Carney gets tough on rogue bankers

Published: Wednesday 10th June 2015 by The News Editor

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Bank of England governor Mark Carney said the “age of irresponsibility” was over tonight as he set out new plans for rogue bankers and traders who break the rules to be jailed for up to ten years.

Mr Carney made the remarks as the Bank published the final report of the Fair and Effective Markets Review (FEMR), which the governor and Chancellor George Osborne launched a year ago in the wake of a series of City scandals.

The review calls for UK criminal sanctions for market abuse to be extended to a wider range of areas and the lengthening of the maximum sentence available from seven to ten years.

Mr Carney said if unchecked, markets were “prone to instability, excess and abuse”.

He blamed poor infrastructure for allowing the US subprime mortgage crisis to “light a powder keg under UK markets, triggering the worst recession in our lifetimes”.

The governor was due to make the remarks this evening at his annual Mansion House speech to the City alongside the Chancellor.

Mr Osborne was due to say: “The public rightly asks why it is that after so many scandals, and such cost to the country, so few individuals have faced punishment in the courts.

“The governor and I agree: individuals who fraudulently manipulate markets and commit financial crime should be treated like the criminals they are – and they will be.

“For let us be clear: there is no trade-off between high standards of conduct and competitiveness. Far from it. Implementing the reforms set out in this review will ensure trust in our markets and strengthen London’s global leadership position.”

Mr Carney was speaking as the FEMR produced a series of recommendations to reform a system whose deficiencies allowed misconduct to take place.

He said: “For the best in the business, this won’t be new. This is just how you run your business. But for others, who free ride on your reputations: the age of irresponsibility is over.”

The governor said failings in market structures, standards, systems and incentives skewed to short-term returns, coupled with a “culture of impunity” in parts of the market had contributed to an “ethical drift”.

Mr Carney also acknowledged the failings of central banks.

“Unethical behaviour went unchecked, proliferated and eventually became the norm,” he said.

“Too many participants felt neither responsible for the system nor recognised the full impact of their actions. For too many, the City stopped at its gates, though its influence extended far beyond.”

It comes in the wake of a series of banking scandals such as the manipulation of benchmark lending rate Libor and foreign exchange markets.

Mr Carney said fines of 150 billion US dollars (£97 billion) levied on global banks had translated to more than 3 trillion US dollars (£1.9 trillion) of reduced lending capacity to the real economy.

Published: Wednesday 10th June 2015 by The News Editor

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