Banks should pay for protection, says UK

LONDON – Banks around the world that enjoy any kind of state support should pay for the privilege rather than expecting taxpayers to bail them out, British Treasury Minister Paul Myers said in an article published yesterday.

Myners discussed options for doing this when he hosted a meeting of officials from G7 finance ministries, the International Monetary Fund (IMF), World Bank and the Financial Stability Board yesterday. Proposals on the table include a global insurance levy, the use of contingent capital instruments and a global transactions tax, Myners said.’If banks are to enjoy even a small hint of implicit underwriting from the state, they should pay for it,’ Myners wrote in an article in the Guardian newspaper.’None of us can get insurance for our homes or our businesses for free – we pay a premium for it. And so should banks,’ he said.’We need to re-examine an economic model that seems to work much better for investment banks than for businesses and workers.’US President Barack Obama has called for a levy on banks’ balance sheets to recoup ‘every single dime’ of the billions of dollars spent rescuing the financial sector during the credit crisis. Myners, who said on Friday that the Obama plan was designed to suit specifics in the US industry, said future regulation needed to be coordinated to prevent international banks from finding loopholes in the system.’This problem can only be dealt with through global agreement, as we know all too well that banks can use gaps in regulation to game the system,’ he said. – Nampa-Reuters