Ministers says never again to public-funded bank bailouts

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

The seminar at 11 Downing Street will be 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.

Writing in The Guardian today, 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."

Lord Myners said the meeting would "address 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."

Today's meeting will explore ways to "shift the burden of financial sector support from the public to the private sector", he said.

Plans under discussion will include a mandatory global insurance fund to support the sector in times of stress, innovative contingent capital instruments and a "Tobin tax" on all financial transactions, of the kind floated by Prime Minister Gordon Brown at the recent G7 summit in St Andrews.

Today's meeting follows US president Barack Obama's announcement that he will impose a levy on American-based banks to repay the billions of taxpayer dollars spent bailing the sector out.

Chancellor Alistair Darling yesterday stressed the importance of co-ordinating any change in regulations globally, telling the Sunday Times: "If everyone does their own thing it will achieve absolutely nothing. The banks are global - they are quite capable of organising themselves in such a way that if the regime is difficult in one country they will go to another one and that doesn't do anyone any good."

TUC general secretary Brendan Barber urged representatives at today's seminar to back a transaction tax on banks.

"This debate must look further than just the direct costs of bailing out the banks either during the financial crash or any future crisis," said Mr Barber.

"The costs of the recession go far wider - both to taxpayers and the millions who have lost their jobs or livelihoods as a result of this finance-driven downturn.

"A financial transactions tax must be at the top of the agenda for today's seminar. This is by far the best way to raise serious money from the finance sector, not just to make good the damage they have already done, but to stop future deep cuts in spending both in the UK and elsewhere."