Now our reckless PM wants prudent lending
GORDON BROWN was accused yesterday of being behind the times after he called for an end to reckless bank lending and massive mortgages.
The Prime Minister said it was time for High Street banks to get back to “traditional” practices, and “prudent” lending and he called for curbs on 100 per cent mortgages.
Mr Brown said the Financial Services Authority has been asked to look at how future new mortgages worth more than 100 per cent of a house’s value could be “controlled”.
He also called for more responsibility worldwide.
The Prime Minister was among eight European leaders meeting in Berlin yesterday who agreed proposals to overhaul the global financial system, bringing hedge funds and other elements of the “shadow banking system” under international supervision.
Speaking at the meeting, hosted by German Chancellor Angela Merkel, he said: “We are looking at how, working with all continents, we can ensure the banking system can serve the public – stewards of people’s money rather than speculators with people’s money.”
Opposition parties were scathing. Shadow Chief Secretary to the Treasury, Philip Hammond, said: “Gordon Brown is trying to shut the stable door on irresponsible lending long after the horse has bolted. It was his regulatory system that failed to spot the boom and allowed 125 per cent mortgages from Northern Rock and HBOS.”
Liberal Democrat treasury spokesman Vince Cable said: “Until very recently Gordon Brown was trying to justify 100 per cent mortgages.
“He was seriously behind the curve since even the industry is no longer making such products available.” Shadow Chancellor George Osborne said: “Attending summits abroad is not going to hide Gordon Brown’s failures at home, where a frenzy of headline- chasing initiatives and open divisions in Cabinet are making the recession worse and damaging confidence in Britain’s economic future.”
Banking minister Lord Myners would not admit the Government was to blame for the 100 per cent plus mortgages and appeared to accept they could not be banned.
He said banks recognised there had been “an exuberance” in the past and they need to “return to prudence, to safe, secure, sober lending activities.
“We have learnt some very, very expensive lessons globally about reckless, feckless, witless lending by a small number of banks.”
The comments came as the Government announced that nationalised Northern Rock will put up to £14billion into the mortgage market over the next two years as part of the latest effort to boost the economy.
There will be about £5billion of new mortgage lending in 2009 and up to £9billion from 2010 onwards.
