John Mann MP - UK Treasury Select Committee HARDtalk


John Mann MP  - UK Treasury Select Committee

Similar Content

Browse content similar to John Mann MP - UK Treasury Select Committee. Check below for episodes and series from the same categories and more!

Transcript


LineFromTo

-- boat overturned. Now it is time I talk.

:00:10.:00:14.

Britain's politicians seem to have conflicting impulses when it comes

:00:14.:00:19.

to the banks. They advocate root and branch reform to tame banking

:00:19.:00:23.

excesses. They bristle at suggestions that London might

:00:23.:00:29.

forfeit its status as the world's pre-eminent financial centre. My

:00:29.:00:35.

guess today, John Mann, was at the centre of the heated debate of UK

:00:35.:00:40.

banking. Can politicians impose their will on the huge banks

:00:40.:00:50.
:00:50.:01:10.

without damaging Britain's economic prospects?

:01:10.:01:15.

John Mann, welcome to HARDtalk. Earlier this summer, you made a lot

:01:15.:01:22.

of headlines when you characterise to Barclays Bank as a "a rotten,

:01:22.:01:27.

thieving bank". Do you stand by that phrase? Absolutely, that's

:01:27.:01:31.

what they were doing by manipulating the market specific at

:01:31.:01:37.

the time - the LIBOR rate. inter-bank lending rate. So many

:01:37.:01:42.

banks depend on that. Fundamentally, that costs people money. It costs

:01:43.:01:47.

the poorest people money, who have sub-prime mortgages. It cost local

:01:47.:01:51.

authorities money, they lost money in the United States because of

:01:52.:01:56.

what they did. There were real losers, that is why what they did

:01:56.:02:00.

may well be criminal. It was certainly ethically and morally

:02:00.:02:04.

wrong. And we know that the bank has now accepted responsibility.

:02:05.:02:10.

The CEO, Bob Diamond, he has gone along with other senior staff. I

:02:10.:02:20.

come back to the phrase "Ben Rutten and feeding bank". -- a rotten. Are

:02:20.:02:23.

you suggesting that everyone better get out of that bank right away

:02:23.:02:27.

because it simply cannot be trusted? No, I'm not, because what

:02:27.:02:31.

I said at the time and repeatedly since is that Barclays was one of

:02:31.:02:35.

wants to many, over 20 banks that appear to be doing exactly the same

:02:35.:02:40.

thing. So they are all rotten and thieving, are they? It's the

:02:40.:02:43.

investment bank that's the problem. Not the retail bank, the high

:02:43.:02:46.

street bank that people see in their everyday lives, but

:02:46.:02:52.

investment banking. At its very core, investment banking that

:02:52.:02:56.

trades the financial crash from 2008, remains a rotten to its core.

:02:56.:03:01.

Excessively greedy, excessive risk. Also, clearly, potential

:03:01.:03:04.

criminality. That is why I used that phrase, it's absolutely

:03:04.:03:09.

accurate. I'm interested in language, you are a politician and

:03:09.:03:12.

language matters and the way you use it matters. You sit on the

:03:12.:03:17.

Treasury Select Committee in a certain position of influence.

:03:17.:03:21.

Other words you have used recently - you are talking about Morgan

:03:21.:03:25.

Stanley and other investment banks and use a "investment banks operate

:03:25.:03:33.

in cartels. They hunt as a pack and their profit as oligarchs". That's

:03:33.:03:36.

because they do. That's the fundamental problem with investment

:03:36.:03:43.

banking. I illustrated that with an ongoing example, the attempt to

:03:43.:03:50.

sell off Direct Line Insurance where a whole raft of insurance,

:03:50.:03:54.

investment banks, have been invited in to assist the process. That is a

:03:54.:03:59.

cartel situation. Do these words I am quoting from you - they make

:03:59.:04:03.

great soundbite and people like me love quoting them, but they're not

:04:03.:04:06.

really responsible politics, are they? They are not really practical

:04:06.:04:11.

in any way because you are surely not suggesting that these banks,

:04:11.:04:15.

which you describe as cartels, you like and then to wolves hunting in

:04:15.:04:18.

packs, profiting as oligarchs, you are not suggesting they should all

:04:18.:04:22.

be rendered illegal and tossed out of the country? No, but the culture

:04:22.:04:25.

within the in the way that they have behaved as fundamentally

:04:25.:04:30.

flawed. It is forward economically and it has created this financial

:04:30.:04:34.

crisis, the biggest crisis we have had since the 1930s. It's because

:04:34.:04:39.

of the way investment banking operates. It's been easy profits,

:04:39.:04:43.

excessive risk, but they have operated together in setting up

:04:43.:04:48.

these systems. The way this really works is the mergers and

:04:48.:04:51.

acquisitions, the asset stripping it takes place, whereby they

:04:51.:04:57.

getting to a company, as they have to do, under domestic laws, in

:04:57.:05:02.

order to advise those companies on a takeover. Having got the inside

:05:02.:05:06.

information, they are able to use their market position in order to

:05:06.:05:09.

manipulate the share price to ensure that whatever happens, they

:05:09.:05:13.

get their huge fees. That has happened routinely across the world

:05:13.:05:19.

and that is a fundamental weakness in the world economy. With your

:05:19.:05:22.

extraordinarily negative view of the integrity and value systems

:05:22.:05:29.

that operate within the big banks, why is it that when the New York

:05:29.:05:34.

State Department of Finance regulators, when they launched an

:05:34.:05:41.

attack on Standard Charter and other big British banks, you cried

:05:41.:05:46.

foul and appeared to suggest in public that they had no right to be

:05:46.:05:49.

castigating Standard Chartered Bank. Surely they would say exactly the

:05:49.:05:52.

things about Standard Chartered that you would say about other

:05:52.:05:58.

banks? No, I had castigated Standard Chartered and what they

:05:58.:06:02.

had done, and I was calling for them to be held to account. What I

:06:02.:06:06.

was challenging is the idea that this is a British problem, a London

:06:06.:06:11.

problem. I was doing so for two reasons. Firstly, because if it was,

:06:11.:06:16.

that creates a particular problem for our economy. Secondly, and more

:06:16.:06:21.

fundamentally, if it's wrong, that it's not a London problem, and

:06:21.:06:24.

that's how it's been analysed in the United States and elsewhere,

:06:24.:06:28.

then we would get the remedies. This is just as much a problem of

:06:29.:06:33.

America and the United States as it is of anywhere else in the world.

:06:33.:06:36.

It seems here that you as a politician allowed your nationalism

:06:36.:06:42.

to trump your stand against the banks. No, exactly the opposite has

:06:42.:06:48.

been going on. What is happening is that I would call it a political

:06:48.:06:55.

imperative in the United States that is restricting what they're

:06:55.:06:57.

doing in challenging their own banks. What we are doing is

:06:58.:07:01.

challenging foreign banks, in particular British banks. That's

:07:01.:07:06.

not true, you know that's not true. You cited, chapter and verse, or

:07:06.:07:09.

Morgan Stanley being hauled through the regulatory system time and

:07:09.:07:14.

again for alleged abusers. Whereas the publicity and the headlines in

:07:14.:07:19.

the US on that? They're all over the press, if you care to look for

:07:19.:07:26.

them.... It has been shown that Morgan Stanley violated the rules

:07:26.:07:29.

and the US regulatory authorities had come down like a ton of bricks.

:07:29.:07:34.

What's interesting is that we have to search for it. We have to look -

:07:34.:07:37.

because of the US banking secrecy Act we have to look at what the

:07:37.:07:41.

courts were seeing in order to get the reporting from the courts, in

:07:41.:07:45.

order to see what was happening. That contrasted totally with the

:07:45.:07:50.

way in which they have put British banks on the front pages,

:07:50.:07:53.

suggesting, and it is their language, that this is a London

:07:53.:07:56.

problem. It isn't a London problem, it's a problem of investment

:07:56.:08:00.

banking. But there is a profound problem in London, he would accept

:08:00.:08:06.

that? And also in Germany, Japan and the United States. But as an MP,

:08:06.:08:09.

it seems you would want to focus on the London problem. '' Boris

:08:09.:08:19.
:08:19.:08:22.

Johnson who took a stand - Chartered -- standard Chartered

:08:22.:08:30.

were found... Boris Johnson said the US regulators were in danger of

:08:30.:08:34.

launching a self-interested attack on the London stage as the pre-

:08:34.:08:38.

eminent global drive off. I can understand why he was worried about

:08:38.:08:42.

that, why aren't you worried about that? The problem isn't London

:08:42.:08:46.

banks, not what's happening in London, but with international

:08:46.:08:50.

banks and the international banking community. If it was a situation

:08:50.:08:53.

that we are the ones who have got it wrong, then we could put that

:08:53.:08:58.

right. In a sense, it would be easy for politicians because we would be

:08:58.:09:02.

the ones who would have to catch up. I am not saying the exact opposite

:09:02.:09:05.

- there are things we need to put right in this country, because

:09:05.:09:09.

there are things. We have lax regulation. I have maintained that

:09:09.:09:13.

for a long time. As a Labour MP it's a bit embarrassing for you,

:09:13.:09:21.

isn't it? To use the euphemism of Tony Brown and Gordon -- Tony Blair

:09:21.:09:25.

and Gordon Brown, it's a light touch. We have had that from

:09:25.:09:30.

successive governments here. under Tony Blair and Gordon Brown

:09:30.:09:34.

there was a particular policy too, used the phrase again, engaged in

:09:34.:09:37.

the light touch regulation to make Britain an international financial

:09:37.:09:41.

powerhouse. There were very few of us who were outside that consensus

:09:41.:09:46.

in Parliament and around Westminster who said that that

:09:46.:09:49.

wasn't a good thing. Some of us thought that was a mistake at the

:09:49.:09:54.

time. The Americans thought it was a mistake at the time, which brings

:09:54.:09:58.

us back to this debate, I do want to take it too far, but the fact is

:09:58.:10:06.

there is a lot of evidence to support him died no -- the people

:10:06.:10:09.

who say that the light touch approach taken by Tony Blair and

:10:09.:10:14.

Gordon Brown was a catastrophic mistake. The lack of transparency

:10:15.:10:18.

in American investment banks that led to the situation of Lehman

:10:18.:10:24.

Brothers collapsing, accounting systems that allowed it to collapse

:10:24.:10:28.

with no-one intervening, that is just as much part of the problem.

:10:28.:10:33.

What we need to do is ensure we tackle the problems, not the wrong

:10:33.:10:37.

perceptions. London has problems, but they are not London problems,

:10:37.:10:41.

their international banking problems. Our regulation is to

:10:41.:10:47.

relax, but is what America had, Germany, Japan and the others. It

:10:47.:10:51.

is a world financial crisis. If it just was a British problem I would

:10:51.:10:54.

be there every day shouting that we get our act together and catch up

:10:54.:10:59.

to the rest of the world. If it were as simple as that... But it is

:10:59.:11:04.

not. The Americans concentrating on the London problem of the eggs them

:11:04.:11:08.

of their responsibility to look at why at this moment in time, for

:11:08.:11:13.

example, Mexican drug cartels have been highlighted with HSBC, but the

:11:13.:11:15.

vast majority of their money laundering is done through American

:11:15.:11:21.

banks. American regulators have sat on their farms about it. They

:11:21.:11:25.

should be even-handed with what they do. There are major problems

:11:25.:11:29.

in terms of the lack of transparency, the official culture,

:11:29.:11:33.

the amount of greed. We have spoken to American politicians and

:11:33.:11:37.

regulators and we challenged them about what they are doing. It seems

:11:37.:11:40.

that your responsibility right now as an MP and a member of the

:11:40.:11:44.

finance committee is to consider Britain's position, not the United

:11:44.:11:51.

States' position. You have got a problem because, just as you demand

:11:51.:11:54.

new regulation, new integrity in the British banking system, you

:11:54.:11:59.

cannot afford to see one of the most powerful sectors of the

:11:59.:12:06.

British economy neutered. response we should have to the

:12:06.:12:10.

international banking crisis is to ensure that our systems,

:12:10.:12:14.

transparency, regulation is effective. A simple question - do

:12:14.:12:20.

you want to see financial-services account for something like 10% of

:12:20.:12:24.

British GDP as they do at the moment? Would you like to see

:12:24.:12:28.

almost a million jobs in financial services? It is that something to

:12:28.:12:31.

be sustained and welcomed or is it something that Britain needs to

:12:31.:12:36.

leave behind? What I want to see is a financial sector here that lends

:12:36.:12:40.

to British businesses, that doesn't undermine the British economy

:12:40.:12:45.

because of its short-term culture. What effect would regulation, with

:12:45.:12:51.

fat sound basis... Answer the question, do you want a British

:12:51.:12:55.

financial sector that is as powerful in the future as it has

:12:55.:12:59.

been in the past? As successful in the future as in the past? If we

:12:59.:13:04.

can keep that many jobs, we should. The only way we will do it is by

:13:04.:13:08.

being ahead of the Game in terms of the regulation and the transparency.

:13:08.:13:12.

If we are behind, we will lose those jobs. Our banks will keep

:13:12.:13:17.

being hit. Well, that brings us to the specifics of regulation. The

:13:17.:13:22.

government is keen to act, it is pushing through this financial-

:13:22.:13:25.

services legislation which will beef up the banking. They have

:13:25.:13:28.

learned a painful lesson, perhaps, a Labour government has learned it

:13:28.:13:34.

too late from the past 12 years, that the tripartite system of the

:13:34.:13:37.

Bank of England, the Treasury and the fine edge will services

:13:37.:13:39.

authority acting together to regulate the financial sector

:13:39.:13:49.
:13:49.:13:51.

doesn't work. -- financial-services authority.... I wish it was as

:13:51.:13:55.

simple as shovelling the decks and hoping everything will work out.

:13:55.:13:58.

That is not the Game we are in. Simply changing the structure does

:13:58.:14:02.

nothing. I fear that what we will have is the perception of strong

:14:02.:14:06.

regulation but the reality of nothing changing. An all powerful

:14:06.:14:12.

Governor of the Bank of England who doesn't, in fact, have the

:14:12.:14:16.

practical powers, the basis of legislation behind him in terms of

:14:16.:14:20.

criminal sanctions. Especially, doesn't have the effectiveness of

:14:20.:14:24.

driving down the transparency we need. None of that is there. In

:14:25.:14:28.

particular, the one thing we could do to improve international banking

:14:28.:14:33.

is put real pressure on the UK crown dependencies, the Cayman

:14:33.:14:37.

Islands, the Virgin Islands and others, where money is hidden away

:14:37.:14:42.

and no-one knows who has got what and where it is. It is fundamental

:14:42.:14:51.

to the financial crisis that we He would close down Britain's

:14:51.:15:00.

sovereign tax havens, were due? would use the full might of the

:15:00.:15:05.

British authorities. I would put that to them bluntly. If we don't,

:15:05.:15:09.

we are not fulfilling our proper responsibilities. It seems to me

:15:09.:15:13.

that you're putting the Governor of the Bank of England in a tough

:15:13.:15:19.

situation. You say he won't be able to deliver. At the same time, when

:15:19.:15:29.

he does deliver, as he did recently, leading to Bob Diamond walking out

:15:29.:15:32.

of the door of Barclays, you and your committee criticised him by

:15:32.:15:38.

saying it was not his right and duty to offer that explicit advice

:15:38.:15:42.

to a CEO of a bank. As you know, my comments at the time were to

:15:42.:15:47.

congratulate him and say he was quite right to use his perceived

:15:47.:15:52.

power in order to ensure that Bob Diamond went. I didn't criticise

:15:52.:15:56.

Mervyn King, I congratulated him. You know full well your committee

:15:56.:16:02.

did. The committee, some of them did. The chairman and I clashed

:16:02.:16:08.

over it. I think he was wrong on that. Mervyn King is the perception

:16:08.:16:12.

of power, though. What we need is someone getting in before these

:16:12.:16:17.

problems occur in the way we have seen. If he had intervene in the

:16:17.:16:21.

LIBOR three years ago, it would have fed a three -- huge difference.

:16:21.:16:25.

It seems that the Government's reforms are going to lead to a

:16:25.:16:29.

beefed up Bank of England, which will have extraordinary powers to

:16:29.:16:33.

regulate and monitor and oversee the financial sector and will not

:16:33.:16:38.

be tied down by politicians. You want the politicians to have

:16:38.:16:43.

authority. The Government says it is much better in the Independent

:16:43.:16:49.

tens of the Bank of England. Exactly the opposite. I wanted

:16:49.:16:52.

regulated independent of the Government. The Bank of England can

:16:52.:16:58.

never be fully independent of politicians. Politicians, the

:16:58.:17:01.

Chancellor and Parliament sets the remit of the Bank of England on

:17:01.:17:08.

monetary policy. That is why it can never be wholly independent. The

:17:08.:17:11.

policy parameters are set by politicians. That is the weakness

:17:11.:17:16.

in what the Government has done. can't do you get away with this.

:17:16.:17:19.

You've written that you want to see, for example, the most secret

:17:19.:17:25.

minutes within the Bank of England open to MPs to investigate and to

:17:25.:17:30.

look out. And to you, as a journalist. But why do you think

:17:30.:17:35.

the public, which has seen everything exposed about MPs

:17:35.:17:37.

fiddling expenses, what they've done with their own efforts to

:17:37.:17:42.

acquire money for themselves, why would the public want to see MPs

:17:42.:17:46.

given new powers over the Bank of England? Transparency creates

:17:46.:17:52.

better behaviour. We've seen that with MPs' expenses. The same thing

:17:52.:17:56.

that baking. You bring transparency into the arrangements, then the

:17:56.:18:01.

behaviour changes. A fundamental problem with the Independent --

:18:01.:18:08.

international banking has been risked taking. The best way to hold

:18:09.:18:12.

people accountable despite better transparency. That should be the

:18:12.:18:18.

aim of the regulation. That regulation. It's not all about

:18:18.:18:21.

regulation as far as you're concerned. You want to see a

:18:21.:18:27.

complete change of policy toward the city of London. You talk about

:18:27.:18:31.

taxes on derivatives trading and a ban on short selling. You want to

:18:31.:18:36.

reintroduce the bank bonus tax. You want punitive taxes on giant

:18:36.:18:44.

digital companies. If you got your way, the city of London as we know

:18:44.:18:49.

it today would be massively diminished, agreed? If I got my way,

:18:49.:18:55.

with those modest proposals, the city of London would actually

:18:55.:19:00.

flourish because it would ensure that will banking, effective risk-

:19:00.:19:07.

taking, fought out risk-taking, proper use of clients' money would

:19:07.:19:11.

happen. I think that would restore confidence, not tarnish it. I tell

:19:11.:19:15.

you what, it wouldn't. John Longworth, who represents the

:19:15.:19:22.

British Chambers of Commerce said, the point is that all businesses

:19:22.:19:26.

that create wealth, pay their taxes and comply with the law are good

:19:26.:19:30.

companies. He is talking about companies that you regard as rotten

:19:30.:19:33.

and thieving. Lehmann Brothers complied with the law and it

:19:33.:19:38.

brought huge financial problems across the world. The problem with

:19:38.:19:41.

Lehman Brothers is the could have been one of many investment banks

:19:41.:19:45.

that did it. That's the danger of banks that are too big to fail.

:19:45.:19:49.

When they go wrong, the taxpayer is required, not just in this country

:19:49.:19:55.

but many countries across the world, to bail them out. All we need to

:19:55.:20:00.

ensure is that there is proper controls to ensure those banks

:20:00.:20:04.

cannot hold the taxpayers to ransom every time they take too much risk

:20:04.:20:09.

for their own good. Not long ago we had David Miller Band on this

:20:09.:20:15.

programme. He made it clear that a return to the big state, as he puts

:20:15.:20:21.

it, is a political dead end. He says, bashing the bridge, bashing

:20:22.:20:27.

banks and big business will not work. He pointed out that at the

:20:27.:20:31.

last election not a single business endorsed Labour. If you get your

:20:31.:20:36.

way, that's just what's going to happen. Having set up and run a

:20:36.:20:41.

successful business, one of the few on the Labour benches, my instinct

:20:41.:20:45.

is that what business wants is the ability to lend money and get it at

:20:45.:20:50.

a reasonable rate. They want certainty in economic policy and

:20:50.:20:55.

banking. If businesses get that, then people are prepared to take

:20:55.:20:58.

risks to invest. That is what I want to see. That's what will

:20:58.:21:03.

create jobs. What is stalling the economy is the lack of that. All we

:21:03.:21:06.

need a banks that we can Reliant and that means that banks that are

:21:06.:21:10.

growing businesses can rely on. That's all we do not have at the

:21:10.:21:15.

moment. Do think there is a battle for Labour's economic policy making

:21:15.:21:22.

Saul at the moment? You and people like you are focused on bashing the

:21:22.:21:30.

banks. You are at one under the agreement -- one end of the

:21:30.:21:35.

argument. Tony Blair said we have to be credible with business. We

:21:35.:21:39.

can't go into the next election without the support of a single CEO

:21:39.:21:44.

from a big corporation. There are two different and so of this Labour

:21:44.:21:50.

Party argument, aren't they? wouldn't say I am at one end of it.

:21:50.:21:54.

I do not think it is nearly as simple as that. The issue is, how

:21:54.:21:59.

do we regulate banks effectively? Its in the interests of the

:21:59.:22:04.

shareholders of banks that fail will represented. It is in the

:22:04.:22:07.

interests of the shareholders of Standard Chartered that there is

:22:07.:22:14.

the transparency. The powers are want to see are the ones whereby

:22:14.:22:18.

there is the ability to ensure that shareholders' interests had been

:22:18.:22:22.

looked after. One of the big weaknesses but investment banks has

:22:22.:22:27.

been the way they have misused their clients' money. They had not

:22:27.:22:34.

looked after it in an honourable way. It is one of the big

:22:34.:22:39.

criticisms that has been there. That is affecting the markets.

:22:39.:22:43.

question is how radical are you prepared to be? De want to see the

:22:43.:22:47.

Labour Party adopt policies which, in essence, would use the law to

:22:47.:22:52.

force these sorts of changes in the way shareholders have powers, in

:22:52.:22:56.

the ways banks remunerate their top staff? Is it the more, you believe,

:22:56.:23:02.

must deliver? The ball is one part of the equation. As they are doing

:23:02.:23:08.

across the west of the world... told me earlier on that the US was

:23:08.:23:12.

lax when it comes to this, you now tell me they are moving forward.

:23:12.:23:15.

They have gone forward with legislation. They are beginning to

:23:15.:23:21.

legislate. It is a balance in the approach that is needed. We need

:23:21.:23:26.

effective regulation here. That's not big states. It's effective

:23:26.:23:32.

regulation. The two do not go together. It isn't about Government

:23:32.:23:38.

intervening. In the last four years, we have seen governments having to

:23:38.:23:43.

intervene with vast amounts of taxpayers'' money. That is what I

:23:43.:23:46.

fundament of the objective. We want banks that can stand on their own

:23:46.:23:51.

two feet, not banks that are relying on the rest of us, the rest

:23:51.:23:58.

of the economy, to bail them out. That actually is a much more open

:23:58.:24:03.

and free market system. In just a very few words, how confident are

:24:03.:24:05.

you that your vision of this radical reform needed within the

:24:05.:24:09.

financial sector is going to be delivered? Talking to people in the

:24:09.:24:13.

city, I don't think it's that radical. I think it's sensible. I

:24:13.:24:17.

Download Subtitles

SRT

ASS