LONDON, Sept 25 (Reuters) - A top Church of England bishop has told bankers those who speculate on falling share prices in the financial sector are “bank robbers”.
Archbishop of York John Sentamu, the church’s second-ranking clergyman, targeted short-sellers who he said had driven Britain’s biggest mortgage lender HBOS HBOS.L to accept a takeover bid from rival Lloyds TSB (LLOY.L).
“To a bystander like me, those who made 190 million pounds ($353 million) deliberately underselling the shares of HBOS ... are clearly bank robbers and asset strippers,” he said in a speech to international bankers in London’s financial district on Wednesday evening.
Sentamu’s speech coincided with the publication of an article by the leader of the global Anglican church, Archbishop of Canterbury Rowan Williams, also calling for better regulation of financial markets.
In an article in the Spectator magazine, Williams said the crisis “exposes the element of basic unreality in the situation — the truth that almost unimaginable wealth has been generated by equally unimaginable levels of fiction”.
Short sellers — who sell borrowed stock hoping its price will fall so they can buy it back more cheaply — have faced strong criticism for aggressively targeting banks such as HBOS, driving down their shares and undermining investor confidence. Responding to the concerns, Britain and the United States have temporarily banned short-selling of financial stocks.
“We find ourselves in a market system which seems to have taken its rules of trade from ‘Alice in Wonderland’, where the share value of a bank is no longer dependent on the strength of its performance but rather on the willingness of the government to bail it out,” Sentamu said.
Williams also criticised lending and borrowing that was not about “equipping someone to do something specific, but exclusively about enabling profit”.
Probing the causes of the global financial market crisis, Williams criticised some financial transactions as the invisible “Emperor’s new clothes”.
A collapse in U.S. subprime mortgages — loans to borrowers with patchy credit histories — has sent shockwaves through the global financial system.
Banks bundled together subprime mortgages and then parcelled them out to investors who thought they carried little risk. As liquidity dried up, the value of these securities has been marked down sharply.
Some financial institutions have either collapsed, been nationalised or forced to sell out to stronger rivals.
U.S. President George W. Bush’s administration has proposed a $700 billion plan to bail out the U.S. financial system.
Echoing politicians such as French President Nicolas Sarkozy who have criticised financial market excess, Williams said there would have to be greater regulation of the financial sector.
The Association of Private Client Investment Managers and Stockbrokers, grouping more than 200 firms, hit back at the bishops’ criticism of short-selling.
“It is market abuse which is wrong and this can occur both when holding either long or short positions,” the group’s chief executive, David Bennett, said in a statement. (Editing by Frank Prenesti and Philippa Fletcher)