Osborne warns debt crisis could undermine recovery

Shadow chancellor George Osborne has called for emergency action to ban banks from paying big cash bonuses and force them to lend the money to hard-pressed firms and families instead. He also said Prime Minister Gordon Brown and Chancellor Alistair Darling's plans to ease the credit crunch and reform the banks had failed. In a speech at London's Docklands, Mr Osborne said that where firms needed to award bonuses to high-flyers to remain competitive they should be paid in new shares in the companies. The Conservative politician's call comes amid growing anger over Christmas-period handouts which are expected to run into billions of pounds in the City of London. He urged the Treasury and Financial Services Authority to threaten retail banks with a curb in taxpayer guarantees and liquidity support if they continue the cash bonus culture. Mr Osborne said: "We supported the bank bailouts to get banks lending again, not to support bankers' bank accounts. Yet the taxpayer subsidised profits are being used not to get lending going but to pay out massive bonuses again."

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ITN | October 26, 2009

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