October 26, 2009 / 1:02 PM / in 8 years

Bank of Canada raps insensitive financial industry

OTTAWA (Reuters) - Bank of Canada Governor Mark Carney delivered a blunt rebuke to the global financial industry on Monday, saying it had shown insensitivity over high compensation and calling it to get on board with reforms.

<p>Bank of Canada Governor Mark Carney speaks during a news conference upon the release of the Monetary Policy Report in Ottawa October 22, 2009. REUTERS/Chris Wattie</p>

“Relief is in danger of giving way to hubris,” he said in the prepared text of a speech he was giving in Montreal. He said the clear priority of the public sector was for banks to conserve their earnings to expand credit formation.

Carney said the industry should be in no doubt that capital requirements are going up and those who pre-fund those requirements -- rather than paying themselves handsomely -- will be in the best possible position over the medium term.

“It would be a mistake to underestimate the determination of G20 leaders to reshape the financial services industry,” he said. He added that risks must be returned to, and borne by, the private sector.

“The financial system must transition from its self-appointed role as the apex of economic activity to once again be the servant of the real economy,” he said, calling for a change in the industry’s attitude. Carney also repeated the central bank’s economic outlook, including the view that the current strength in the Canadian dollar would more than fully offset favorable developments since July.

Reporting by Randall Palmer; editing by David Ljunggren

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