Minister says never again to bank bailouts by the taxpayer

The peer was hosting a meeting in London of the world's biggest economies and international financial regulators yesterday to discuss measures to prevent future excesses in the banking industry.

The seminar at 11 Downing Street was attended by officials from each of the G7 nations, as well as the World Bank, International Monetary Fund, Bank of England and Financial Services Authority.

Lord Myners convened the meeting to seek solutions to the problem of banks which become "too big to fail" and to discuss the best way to ensure financial institutions will not need taxpayer bailouts in any future crisis.

He said taxpayers were right to be angry when banks which had been bailed out with their money paid out large bonuses and refused to lend to businesses in the real economy. And he said banks could no longer expect to receive handouts as if they were charity cases.

"It is the fundamental unfairness of the rescue that should be the cause of lasting anger," said Lord Myners.

"When recessions hit, businesses get into trouble. And some businesses fail, taking many jobs with them. Banks, however, were for the most part protected from the rules that applied to everyone else – and protected at great cost to public funds."

He said the meeting was "addressing this fundamental inequity at the heart of global capitalism".

"If a bank is judged to be too big or too important to fail, it should be the banks and their owners, not taxpayers, who pay the price for saving it," he said.

"Any institution that thinks it will always be bailed out when the going gets tough is an inherently dangerous institution. If you never have to face the consequences of bad decisions, you are less likely to be as careful as you should be when making important choices...

"If banks are to enjoy even a small hint of implicit underwriting from the state, they should pay for it.

"None of us can get insurance for our homes or our businesses for free – we pay a premium for it. And so should banks.

"We need to re-examine an economic model that seems to work much better for investment banks than for businesses and workers."