LONDON - Britain on Monday led a push for a global deal on reforming the banking sector that could include widespread agreement for an extraordinary tax on lenders amid concerns that the US may go it alone.
Paul Myners, the minister charged with overseeing Britain's financial services sector, said international agreement on the issue 'would be the most important legacy' of the state-led response to the financial crisis.
The comments by City Minister Myners in The Guardian newspaper came as he chaired a seminar on Monday on the practicality of levying extraordinary taxes on financial institutions.
The London meeting was arranged to canvass opinion among officials from G7 nations, the IMF, World Bank and academics on the 'practical challenges' of 'implementing insurance levies', according to the Treasury.
British Prime Minister Gordon Brown has urged leading economies, including the United States, France and Germany, to consider a tax on financial transactions to make banks more accountable to society.
Mr Brown has pressed the idea of a so-called Tobin Tax but said nations could also consider an insurance scheme aimed at preventing a repeat of the multi-billion-dollar state bailouts of banks caused by the financial crisis.
A Tobin Tax was originally proposed in 1971 by Nobel Prize-winning economist James Tobin as a means of reducing speculation in global markets, but Mr Tobin himself later doubted his own idea was workable.
US President Barack Obama recently proposed levying a fee on top US banks to raise US$90 billion in 10 years to recoup 'every single dime' of the recent Wall Street bailout.
And in a bid to radically change the financial landscape, Mr Obama last week announced plans to limit the size and scope of US banks, saying they would 'never again' get so big that taxpayers have to bail them out.
In opening comments to the London seminar on Monday, Mr Myners said it was 'important that any costs that governments incur for interventions in the financial sector are distributed more fairly.
'There is clearly a strong rationale to charge for the externality caused by the financial sector and financial institutions should shoulder the responsibilities for losses they may face.'
But Mr Obama's proposals have failed to win over Britain.
On Sunday, Britain's finance minister Alistair Darling expressed scepticism at the president's banking reform plans, saying they would not have prevented the financial crisis and warning they risk undermining the global consensus.
Writing in The Guardian daily, Mr Myners said that 'finding a new way to keep taxpayers from shouldering the bill for future bailouts will be far from easy, but the UK will continue to lead the international effort to do so'.
He added: 'A global agreement on this issue would be the most important legacy of our response to this crisis, and it is a prize all governments have a duty to pursue.'
The IMF is meanwhile due to publish a report in April expected to outline what it considers to be the best form of extraordinary taxation on financial institutions. -- AFP
It's very easy to point fingers at banks that caused the melt down of the world economy in 2008. Though I admire Obama but I think he has gone too far this time. It is very easy to get popular by taking measures like this but I think he has overdone it. To argue it the other way round, since this crisis was originated from the US, should we recover every dime from them?
What about the rating agency, the Fed(Alan Greenspan), over-consuming American, over saving Asians, bankers of the world(Japanese Yen) that funded carry trade? etc ...... ....... ......
Should Obama administration continue to be unreasonable, they are going to choke innovation and restricting lending growth that eventually slowing the economy recovery. I think the most pragmatic thing to do now is to revive lending and ensuring bank has proper identification of counter parties, regulate derivative products like CDS, MBS and etc. If he is serious to show his righteousness, just nationalize them and do whatever he pleases.