Oct. 27 (Bloomberg) -- Bank of England Markets Director Paul Fisher said he understands the public anger against banks that sparked the Occupy London protests and would probably have joined them when he was younger.
“If I were 17, I’d probably be camping out there as well,” Fisher, 53, said in an interview in Bloomberg’s London office yesterday overlooking the encampment on Finsbury Square. “One group earned an awful lot of money out of getting us into this situation, and you can’t help people feeling resentful about that, particularly if they see that sector continuing to earn large sums.”
Demonstrators inspired by anti-Wall Street protests in New York set up camps in London’s financial district to campaign against bank bailouts and cuts in government spending. Fisher, who backed the Bank of England’s move to restart bond purchases this month to help stave off another recession, said that while protests were a “natural reaction,” the crisis also demonstrated the need for a safe banking system in the U.K.
“What the crisis proves is how dependent we are on having a strong banking system,” he said. “And there is a risk that you do things to weaken the banking system if you want to punish them. What we need to do is get the banks back to being safe and strong.”
Fisher said the risk of a credit crunch, three years after the collapse of Lehman Brothers Holdings Inc. plunged the world into a financial crisis, prompted his decision to vote for new stimulus on Oct. 6. He also said making the banks safe should be policy makers’ “primary objective.”
“We also may want to deal with the social injustice of the compensation arrangements,” he said. “But our primary concerns should be to make the banks safe, because we need them there to support the real economy. We’re seeing the consequences of what happens if your banks are not strong and safe.”
Andrew Haldane, the Bank of England’s executive director for financial stability, said this week that the “behavior” of the financial system would be “improved” by changing how executives’ salary is calculated. He noted that the salaries of the chief executive officers of the seven largest U.S. banks rose from 100 times the country’s median household income in 1989 to 500 times in 2007.
--With assistance from Linda Yueh and Joanna Starritt in London. Editor: Fergal O’Brien
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