LONDON (MNI) – The UK public and its businesses are not getting
“value for money” from its banks, Bank of England Monetary Policy
Committee Member Adam Posen conceded today.
In comments to Sky TV, Posen said that while the banks could not be
“directly forced” by governments to lend, regulations and the incentives
could be changed to make them “do their job”.
Posen’s comments follow the latest political furore over
bankers’ bonuses, but the MPC official said that the debate about the
banking industry should not be about “individuals”.
Recent surveys and data from the banking sector suggested that
banks were rolling over old loans rather than writing off old loans and
making new ones.
The cost of loans and spreads were all going up, he noted, at a
time when consumer and business demand was cautious, Posen said. Quoting
comments from the BOE Governor Mervyn King and other senior BOE
executives, Posen rejected arguments often used by banks that the need
to build capital buffers is constraining lending to small business.
Posen said that this was an “excuse” and that banks were
exaggerating the official pressure on them to retrench and build up
capital.
–London Bureau; Tel: +442078627492; email: dthomas@marketnews.com
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