Cable stands firm on banking reform

British Business Secretary Vince Cable has warned Britain's bankers that the economic turmoil in Europe will not derail reform of the financial sector. The Independent Commission on Banking will report on September 12 and Cable said the fact that there were still fears about the collapse of big financial institutions was "all the more reason for grappling with this issue". It is expected that Sir John Vickers' commission will recommend ring-fencing banks' retail operations from their investment arms and the Business Secretary said in an interview Wednesday it was "disingenuous in the extreme" for the banks to warn that the reform could damage the economic recovery. The comments from the Liberal Democrat Cabinet minister, who has long favoured the separation of retail and investment banking, came after attacks on the proposals from the director general of the Confederation of British Industry John Cridland and British Bankers' Association chief executive Angela Knight. Cridland said taking action to reform the banks now would be "barking mad" and Miss Knight warned imposing the measures on lenders risked denting confidence and cutting the supply of credit to the economy. But Cable told The Times newspaper "It is disingenuous in the extreme to use the current context to argue against reform. Banks are in a way trying to create a panic around something which they know has got to happen." "The governor of the Bank of England and many other people have been arguing that we have to deal with the too-big-to-fail problem," he said. "We can't have big global banks with balance sheets bigger than British GDP underwritten by the taxpayer; this can't go on and it has got to be dealt with.