On the Politics Show, Sunday 28 September 2008, Jon Sopel interviewed Yvette Cooper, the Chief Secretary to the Treasury.
JON SOPEL: The Chief Secretary to the Treasury, Yvette Cooper, joins me now from Leeds. Yvette Cooper, I'm very grateful to you for joining us on the Politics Show.
YVETTE COOPER: Good afternoon Jon.
JON SOPEL: As things stand, what is the status of the Bradford and Bingley.
YVETTE COOPER: Well the Chancellor is going to make a full statement on this before the markets open tomorrow morning and negotiations are still underway at the moment, so there's a limit to what I can say right now. But clearly, as people know, there have been concerns for some time about the Bradford and Bingley business model and the position they've got themselves in to and we've been very clear that the priority is to make sure that depositors, ordinary savers are properly protected. But also, that we can support the financial stability of the banking system as a whole, so we will set out further details before markets open, but as I said, we are very clear, financial stability has got to be protected but so too have ordinary savers.
JON SOPEL: Sure, essentially, it has been nationalized.
YVETTE COOPER: Well, as I said, there is a limit unfortunately to what I can say at this stage. We will set out those further details but you know, we have a full range of, of work that's been underway and I think it is important that people understand, given the debates on this, that really what the Conservatives have been saying, what George Osborne and David Cameron have said about this today is completely incoherent and irresponsible and really, I think frankly, does not understand the nature of what's at risk here and the nature of the way in which the financial system is operating under the pressures of the credit crunch.
JON SOPEL: I know there are limits to what you can say. Just to push it a tiny bit because people obviously watching at home, want to know that their deposits are safe. If you are able to come on and say to us their deposits are safe, then presumably it does mean that in some form or other, the government has stepped in.
YVETTE COOPER: Well, certainly, the government is stepping in, as part of the process and part of the discussions over the weekend and that's the right thing for a government to do under the circumstances. What ? as I also said, we are very clear that depositors and ordinary savers must be properly protected and they will be, as part of the arrangements we'll set out, but we will need to wait for the Chancellor's statement for the full details of the way in which we will take this forward.
JON SOPEL: And of course people will watch that very closely. But people saw the housing downturn coming months ago, surely you and the regulators, should have stepped in earlier, looking for a private sector solution, so that we're not putting taxpayers money at risk again.
YVETTE COOPER: Well in fact the company itself has been looking for alternative commercial solutions and there has been work, both at the Treasury but also with the Bank of England and with the regulator, to look at a range of alternative solutions and that work is continuing, as I speak. But we have to say here ? the Conservatives have been basically saying that we should have brought in new legislative powers in order to deal with failing banks, to give the Bank of England new powers to deal with failing banks ? that is exactly what we did. We did that in February and in March and the Conservatives voted against it.
David Cameron and George Osborne voted against the very powers they are calling for now. That's incoherent and irresponsible of them. I just think it means they simply do not understand the way the system is working. The other thing that I think they've been saying is that they'd effectively rule out nationalization on principle in any circumstances and again, that is completely irresponsible and just misunderstands the extent of the potential threats to the whole stability of the banking system, when banks face serious problems and the fact that in the end, when you face those kinds of threats to stability, you do need governments to be able to take action in the interests of ordinary savers and depositors across the country.
JON SOPEL: Yvette Cooper, I know this is Party Conference season and I know you want to have a go at the Conservatives. I just want to stick to government responsibility because there will be people who will say, Bradford and Bingley, the business model that they were engaged in, the fact that it was people on buy to let mortgages, by and large who were their customers, that this was vulnerable, therefore why wasn't the government doing more to find a private sector solution earlier.
YVETTE COOPER: Well the government has been involved in a series of different discussions in order to try and find a commercial solution for Bradford and Bingley and in addition, Bradford and Bingley itself has been seeking different commercial solutions, and as you will know, there have been other discussions round other banks, other building societies where they found market solutions to pressures and problems they faced as a result of the global credit crunch, which is hitting banks and financial institutions across the world.
And we've seen that for example the astonishing events that we've seen in the US over the last few weeks too, so of course that work is underway, that work has been underway, but it's equally right that you need in the end, a backstop, you need in the end .. (interjection) ? government ? to prepare to take action, when things become very serious in order to support financial stability.
JON SOPEL: The Prime Minister spoke when he was in the States a couple of days ago about ?an age of irresponsibility', isn't that the most damming self assessment of your period in office.
YVETTE COOPER: Well if you look at what we did after 1997, we introduced much tougher regulation in terms of putting it on the statute book, some of which was in fact opposed by the Conservatives at the time. I think there has been a problem with what started with basically dodgy lending in the US mortgage market, you know, lending to people who would never have got a mortgage in this country because of the different regulatory framework that's in place, but ? (interjection)
JON SOPEL: ? has happened on your watch, while you've been in charge.
YVETTE COOPER: Hang on. So what started as dodgy lending in the US mortgage market, what nobody properly understood, was the way that would infect financial institutions right across the globe and that's partly because we have a regulatory system that operates country by country. There's no properly regulatory approach to looking across countries' borders, the way in which our banks could end up being infected by decisions taken in the US ? (interjection)
YVETTE COOPER: ? actually ? Gordon Brown has been pursuing and promoting a new approach to global regulation for some time and it's right that we should do that and hopefully, there will be a much better reception for that from other countries now, as a result of the events that we've seen. There were also issues, the regulator in this country, when it did its report on the events around Northern Rock, identified problems there and has been taking a much tougher approach and a different approach as a result. So we have to look at regulation across the board. But the thing is, when we've got those international risks, you know, banks are lending to each other, who are lending back to each other again, with these very complex products that we're bundling up, those dodgy US mortgages, in the end, the banks didn't understand where the risks lay, the credit ratings agencies didn't either, the regulators didn't and that's why actually this whole system has to be cleared up and banks need to take responsibility for some of those dodgy decisions.
JON SOPEL: Yvette Cooper thank you very much indeed for being with us.
END OF INTERVIEW WITH YVETTE COOPER
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The Politics Show Sunday 28 September 2008 at 1200BST on BBC One.
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