Andrew
Haldane said protestors were correct to focus on inequality as the chief reason
for 2008 economic crash
The Guardian, Phillip Inman, economics correspondent, Monday 29 October 2012
 |
| Occupy's voice had been 'loud and persuasive' said Andrew Haldane. Photograph: Rex Features |
The Occupy Movement has found an unlikely ally in a senior Bank of England official,
Andrew Haldane, who has praised protesters for their role in triggering an
overhaul of the financial services sector.
Haldane,
who oversees the City for the central bank, said Occupy acted as a lever on
policymakers despite criticism that its aims were too vague. He said the
protest movement was right to focus on inequality as the chief reason for the
2008 crash, following studies that showed the accumulation of huge wealth
funded by debt was directly responsible for the domino-like collapse of the
banking sector in 2008.
Speaking at
a debate held by the Occupy Movement in central London, Haldane said
regulations limiting credit use would undermine attempts by individuals to
accumulate huge property and financial wealth at the expense of other members
of society. Allowing banks to lend on a massive scale also drained funding from
other industries, adding to the negative impact that unregulated banks had on
the economy, he said.
The
hard-hitting speech is unlikely to find a warm welcome in the Square Mile,
which is keen for bank lending to recover to its heady pre-crisis levels and
bring accompanying profits and commissions. Lending to individuals and
corporations in the UK has fallen to a fraction of the levels seen in 2007 when
few banks checked the income status of individual borrowers or the risks being
taken by corporate customers before offering a loan. The Bank of England will
impose stricter lending rules on banks next year when it takes over regulation
of the industry from the Financial Services Authority.
Haldane
said Occupy's voice had been "loud and persuasive" and that
"policymakers have listened and are acting in ways which will close those
fault-lines" with a "reformation of finance that Occupy has helped
stir". He said inequality was fuelled by bank lending for speculation on
property and other assets that enriched some in society at the expense of
others.
"The
asset-rich, in particular the owner-occupying rich, became a lot richer.
Meanwhile, the asset-less and indebted fell further behind. In other words, the
pre-crisis asset price bubble acted like a regressive tax," he said.
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