"Government must take control of the banks"

GMB Press release January 21st 2009

Paul Kenny, GMB General Secretary commenting on today’s rise in unemployment said:

“Unlike some GMB see no signs of green shoots. This “bankers recession” is going to get a lot worse. GMB officials are talking to employers all over the country who are planning layoffs unless the flow of credit resumes. Putting taxpayers money into the banks is not working in terms of getting that money to companies. A change of approach is urgently needed to save job losses in the pipeline. As an emergency measure the government must take control of the banks already in state hands and use them to do this job.

The lesson has to be learned quickly that banks are just another public utility that the economy requires to function effectively. Like all the other public utilities they need to be under strict control of the state and be run for the benefit of UK citizens. We need them run by managers who know what they are doing and we need to clear out the irresponsible gamblers that brought about the recession.

David Cameron, with his debt poster campaign, is well wide of the mark on what is the problem in the UK economy. He utterly fails to recognize that most of the excess borrowing has been undertaken by banks, private equity companies and hedge funds – and not by households and non-financial companies who are now being starved of credit . He also fails to recognize the massive damage to the economy caused by speculation in oil and commodities during 2008.

GMB warned that financial conditions in the City had become dangerously unstable and drastic reductions in debt and leverage were required. Two years ago GMB called for tax relief on interest payments to be abolished to discourage excessive borrowing by the financial sector and for fair taxes. We also call for action to outlaw speculation in energy markets and for a regulator with powers to cut prices. that action is still needed.”