PLANS announced today that mean badly-performing bankers may have to pay back bonuses do not go far enough and will not help us avoid further global economic crashes, says the Green Party, the only mainstream party calling for the banking sector to cut back in size and fundamentally reshaped.
The Bank of England has today unveiled plans (1) that mean bankers that partake in the rigging interest rates or reckless risk-taking may have to pay back bonuses up to seven years after being awarded them. Under the plans, even if bonuses paid in shares have been cashed and spent, bankers could be asked to pay the money back.
Natalie Bennett, Green Party Leader, said:
"The proposals today are profoundly inadequate, because they only address individual behaviour. Lying behind them is a "bad apple" hypothesis, that a small proportion of people are doing the wrong thing and should be punished for that.
"The kind of activities they propose to punish reflect the entire behaviour of the financial sector: fraud, excessive risk-taking and dishonesty are now at its core, as scandal after scandal have exposed.
"The only way of removing the risk of another massive global financial crash with London at its heart - a risk that the Bank for International Settlements recently said is just as bad today as in 2007 - is to severely cut back the size of the sector and reshape it.
"Banking needs to be a utility that meets the needs of individuals and businesses. It should be boring, low-profit, low-risk. Banking should be the kind of job you go into for an unexciting, safe life and we should be using the skills of the holders of physics, maths and other doctorates now going into the sector for useful purposes, in agriculture, energy generation and other areas that can help solve our problems, not make them worse.
"The Green Party's recent report (2) on what our banking sector should look like sets out the kind of reforms that we need."
Molly Scott Cato MEP, the Green Party’s Finance Spokesperson and co-author of Stepping Outside the Casino: A Green Policy for Banking, said:
“Nothing short of determined political action to separate retail and commercial banking and the introduction of a test of social usefulness for financial products can protect society from another banking crisis and ensure that this most vital sector works for the common good.”
The Green Party’s proposals for a banking system that will serve the interests of citizens and the businesses they build and work for include:
● A clear separation of retail and commercial or so-called 'casino' banking;
● All derivatives and complex financial products to be subjected to a social usefulness test;
● Retain stakes in taxpayer-owned banks and transfer their assets to a network of community banks.
● A network of public, not-for-profit community banks that would support the development of community economies by providing local businesses with low-cost funding.
1 http://www.bbc.co.uk/news/business-28556906
2 http://greenparty.org.uk/files/peoplepic/Natalie%20Bennett/FINALbankingreport.pdf