Monthly Archive: August 2011

BBC News – Banking reforms will go ahead, says Vince Cable.

Business Secretary Vince Cable has said banking reforms will go ahead despite a row over the speed of the changes.

CBI director general John Cridland said taking action now could starve businesses of the capital they needed and damage the economic recovery.

But Mr Cable said that suggestion was “disingenuous in the extreme”.

Ensuring taxpayers are not liable for any future losses or bank collapses, and ring-fencing banks’ retail operations, are among the proposals.

Anxieties about the big financial institutions were “all the more reason for grappling with this issue”, Mr Cable told The Times.

The Liberal Democrat minister said: “It is disingenuous in the extreme to use the current context to argue against reform.

“Banks are in a way trying to create a panic around something which they know has got to happen.

“The governor of the Bank of England and many other people have been arguing that we have to deal with the too-big-to-fail problem.

“We can’t have big global banks with balance sheets bigger than British GDP underwritten by the taxpayer; this can’t go on and it has got to be dealt with.”

‘Radical slowdown’

The Independent Commission on Banking’s final recommendations are due on 12 September.

In its interim report published in April, the banking commission – chaired by former Bank of England chief economist John Vickers – recommended ring-fencing banks’ retail operations from their investment banking arms.

It also said that taxpayers should not be liable for future losses, and that depositors should get their money back before creditors.

But Mr Cridland told BBC Radio 4’s Today programme there had been “a radical slowdown” in the economy since that interim report and there was now real concern about the impact of any reform.

“We’re going to have a major problem if growth stagnates, and at that point, my businesses being able to get cash from their banks is critical,” he said.

“Anything which makes it harder for banks to keep the wheels of the economy well-oiled is not good timing.”

Andrew Lilico, from financial consultancy Europe Economic, agreed that plans to force banks to hold more capital in reserve – rather than lend it out – could “tip us into a great depression”.

But he said pressing ahead with reform now need not be a problem if the changes introduced were the correct ones.

“If you have the right sort of reforms… which in this case ought to be means of making it easier for banks to be allowed go bust safely without causing problems for taxpayers or the wider economy, you should introduce them at the earlier possible opportunity.

“In fact, it’s amazing that the crisis has gone on since 2007 and serious reforms have not yet been introduced.”

No obligation

The Vickers commission was set up by the government last June to review the UK banking sector after bailing out some of the UK’s biggest banks during the financial crisis.

Prime Minister David Cameron said the government wanted to wait for the full report before responding to its recommendations.

And he said: “I think the key thing we want from our banks is really two things. First of all, to be lending into the real economy so we can support growth and jobs.

“But the second thing we do need to make sure that our banks are not taking risks that put the economy at risk.”

British Bankers’ Association chief executive Angela Knight said banks should be allowed to “finance the recovery first, pay back the taxpayer next”, and only then set about reform.

“If more regulation remains at the top of the list, then this will only have the affect of risking the recovery which is so essential to our future,” she said.

The government is under no obligation to implement the Vickers recommendations.

Treasury sources say there have been no official discussions on when any changes might be brought in and have refused to promise legislation before the next general election.

There has been speculation the reforms could possibly be delayed until 2019, but ministers are expected to make their position clear by the end of the year.

BBC News – Gender pay gap ‘to last for another 98 years’.

It will take almost a century for UK women managers to be paid the same as their male counterparts, a study says.

Female managers are now paid an average £31,895 per year, compared with males earning £42,441 for doing the same job, according to the report by the Chartered Management Institute (CMI).

Despite female pay rising more than men’s in 2011, the CMI said it will take 98 years to gain parity.

However, the CMI said junior female managers now earned more than males.

According to its survey, junior women managers now earn £21,969 on average, £602 more than men at the same level.

But for women managers as a whole, the CMI said the pay gap is wider in 2011 than 2010, rising to £10,546 from £10,000.

As a result, the number of years it says it will take women managers to achieve equal pay has risen from 57 to 98.

‘Damaging businesses’

The CMI added that female salaries had increased by 2.8% this year, compared with 2.3% for their male colleagues.

The CMI’s director of policy and research, Petra Wilton, said: “While CMI is delighted that junior female executives have caught up with males at the same level, this year’s salary survey demonstrates, yet again, that businesses are contributing to the persistent gender pay gap by alienating top female employees by continuing to pay men and women unequally.

“This kind of bad management is damaging UK businesses and must be addressed.”

Across the nations and regions of the UK, the gender pay gap is biggest in Northern Ireland, where on average, male managers are paid £13,793 more than their female counterparts, said the CMI.

It found that the Midlands had the next largest gap, £11,346, followed by London with £11,129.

Salaries are most equal in Wales, where the pay gap is £2,441, said the CMI.

‘Ongoing war’

To help close the gap, Ms Wilton said the CMI wanted the government “to scrutinise organisational pay, demand more transparency from companies on pay bandings and publicly expose organisations found guilty of fuelling the gender pay gap”.

However, the CMI said it was not calling for the imposition of quotas or for organisations to be forced to reveal staff salaries.

Its survey of 34,158 managers across the UK also found that more female managers (4.2%) were choosing to quit their jobs than their male colleagues (3.6%).

At the same time, exactly the same level (2.2%) of managers of both sexes had been made redundant.

Sandra Pollock, national chair of the CMI’s women in management network, said: “Too often managers are male and aged 45-plus, and we are fighting an ongoing war to ensure that professions attract people based on their talent, and not their age or gender.

“The research launched today does, however, show that we have won our first battle – it is wonderful to see that the gender pay gap at junior executive level has closed – and we hope this continues as this generation climb the ranks of management.”

‘Dragging feet’

Back in February, an independent report for the government told firms to more than double the number of women on their boards by 2015 or face government measures.

The report’s author, former minister Lord Davies of Abersoch, urged FTSE 350 companies to boost the percentage of women at the board table to 25% by 2015.

But he stopped short of imposing quotas, unless voluntary measures fail.

Lord Davies said on Wednesday that the progress he had seen since February had been “encouraging”, but more needed to be done.

“Many companies can be proud that they have set out their own targets towards achieving greater diversity on their boards, but there are others who are dragging their feet,” he said.

“The rate of female appointments since March is still well below the 25% target that my panel has set, with 47% of all FTSE 250 companies continuing to have all male boards.

He added: “There is more work to be done and the panel will be reconvening in the autumn to assess progress and agree next steps.”

Cable: US pressured EU to approve Oracle-Sun merger – Software – Technology – News – iTnews.com.au.

The US Government met with European competition officials to lobby on behalf of Oracle during its purchase of Sun Microsystems, according to leaked diplomatic cables.

The cables, released this week by whistleblowing site Wikileaks, reveal that the Obama administration had monitored the European Union’s investigation into the competition issues that could arise from the merger and tried to convince them to let the deal go ahead.

The EU had investigated the merger due to concerns for the future of Java and the open source MySQL database.

The cable noted that Oracle representatives were “unwilling or unable to make certain divestitures to satisfy the Commission’s concerns” and that without the merger Sun would “go bankrupt.”

The cable suggests the US Government lobbied on behalf of Oracle to prevent Sun from shedding any further jobs and to save face for the US Department of Justice’s Antitrust division, which had approved the acquisition months earlier.

“The Department of Justice/Antitrust views this matter as a high priority,” said the Deputy Chief of the US Mission to the European Union, Ambassador Christopher W. Murray.

“Its senior officials and investigative staff are currently engaging productively and intensely with their DG COMP [EU Director-General for Competition] counterparts, and are in close touch with Oracle and Sun, in the hopes of preventing a divergent outcome.”

One month later, another cable sent to the US Secretary of State Hillary Clinton, the USTR (United States Trade Representative), the US National Security Council, the US Departments of Treasury, Justice and Commercial and the Federal Trade Commission, went into great detail about the EU’s competition commissioner’s opinions on the open source software movement.

Anthony Whelan, chef du cabinet to Competition Commissioner Neelie Kroes told the US Mission to the EU that Kroes sympathised with “the argument that open source software is by definition pro-competitive, since the theory is that everyone has access to it and can contribute to improving open source programs” but was equally swayed by “subtle and complex counterarguments to this.”

Whelan was quoted in a second cable as saying that “in the dynamic, real marketplace in Europe, this open source argument needs to be examined.”

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BBC News – Minister snapped leaving No 10 with Afghan memo.

A senior minister has accidentally revealed a UK government briefing document “welcoming” the departure of Afghan President Hamid Karzai.

International Development Secretary Andrew Mitchell was photographed clutching the note as he left No 10.

It said the UK should “publicly and privately” approve Mr Karzai’s decision not to seek a third term in 2014.

In response, Foreign Secretary William Hague said the memo was “pretty low level”, adding “these things happen”.

Mr Mitchell was photographed leaving Downing Street following a meeting of the National Security Council – in which ministers discussed Libya, Afghanistan and a range of other issues.

The BBC’s Political Correspondent Robin Brant said Mr Mitchell immediately realised he had mistakenly displayed confidential briefing papers and told an aide “it is nothing top secret”.

‘Routine’

The document says: “Note that Karzai has publicly stated his intention to step down at the end of his second term as per the constitution. This is very important. It improves Afghanistan’s political prospects very significantly. We should welcome Karzai’s announcement in private and in public.”

Click to play

William Hague says Mr Mitchell was carrying a “low level briefing document”

It goes on to say: “Afghan perceptions of violence are very important for their confidence in their future, and for their readiness to work for the Afghan government.

“Have we got the strategic communications on levels of violence right?”

The document also discusses reforms to Afghanistan’s banking sector and a planned IMF visit to the country.

The Department for International Development said the papers were “of a routine nature”.

“They would have had a national security level marking of ‘restricted’ or ‘confidential’ if they contained anything of significant sensitivity,” a spokesman said.

Mr Karzai was controversially re-elected to a second five-year term in 2009 after an election which was marred by allegations of fraud and vote-rigging.

Troubled relationship

Under the terms of the Afghan constitution, Mr Karzai is not allowed to stand for a third term – which means he will stand down in 2014.

There had been speculation he would try to continue in office beyond that date but he has confirmed he will not be seeking a third term.

Asked about Mr Mitchell’s disclosure, Mr Hague said the memo was a “pretty low level briefing document within one department” and President Karzai had already made his intentions clear.

He added: “Of course we always look to presidents of a country, of all countries, to respect the constitution of their countries. It is as simple as that.”

Mr Karzai was controversially re-elected to a second five-year term in 2009 after an election which was marred by allegations of fraud and vote-rigging.

The Afghan leader’s relationship with the UK and US has often been fraught, with critics urging him to do more to tackle corruption within his government.

But Nato forces in Afghanistan have said significant progress is being made in building up the capacity of the Afghan army and police as they take over greater responsibility for security.

The UK plans to withdraw the majority of its 9,000 troops from Afghanistan by the end of 2014, when its combat mission will come to an end.

Mr Mitchell is not the first person to be caught unawares by photographers outside No 10.

Former senior Metropolitan Police officer Bob Quick was mistakenly revealed a secret terrorism document as he arrived at Downing Street in 2009.

He subsequently resigned, saying his position was “untenable”.

In other similar cases, Treasury minister Danny Alexander was pictured last year holding a memo detailing the forecast scale of public sector job cuts while, in 2009, the then Labour Cabinet minister Caroline Flint inadvertently displayed a document which talked of a “property crisis”.

Plan to slash National Oceanic and Atmospheric Administration’s budget by 30% could ruin its hurricane warning capability

Now might be a good time for Republicans to rethink their proposal to cut 30% from the existing budget of the National Oceanic and Atmospheric Administration (NOAA) – the agency responsible for tracking hurricanes.

NOAA says the Republican cuts will destroy its ability to warn of hurricanes five or 10 days out. That is crucial lead time to carry out the preparations and evacuations we have been seeing this weekend with Hurricane Irene.

Mississippi floods, the mid-Atlantic tornados, south-western wildfires and record heatwaves made 2011 a year of extreme weather events well before Irene hit.

But Republicans in the House of Representatives insist NOAA is a waste of money.

The $1.2bn (£730m) of cuts will force NOAA to delay replacing ageing satellites – meaning that it could go for up to 18 months without an eye in the sky at some time in the next five years.

“Whether the gap is longer than that depends on whether we get the money in the next budget,” Jane Lubchenco, the head of NOAA, told an audience in Denver earlier this month.

‘One of the most outrageous “open secrets” of U.S. government policy these days is that the Federal Reserve is still paying big banks not to lend money. And it’s doing that while screwing average Americans who have been responsible and lived within their means. Huh?’

Read more: Do You Realize That The Government Is Still Paying Banks Not To Lend…?