Bankers should face a criminal investigation to see whether they should be prosecuted for their role in causing the financial crisis, according to a Birmingham MP.
Lynne Jones (Lab Selly Oak) called for the Crown Prosecution Service and the Financial Services Authority, the official watchdog of the finance industry, to look into the way “sub-prime” mortgages were sold.
It follows the announcement that the FBI is to investigate US firms for alleged mortgage fraud, after it was claimed that executives provided “misinformation” to the public.
Investment bank Lehman Brothers, insurer AIG and mortgage lenders Fannie Mae and Freddie Mac are to be the subject of inquiries.
Dr Jones is one of 18 MPs to sign a Commons motion calling for an inquiry into the behaviour of senior employees at Northern Rock and Bradford & Bingley, both of which have been nationalised.
The motion states: “This House believes that the financial crisis is the result of reckless overtrading by banks and their establishment of special purpose companies to evade regulations.”
The MPs said in the motion that they noted that “unlike in the United States, no bankers in the United Kingdom have been investigated for possible criminal actions in the selling of sub-prime mortgages and other toxic financial products”.
They called on the Crown Prosecution Service and the Financial Services Authority “to co-operate in investigating possible complicity of senior employees of Northern Rock and Bradford & Bingley banks in trading that was irresponsible and possibly illegal”.
Dr Jones said the first priority was to strengthen the economy rather than to determine who was to blame.
But the time would come when people wanted to know how the economy had got into such a mess, she said.
“Quite clearly, there was a lot of irresponsibility. I was fed up of getting unsolicited junk mail inviting me to borrow money, like a lot of other people,” she said.
“When I started buying a house, you had to have a reasonable deposit in order to borrow, and you were only offered a sensible amount, based on your salary. But this seems to have changed.”
She added: “Once we get through this crisis, people will want to look at what happened and see who was responsible, and what kind of rewards they were receiving at the time.”
The MP said she welcomed the Government’s willingness to intervene in the banking sector, which has included part-nationalisation of the banks for £50 billion of taxpayer-funded investment.
“What we have seen is that the social democratic model, in which the state plays a role, is more resilient than the Anglo-Saxon model.”
MEP Neena Gill also called for “fat cat” managers to be held to account, as she spoke in the European Parliament.
Ms Gill (Lab West Midlands) called for the European Union to play a larger role co-ordinating the responses of national governments to the credit crunch.
She said: “We also need to recognise that this crisis has been brought about by market failures and a lack of appropriate legislation, and as a result of the decisions taken by a few selfish individuals on fat cat bonuses that will affect the lives of millions, even billions of people around the world.
“We need to ensure that such criminal negligence can never reoccur, and we need those responsible to be held to account for the full weight of their actions.”