‘Barclays Firestorm’ Threatens U.K. Banks, Lambert Writes in FT

July 4 (Bloomberg) -- A lengthy public inquiry into the behavior of U.K. banks in the wake of the “Barclays firestorm” would pose substantial risk “in this period of systemic fragility,” Richard Lambert wrote in the Financial Times.

The banking system is under threat from the crisis in the euro region, from questions over part of the banks’ loan portfolios, especially in commercial real estate, wrote Lambert, the chancellor of the University of Warwick and a former director-general of the Confederation of British Industry.

If controls have to be tighter following the Libor scandal, “so be it: that is the argument for a short, sharp inquiry,” wrote Lambert, who was a member of the Bank of England Monetary Policy Committee from 2003 to 2009.

Returning to “square one” would be “a serious mistake,” Lambert wrote, adding that “the economy cannot recover in the absence of a stable banking system: nothing can be more urgent than that.”

To contact the reporter on this story: John Simpson in Toronto at jsimpson12@bloomberg.net

To contact the editor responsible for this story: Greg Chang at gchang1@bloomberg.net