Business Secretary Vince Cable told British banks that paying out big bonuses this year will lead to an “enormous kickback” from lawmakers of all parties.
“There’s a potential train crash ahead if there’s a very generous bonus round,” Cable told a fringe meeting sponsored by the City of London Corporation at his Liberal Democrat party’s annual conference in Liverpool, northwest England. He said his feelings were shared by both parties in the ruling coalition. “I’m not just talking about the Lib Dems -- some of the Conservatives are on the warpath as well.”
The business secretary was responding to a warning from Stuart Fraser, director of Brewin Dolphin Securities, that “the industry is about to shoot itself in the foot” with big payouts just as public-sector spending cuts planned by the coalition government hit the rest of the country.
A few hours earlier, Cable said that the government was still considering implementing a bank tax proposed by the International Monetary Fund if lending to businesses doesn’t increase and if banks don’t moderate their behavior and pay.
Cable said the public was outraged at the sight of “people paying themselves enormous sums of money when they’re underwritten by the taxpayer. We are the lenders of last resort -- I don’t think bankers understand that.”
Cable said concern will continue until the government finds a way to remove the issue of banks being “too big to fail,” something he described as “a major, major problem that hasn’t gone away.”
He also renewed his attack on the appointment of Bob Diamond as chief executive officer of Barclays Plc. Paying tribute to former Barclays CEO Martin Taylor, who now sits on the government’s independent commission on the future of banking, as a model of a good banker, he added: “Unfortunately he brought in Bob Diamond, who subsequently transformed it into the kind of bank he disapproved of.”