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Richmond upon Thames Liberal Democrats:Covering the constituencies of Twickenham and Richmond Park |
Kramer and Newby quiz Sassoon on banking
March 6, 2011 10:45 AM
• [Feb 28] Baroness Kramer (Liberal Democrat): TO ask Her Majesty's Government what assessment they have made of the progress of the Independent Commission on Banking.
Lord Sassoon (Commercial Secretary, HM Treasury; (Conservative): My Lords, the Government set up the Independent Commission on Banking to consider reforms to the banking sector. We welcome the progress that the commission has made and look forward to receiving its report in September.
Does my noble friend agree that strengthened regulation supervision and stronger capital requirements are welcome but that neither of them deals with the underlying structural problems of "too big to fail" or "too interconnected to fail"? Will he commit the Government to act on any recommendations from the ICB for reform in this area, even if it means splitting the banks or ring-fencing activities with functional subsidiarity?
Lord Sassoon (Commercial Secretary, HM Treasury; (Conservative): I certainly agree with my noble friend that there were two areas that the Government needed to address urgently resulting from the failure of the previous system of regulation and the over-leveraging of our banks. The first one on which we have brought forward proposals is the system of regulation, although I completely agree with my noble friend that that is not sufficient, which is why we set up the independent commission to look into the structure of banking. I am certainly not going to pre-empt either the conclusions that it comes to in its final report or the Government's response, but I am greatly encouraged by the papers that it put out and by the recent lecture by Sir John Vickers, which indicate that the commission is tackling all the major issues and stimulating a vigorous debate.
• . . Lord Newby (Liberal Democrat): My Lords, does the Minister agree that one of the issues that the Vickers Commission is looking at is how to reduce risk within the banking sector and risk taken by individual institutions? In light of that, do the Government support the decision by Northern Rock to increase the proportion of loan-to-value on mortgages to 90 per cent, which many people see as the first step towards a return to the bad old days?
Lord Sassoon (Commercial Secretary, HM Treasury; (Conservative): My Lords, I agree with my noble friend that risk and the stability of the system go the heart of the remit of the commission. However, the individual product sets which are offered by individual banks is at the moment a matter for the Financial Services Authority, and I am sure that it will be taking its responsibilities very seriously in relation to the business models and products of all the banks it regulates.
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