Dr Adam Posen, a member of the Bank of England’s Monetary Policy Committee, has lashed out at banks for not lending enough to small and medium-size enterprises, calling them ‘reluctant risk adverse jerks’.
Talking to BBC Radio 5, Posen argued that more should be done to boost loans to SMEs and questioned whether banks were focusing on the ‘wrong risks’ and ‘overreacting’ in the wake of the 2008 credit crisis.
Businesses are now suffering as a result, said Posen, because banks are cutting back on forms of lending that could be productive.
He said: “We have had 100 years in the UK where people have been complaining about the inability of the City to finance domestic industry and domestic business. Looking across national data, the UK does just not look good on this. Throw in the crisis and the cutbacks to lending to small and new businesses are enormous.”
Posen’s remarks were made before a lecture he gave at a Trade Union Congress (TUC) seminar yesterday to coincide with the release of a new banking report.
According to the TUC’s Banking after Vickers report, a radical banking reform is essential if banks are to double the current lending level needed to meet UK investment needs.