The head of the FSA, Britain??s top banking watchdog, supports the idea of new global taxes on financial transactions, warning that a ??swollen? financial sector paying excessive salaries has grown too big for society.
Adair Turner, chairman of the Financial Services Authority, said the debate on bankers?? bonuses has become a ??populist diversion? and that more drastic measures may be needed to cut the financial sector down to size.
He also pointed out that the FSA should ??be very, very wary of seeing the competitiveness of London as a major aim?, claiming the city??s financial sector has become a destabilising factor in the British economy.
His comments were made in an interview in Prospect magazine published on Thursday.
Lord Turner is worried about a return to ??business as usual? in the banking sector, suggesting that new taxes may be necessary to curb excessive profits and pay in the financial sector. He floated the idea that a ??Tobin tax? ?? named after the economist James Tobin ?? should be considered for financial transactions in the future.
??If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit,? he said.
The FSA chairman also claims that parts of the financial services sector had grown ??beyond a socially reasonable size?, including derivatives and hedging and aspects of the asset management industry and equity trading.
