DAILY MAIL: The head of the financial watchdog has launched a stinging attack on bankers, mocking City traders and attacking their refusal to accept that the industry needs radical change.
Just weeks after declaring much of bankers' work 'socially useless', Lord Turner delivered a new broadside at a Mansion House banquet last night attended by the great and good of the Square Mile.
He told them the industry's collapse had been 'cooked up' on trading floors where workers earned exorbitant bonuses that regular victims of the recession could only dream of.
The peer insisted that only a huge transformation would allow banks to restore their reputations and rebuild their trust, such was the harm caused by their over-extension.
And he even went as far as to mock bankers for creating financial instruments that nobody wants or needs.
'No one wakes up on a Saturday morning and says I think I'll go out and buy one of those CDO squareds,' he said, referring to the exotic investments that helped bring the financial system to its knees.
'Banks need to refocus their energies, not on those over-complex products of no use to humanity... but on their core functions of providing savings and credit and payment products to customers.'
The atmosphere at the lavish banquet noticeably cooled as the peer spoke and he was even heckled three times about bonuses paid to FSA staff.
'Probably 60 per cent of the people in this room would willingly shoot Lord Turner over that speech,' one guest said afterwards, according to the Financial Times.
Within seconds of starting to speak, the FSA chairman made clear he had no intention of taking back his 'socially useless' claim made last month - for which he was branded a 'heretic' by City figures. 'I will not be recanting this evening', he said.
Lord Turner rejected accusations that he had undermined the industry's competitiveness with his earlier comments.
'It is not my job as chairman of the financial regulator to be the industry's cheerleader,' he declared pointedly.
He continued: 'British citizens will be burdened for many years with either higher taxes or cuts in public services because of an economic crisis... cooked up in trading rooms where many people earned annual bonuses equal to a lifetime's earnings of some of those suffering the consequences.'
He told bank bosses they needed to realise some activities - although profitable - are so unlikely to have a social benefit that they 'should voluntarily walk away from them'.
'Not all financial innovation is valuable, not all trading activity plays a useful role, and a bigger financial system is not necessarily a better one,' he said.
The peer - who used to be a banker - conceded that this might mean bank investments becoming more boring but said 'after the last year, there's a lot to be said for boring'.
He attacked those who wanted to pretend as if 'the near-death experience' of the last year had never happened. Returning to business as usual and risking a similar crisis was not an option, he insisted.
He also strongly endorsed the idea of linking bankers' pay to higher levels of capital held by banks so that they are never so exposed again.
The fresh attack left senior City figures fuming. >>> | Wednesday, September 23, 2009
