Savings Guarantee A Necessary Sticking Plaster But Deeper Wounds Remain - Cable

11.28.00am BST (GMT +0100) Sat 22nd Sep 2007

Commenting on Alistair Darling's announcement that he is considering guaranteeing people's savings held in a bank or building society up to £100,000, Liberal Democrat Shadow Chancellor, Vince Cable MP said: "The Chancellor's plans to guarantee bank deposits up to £100,000 is a necessary sticking plaster to stop bleeding from the banking system, but there are much deeper wounds that need properly addressing as soon as possible.

"One key question, as yet unanswered, is whether the Government is proposing that the guarantees to savers in the banking system will be more or less generous than the guarantees given to savers in, for example, pension funds.

"It would be fundamentally unfair and destabilising if there was a big difference in the level of generosity.

"Alistair Darling has taken a useful first step to restore stability but the bigger question remains as to whether the Government is willing to tackle the behaviour of the banks in general.

"In particular their risky investments in complicated financial instruments and the reckless lending of some banks in the UK mortgage market, with multiples of income and loan to value ratios that invite disaster if there is any slow down in the British economy or fall in house prices."