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Vince Cable: Reform of the banking system still needed

February 14, 2011 9:15 AM
Originally published by UK Liberal Democrats

Speaking on the Andrew Marr Show on BBC1 (watch here) Vince said:

"I think there will have to be change and it will have to be radical. The precise mechanics of it are being looked at by the Banking Commission and I don't want to pre-judge what they will say.

"Ultimately, these problems are only going to be dealt with when we have the big structural reforms which the Banking Commission is dealing with. In other words, the whole question of getting more competition, dealing with this issue about the link between the retail banks and investment banks. These big structural questions, the fundamental surgery, that's to come.

"The banks are ultimately underwritten by the state. They effectively have a state guarantee. And that's what makes the enormous (bonus) payments so offensive. In order to deal with this problem of the underlying state guarantee, the banks being too big to fail, we've got to look at their structure because that's where the Banking Commission, which George Osborne and I jointly set up, that's where it's absolutely crucial."