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CBI warns against rash banking reform
10 March 2008
Northern Rock depositors and shareholders could be excused for wanting a strong regulatory response in the wake of the bank's troubles, but such a move would be premature, according to a leading British business figure.
Richard Lambert, the director general of the Confederation of British Industry (CBI), said that the UK should look to the United States in the aftermath of the Enron collapse in 2002 to see the negative effect of rushing through legislation too soon after a crisis.
He said that any 'institutional changes' would be very significant and that the government needs time to reflect about what went wrong at Northern Rock.
"If we get the answers wrong, the long-term impact of Northern Rock will be very serious. But if we get them right, the UK has the capacity to emerge from all this actually strengthened by the experience," he told a gathering in the City of London.
"You are now considering a series of seismic changes in the British banking system. Don't rush things," Mr Lambert added.
Among the changes being mooted are ensuring banks have a greater level of liquidity in the wake of the 'run on the bank' at Northern Rock last year. 
