Brown takes broom to banks
Thursday, 18 September 2008 12:00
Gordon Brown is acting to clean up the UK financial system, he said today, after the government aided in the rescue of HBOS by Lloyds TSB.
The giant banking group was only made possible after the government agreed to waive competition rules.
The prime minister said: "We are cleaning up the financial system, continuing to take whatever action is necessary.
"We're now in a better position because things are more stable."
He added: "The important thing is we have to take decisive, quick action. Our determination is to do everything to maintain stability of the system. I believe we took not only the right action but that by taking the actions we dealt with the stability of the financial system.
"First things first, and that is to maintain and ensure the stability of the system."
The Conservatives have welcomed the government move to facilitate the merger.
George Osborne, Conservative shadow chancellor, called for a crackdown on short selling - which was seen as key reason why the HBOS share price dropped so suddenly.
"On the question of short selling, market abuse is not acceptable, but we must tackle the causes of this crisis, not the symptoms," he said.
"The causes are a decade of debt when the government hubristically claimed that we had abolished boom and bust."
He added: "The priority is to bring stability back to the British banking system."
Dr Eamonn Butler, director of the Adam Smith Institute (ASI), claimed regulations have been at fault to allow the recent turbulence.
"Banks going down like ninepins, fortunes being wiped off the stock market, inflation haywire, loans unobtainable - the market's messed up, hasn't it?" he said.
"It's perfectly obvious to me that it's governments and regulations that have messed up, not free markets - because in the financial wonderland that our regulators have created, free markets do not exist."
He added: "There was no problem when everything was booming. But the 'prudence' of Gordon Brown, and Alan Greenspan's confident mastery of the markets now turn out to have been prolonged, stealthy, credit binges.
"It was great for politicians and business, at the time. The trouble is that after every binge, there's a hangover. In the cold light of day, nothing quite looks so clever."
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