Borg: US financial institutions ‘reckless’

Borg: US financial institutions 'reckless'
Anders Borg, Sweden’s Minister of Finance, has slammed the culture of “greed” exemplified by US financial institutions and its role in precipitating the current financial crisis.

“It’s clear that American financial institutions have been reckless with other people’s money,” said Borg in an interview with the Dagens Industri newspaper on Tuesday.

“We ought to make sure we don’t encourage a culture with bonuses and a setting of salaries which encourages reckless risk-taking.”

Borg called for the world financial markets to “review regulations” when the crisis has passed.

“There is no doubt that the global economy, including Sweden and Europe, has been affected by a raw greed and reckless risk-taking. It’s something that we must remain skeptical of in the future,” he said.

Borg reiterated that the current financial situation is “serious” but that Sweden’s banks remain “strong” in the face of growing financial uncertainty.

“It affects economies around the world and also in Sweden. But it’s very hard to determine how this sort of financial uncertainly affects things that matter to ordinary people, how things are going in the labour market, and how much our companies can sell,” he said.

Borg added that uncertainty will likely continue to grow as other European countries have had to take action to mitigate the effects of the crisis.

Nevertheless, Sweden and its banks are not in any grave danger for the moment, according to Borg, and the country is well prepared to take action if necessary.

“We have a surplus in our public finances. That gives us the ability to provide stability in this type of situation,” he told the newspaper.

“For now we have a satisfactory level of financial stability. Swedish banks remain strong in this type of situation.”

Borg also said that Sweden was ready to use its budget surplus to help ailing foreign banks in coordination with other countries if the need arose.

“If we end up in a situation where banks which are active in Sweden are affected, then we’ll act together,” he said.