THE City accused politicians of remaining stuck in the “hysterical” phase of reaction to the financial crisis yesterday after MPs called for radical reform of the banking system.
The Treasury Select Committee urged the government not to rule out breaking up systemically important banks, arguing the debate should be kept “as wide as possible” to protect taxpayers from future collapses. In a nod to retail upstarts Metro Bank and Virgin Money, the influential body of lawmakers also said reducing the size of dominant players would help spur competition.
Led by Labour veteran John McFall, the committee went on to stress the importance of living wills and tougher capital requirements for banks. It added that reform could be undertaken by the UK without international coordination because “[it] is anyway in our own interest”.
But Angela Knight of the British Bankers’ Association, whose members include Barclays and JPMorgan, pointed out the UK had already moved further than most countries on capital rules and living wills. “The time has gone for the somewhat hysterical phraseology. We need a bit more common sense and analysis.”