The Prime Minister has rejected pleas from Cabinet colleagues and will not use a speech in Washington on Wednesday to issue any sort of apology for the role he played while Chancellor in allowing banks and the City to operate unfettered.
In a candid interview in the Telegraph, Alistair Darling said that the Government and regulators had “lots of lessons” to learn from the events that led to the
economic crash.
The Chancellor’s frank admission that there is a need for ministers to show “humility” will have irritated the Prime Minister as it is in stark contrast to his own view of the
crisis. And it exposes a potentially damaging rift between Mr Brown and his Chancellor.
Mr Darling’s handling of the Treasury brief in recent months has been called into question. Last week he had to admit he did not know about the scale of Sir Fred Goodwin’s £693,000 a year pension deal which had been waved through by one of his junior ministers.
Mr Brown is meeting Barack Obama in Washington to discuss the
global economic recovery plan that the Prime Minister hopes to kick start when he hosts next month’s world leaders G20 gathering in London.
But the trip threatened to be overshadowed by the row over whether Mr Brown should apologise and show some contrition. It is known that some Cabinet colleagues have been privately urging him to make an apology of sorts.
However, the Prime Minister has rejected outright the need to make any sort of admission.
In direct contrast to his Chancellor, he defiantly believes that the problems were unique and were not the fault of the system he put in place and presided over while at the Treasury for a decade.
John Kingman, the head of UK
Financial Investments and a former close ally of Mr Brown at the Treasury, has added to the pressure on Mr Brown by admitting that the tri-partite system of City regulation had not worked.
He told the Treasury Select Committee in London: “There are issues around how the Treasury and the regulator identified problems.”
When asked whether he was reluctant to admit that the system that Labour put in place in 1997 had been a massive failure, he replied: “I don’t think I am massively reluctant.”
Mr Brown has defended his actions as Chancellor and argues that the current recession is not typical of previous downturns caused by high inflation and rising interest rates. Instead it is a banking crisis that has been caused by poor decisions by bankers such as when RBS took over the Dutch bank ABN Amro in 2007 and took on board a slew of poor sub-prime debt.
The Prime Minister also knows that if he admits he made mistakes he will hand a massive propaganda coup to the Conservatives.
But Mr Darling told the Telegraph: “There are a lot of lessons to be learnt by regulators, governments, all of us. The key thing that went wrong was that a culture was allowed to develop over the last 15 years or so where the relationship between what people did and what they got went way out of alignment, especially at the top end.
”If there is a fault, it is our collective responsibility. All of us have to have the humility to accept that over the last few years, things got out of alignment.”
He added: "There are some very hard questions to be asked about the regulatory model we have operated for the last few years.
”The model of us saying to them [the banks] ‘you say it’s OK to us and we’ll go along with it’ has failed. You should regulate according to
risk... financial
services have to be properly run and supervised.”
As well as today’s White House meeting, Mr Brown has also been invited to address a joint session of Congress on Wednesday - only the fifth British premier to make such a speech.
He is on a mission to deliver a “clear message” to Mr Obama from Europe about the need for urgent worldwide action to counter the economic crisis.
Mr Brown believes that, working together, the
UK and US can persuade other leading economies to sign up to a co-ordinated programme of action at next month’s G20 summit in London that can restore confidence among consumers, companies and banks worldwide.
In a change to the anticipated schedule of events for today, the White House indicated that Mr Obama would not hold a full press conference with Mr Brown, but the two leaders would instead appear in front of the media in the Oval Office.
Prime Minister Gordon Brown today called for concerted international action to improve the regulation of the global financial industry as he prepared for his first meeting with Barack Obama since he became US President.
Speaking to National Public Radio in Washington, Mr Brown said it was time to “clean up the banking system” and create international standards on banking transparency, accountability and pay.
Shared rules would allow the international community to freeze out jurisdictions which do not live up to the standards and deal with so-called “shadow banks”, he said. And Global co-operation on restructuring the banking system would create the confidence to allow recovery from the economic downturn.
Mr Brown will later today become the first European leader to hold talks at the White House with Mr Obama since his inauguration in January.
The international economic crisis will be top of the agenda for the talks, with Mr Brown hoping to secure a clear signal that the President is ready to back an international economic rescue package when the G20 group of major economies meet in London on April 2.
Plans for a formal press conference following the talks have been downgraded by the White House to a brief appearance before the cameras by the two men inside the Oval Office.
Mr Brown will on Wednesday issue a plea for America to resist protectionism as he addresses both houses of Congress.
Ahead of the meeting, he spelt out his message in his interview with National Public Radio’s Morning Edition - the most listened-to radio news programme in the US - in which he predicted that recovery from the economic downturn could come “with some speed” if nations around the world are prepared to work together to restore confidence in the banking system.
Mr Brown declined to say when he thought the economy would return to growth.
But he said: “This is a global problem. It needs global solutions. There is a global banking collapse that we are dealing with.
”If we could have the same standards and the same rules that we are about to apply in the USA and in Britain to apply to other countries around the world, the same standards of disclosure and accountability and remuneration, I think the confidence in the banking system will be restored.”
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