Tyrie: We must not bow to bank pleas

THE chairman of the Treasury Select Committee urged regulators to not cave in to ‘special pleading’ from UK banks to water down rules designed to protect taxpayers from another financial crisis, writes James Salmon.

In a speech last night Andrew Tyrie launched a withering attack on the banking industry which has been complaining about new ‘ringfencing rules’.

These rules will force banks to insulate their High Street arm from the rest of the group from 2019. The aim is to protect ordinary savers from the risky activities of ‘casino bankers’, and to make it possible for any part of the bank to collapse safely, without triggering another bailout from taxpayers.

But the British Bankers’ Association complained about the ring-fencing rules last week, and said a raft of regulation was threatening London’s position as an international banking centre.

Tyrie, a Tory MP, said: ‘Regulators should not give in to special pleading from banks in implementing the reforms introduced as a result of the financial crisis.

Regulators have told Parliament repeatedly that the UK’s major banks are not yet in a position to be ‘resolved’ - that is, allowed to fail – without the risk of taxpayer support’.

He added: ‘The tax paying public’s tolerance of another bailout is low, to put it mildly.’

Tyrie also said regulators should be ready to use their new powers to break up banks caught ‘gaming’ the ringfencing rules.