An
interview with the prime minister,
the Rt Hon Gordon Brown MP, appears in today's
Financial Times. The transcript has also been published
here by the
Daily Telegraph newspaper. As the
FT notes, Mr Brown has "tempered his call for a crackdown on bankers’ remuneration with a warning that the UK could not be expected to take action unilaterally". Below are some of Mr Brown's comments:
... we’ve set up the Walker Review but it’s absolutely clear you cannot have banks in a position where the main board members – in some cases even some of the executives of the bank – don’t understand the risks that are being taken. And there is still a worry that unless systems of governance are improved, not just in Britain but around the world, that we end up in a situation where, for example, banks are holding subprime mortgages from the US but they don’t understand what the meaning of the asset is. So I think governance has got to be good.
... as many members of boards have recognised themselves, they did not have the information in a global marketplace on which to base their assessment of the risks that they were undertaking. Now that’s why I think you get quite strong recommendations from the Walker Review in Britain but that’s why I think you’ve got to have common standards of governance throughout the world and it would be unfair if we had tightened up all the arrangements for governance in a global economy when other countries have not done so. So one of the things that I’ll be looking for at Pittsburgh [where the G20 will meet this month] is an assurance that the governance arrangements of financial institutions are going to meet the highest standards possible in the future".
.... I think you’ve got to be absolutely clear that remuneration has got to be based on long-term success, not short-term speculative deals, that there’s got to be a clawback system in remuneration itself so that if things are not working in year two then there is a clawback that is possible as an example. And I think we’ve also got to look at whether the capital requirements of individual institutions would have to be increased in situations where the regulator thought that risk was higher"
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