http://www.guardian.co.uk/world/2008/oct/07/sweden.banking.regulationBank executives responsible for reckless lending should be punished under criminal law and face fines, according to a politician who rescued Sweden's banking system from collapse in the 1990s.
In an interview with the Guardian, Bo Lündgren, director general of Sweden's national debt office, the country's financial regulator, said US proposals to cap bankers' pay as part of the $700bn bail-out did not go far enough.
He said laws should be introduced in the US and Europe making it a criminal offence for bankers to lend irresponsibly. He also proposed that banks should be made subject to legally-binding guidelines on lending. Lündgren was Sweden's finance minister in the early 1990s when a property slump put the economy into recession.
"In the US, the bail-out's condition on capping executive pay is for show," he said. "Legislation should be introduced so that if any bank is lending recklessly, executives could be punished by criminal law or be forced to pay damages."
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He said the UK should not follow the US example of buying up banks' toxic assets without taking stakes in them. "You will never win an election for measures to support banks but taking stakes in banks would be more popular. This is because taxpayers stand to gain in the future if the banks' share prices rise."