Sunday, January 25, 2009

Minister unleashes savage attack on 'masters of the Universe' over recession

Britain's banking system was less than three hours away from collapse before the Government's first bail out, Gordon Brown's City Minister revealed last night.

Lord Myners said that 'things were very bad, nervous and fragile' in the moments before the Government announced a ?500 billion rescue package last October.

In an interview with the time, Lord Myners revealed that the financial crisis was far worse than released.

The government pumped up to ?37billion into Royal Bank of Scotland, Lloyds TSB and HBOS in an attempt to prevent the UK's banking sector from melting down last year - resulting in the part nationalisation of Britain's banking system.

Lord Myners revealed: 'How close were we to a systemic collapse of the banking system? We were very close on Friday, October 10.

'There were two or three hours when things felt very bad, nervous and fragile. Major depositors were trying to withdraw ? and willing to pay penalties for early withdrawal ? from a number of large banks.'

The City minister's comments came as new figures revealed that Britain is heading into a longer and deeper recession than feared.

In a furious onslaught, Lord Myners blamed banking's 'masters of the Universe' for the crisis.

He said that too many top bankers fail to realise they are grossly over-rewarded and have no sense of society around them.

Lord Myners added that there will have to be fundamental changes in the way that banks operate and that 'the golden days of huge bonuses in the investment banking arms are gone'.

The minister went on to argue that there was no economic justification for senior executives? pay rising 'exponentially' in the past 20 years.

Asked whether they should pay back their bonuses or lose their knighthoods, he says 'that?s a decision for individuals' and adds that if people have committed crimes they should be prosecuted.

Lord Myners says: 'I have met more masters of the Universe than I would like to, people who were grossly overrewarded and did not recognise that. Some of that is pretty unpalatable.

'They are people who have no sense of the broader society around them. There is quite a lot of annoyance and much of that is justified.

'Let us be quite clear: there has been mismanagement of our banks.'

His comments are the most ferocious yet by a Labour minister on Britain's banking bosses.

Lord Myners joined the Government from the City in October.

The former chairman of Marks & Spencers and hedge fund manager went on to admit that more bailouts could be in the pipeline.

He added that the Government still did not know the scale of 'toxic debts' on the books of Britain's banks.

George Osborne, the Shadow Chancellor, said: 'The Government?s endless announcements and summits are commanding neither public confidence at home nor confidence abroad.'

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