Commission on Banking Standard said that the bosses of the Britain Bank should be sent to Jail due to their wrong decision the situation of bailout arises.
Banking Commission: A new offense
The Commission asked the Chancellor George Osborne to consider the creation of a new offence “reckless misconduct in the management of a bank”. If this would have been considered as an offence after the financial crisis, there would have been many bosses who would have faced the charge.
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After the Libor scandal, Mr. Osborne formed a parliamentary commission to bring about changes. The commission said that the senior authorities were not ready to accept their fault, which was “dismal”. A new rule should be made, according to the commission, which should force the authorities to take the blame if they have made mistakes.
A new licensing policy should be formed for the bankers, according to the suggestion in the report. The new policy should have stringent rules to put penalties on those traders and branch staff who fraudulently sell the financial products. The banks should be under the supervision of Britain’s financial watchdogs.
As per the report of the commission, the hike in the fines is also proposed on the wrongdoing banks and bankers. The fines norms are similar to those levied by the American authorities over HSBC Holdings plc (ADR) (NYSE:HBC), which amounted to a record fine of approximately $2 billion.
The new proposed rule will require the top bankers to make clear that how they are not involved in violating the rules and why are they not responsible.
In case of switching the job, the banker should put his signature on all the risks, which the new person joining will have to face. If the outgoing boss does not sign then he could lose deferred bonus money for a maximum of 10 years.
Leaders lacked responsibility
Mr Osborne will not prepare a strict timetable and will thrust upon the fact that the taxpayers should get their money back. Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) (AMS:RBS) was bailed out by the last government after spending £45 billion, and Lloyd was bailed out for £20 billion. The report said that the most discouraging was the excuse of ignorance made by the authorities who were heading the bank. According to the report, the leaders lacked the sense of responsibility.
It says this was “not always accidental”, accusing leading bankers of “donning the blindfolds”.
Credit rating agency Standard & Poor said last week that the US government will most probably not bailout the big banks if another financial crisis comes up. The holding company creditors will bear losses if the banks fall.
A few months back, U.K.’s Treasury chief hinted that new regulations will empower regulators to split up banks. Since last year, Bank of England has been favoring splitting up large banks in the nation, which will help to prevent future financial breakdowns.