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FSA and Brown take on King

THE FINANCIAL Services Authority (FSA) and Prime Minister Gordon Brown yesterday hit back at Bank of England governor Mervyn King who has said that banks which are &ldquo;too big to fail&rdquo; should be broken up to prevent another financial crisis. <br /><br />The FSA will publish a paper today which will argue that carving up retail and investment banks would not necessarily reduce risks. Instead the City watchdog will back &ldquo;living wills&rdquo; that will allow banks to be wound down in an orderly manner if they collapse.<br /><br />At Prime Minister&rsquo;s Questions in the Commons yesterday, Gordon Brown backed this view, telling MPs &ldquo;the difference between having a retail and investment bank is not the cause of the problem&rdquo;.<br /><br />The comments put him at odds with King, who told Scottish business leaders on Tuesday that tighter regulation alone would not be enough to prevent banks from generating financial crises, meaning that retail and investment banks should be spilt up. <br /><br />Meanwhile, City minister Paul Myners increased government pressure on bankers last night when he told the International Bankers Dinner at Mansion House that pay in the financial services sector should show &ldquo;restraint&rdquo;.<br /><br />Myners told the audience: &ldquo;My advice would be to get ready to explain why your bank&rsquo;s earnings are genuinely attributable to your performance.&rdquo;<br /><br />&nbsp;Myners&rsquo; comments to the audience of bankers come after thinktank the Centre for Economics and Business Research said on Tuesday that bonus payouts in the UK financial sector are expected to rise to &pound;6bn this year, up 50 per cent from a year ago.<br />