Gordon Brown: Cheating bankers should go to jail

Posted On: 
31st October 2017

Cheating bankers should be stripped of their huge bonuses and sent to jail, according to Gordon Brown.

Gordon Brown says current laws do not go far enough in cracking down on rogue bankers.
PA Images

The former Prime Minister said failing to lock up rogue financiers - as they have done in the likes of Iceland and Spain - risked giving "a green light to similar risk-laden behaviour" by others.

New extracts from Mr Brown's autobiography also reveal how he was ready to quit Downing Street in 2008 if his attempts to bail out stricken RBS and Halifax Bank of Scotland had failed.

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The Labour government provided £50bn to prevent the banks from going into liquidation as the global financial crash struck 10 years ago.

But Mr Brown said emergency measures put in place to prevent a repeat of the crisis had fallen short.

He said: "Little has changed since the promise in 2009 that we bring finance to heel. The banks that were deemed ‘too big to fail’ are now even bigger than they were."

The former Labour leader added: "If bankers’ conduct was dishonest by the ordinary standards of what is reasonable and honest, should there not have been prosecutions in the UK as we have seen in Ireland, Iceland, Spain and Portugal? 

"While the new criminal offence of reckless misconduct in the management of financial institutions is intended to deter irresponsible management decision-making within banks and building societies, defendants will likely argue that their institution was in difficulty more because of fluctuations in interest rates or exchange rates, inter-bank illiquidity, or even regulatory changes imposed by government, rather than their own conduct. 

"The Fraud Act 2006, which criminalises fraud by false representation, failing to disclose information and abuse of position, may be more relevant. If bankers who act fraudulently in this way are not put in prison with their bonuses returned, assets confiscated and banned from future practice, we will only give a green light to similar risk-laden behaviour in new forms."

Mr Brown also said former RBS boss Fred Goodwin should have been stripped of all the bonuses he accrued during his time in charge of the bank, and banned from ever being a company director again.

Elsewhere in the book, the former Prime Minister recounted how he and Alistair Darling tried to piece together the bank bailout - and how he feared it would cost him his job.

"I went to bed at midnight on Tuesday, 7 October, with my mobile phone next to me in case of any further disasters," he said. "I had decided to announce the plan at 7am the following day, and that we would phone other national leaders and finance ministers immediately beforehand and afterwards. 

"When I got up the next morning I told Sarah that she would have to be ready to pack our things for a sudden move out of Downing Street. If what I was about to do failed, with markets collapsing further and confidence ebbing from Britain, I would have no choice but to resign. As I walked into the office, I didn’t know if I’d still be there at the end of the day."