CBI chief says, 'Don't destroy banks over Libor'

John Cridland, director general of the CBI, has warned that punishing banks over selling Libor-related products, as well as for the rate-fixing, could have dire consequences. 'It would be a dangerous precedent if banks were to be held responsible for products sold that related to Libor,' he says.

by Rebecca Burn-Callander
Last Updated: 09 Oct 2013

It takes a brave man to stick his head above the parapet in defence of the banks at the moment. And Cridland, head of business lobbying group the CBI, is head and shoulders out of the safe zone.

Cridland has made the salient point that if the banks are taken to task over all the financial products sold over the years that are linked to Libor, then it could do irreparable damage to the UK banking industry. 'Banks must be held accountable for the manipulation of Libor and the Wheatley Review has set out a comprehensive and compelling case for reform,' he says. 'But hindsight is a wonderful thing. It would be a dangerous precedent it banks were to be held responsible for products sold that related to Libor.'

His remarks have astounded many in government and the business community. 'I find his thinking rather bizarre,' Guto Bebb, Conservative MP, told The Telegraph.

Cridland has become an unlikely champion for the banks, also calling for government to introduce a deadline for claims for payment protection insurance to stop banks haemorrhaging money in compensation. And while this is an unpopular stance, it could be a pragmatic one. While the banks must rectify their mistakes and pay for their wrongdoing, driving them to the wall may not be in the country's best interests long term...

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