Philip Hammond says banks were not solely to blame and those who borrowed too much in the boom were ‘consenting adults’
Consumers and homeowners who borrowed too much during the economic boom must “accept responsibility” for their part in the financial crisis, a cabinet minister has said. The defence secretary Philip Hammond claimed banks were not the only ones responsible for the crash, adding that those who took out loans, spent on credit cards and accepted large mortgages were “consenting adults”. Hammond said the banks “had to lend to someone”.
His comments came after Bank of England governor Sir Mervyn King said he should “have shouted from the rooftops” about the looming financial crisis. But Hammond said those who borrowed money must also accept responsibility.
Hammond told the Daily Telegraph: “People say to me, ‘It was the banks’. I say, ‘hang on, the banks had to lend to someone’. People feel in a sense that someone else is responsible for the decisions they made. Of course, if banks don’t offer credit, people can’t take it. [But] there were two consenting adults in all these transactions, a borrower and a lender, and they may both have made wrong calls. Some people are unwilling to accept responsibility for the consequences of their own choices.”
He added: “We allowed our expectations to run away with us. We started living a lifestyle both in private consumption and in public consumption that we could not afford. We borrowed to top it up … now the day of reckoning has come and we are adjusting. Households were spending more than they earned. That’s why household debt rose.”