Ed Balls 'deeply sorry' over banking crisis
Ed Balls has said he is "deeply sorry" for the previous Labour government's role in the banking crisis.
Responding to the Vickers' report into UK banking, the shadow chancellor said governments and regulators should have foreseen the crisis.
But he urged "humility" from Chancellor George Osborne who, in 2006, had warned against "burdensome" City regulation.
MPs have debated proposals to make banks' retail and investment arms separate legal entities.
The Independent Commission on Banking, led by Sir John Vickers, has recommended that UK banks "ring-fence" retail banking - which includes customer deposits and small business loans - from investment banking, with the aim of putting UK banking "on a more stable and competitive basis".
It also says banks should set aside more money than they are currently obliged to, in order to cushion the blow of future financial crises. Changes should be made by 2019, it says.
Opening the Commons debate, the chancellor said the recommendations addressed the "British dilemma" of how the UK can remain an international financial centre while protecting taxpayers from having to bail out the banks, if they collapse. Mr Osborne said he planned to stick to the timetable recommended.
In his response, shadow chancellor Ed Balls - who as Labour's City minister championed "light touch" financial regulation - said taxpayers had been angry at irresponsibility by banks across the world which caused the crisis, but also at regulators and "governments who failed to foresee and prevent this irresponsibility".
"As I have said before, for the part that I and the last Labour government played in that global regulatory failure I'm deeply sorry," he told MPs.
"But let me say to the party opposite and in particular to the chancellor who accused me in 2006 of supporting 'burdensome complex regulation', which he said would make cross-border market penetration more difficult and threaten the global competitiveness of the City of London, perhaps the chancellor also needs to show a little more humility about that global regulatory failure."
He said Labour backed the Vickers recommendations on ring fencing and suggested the coalition was split on the issue, saying that while Mr Osborne supported them "in principle, we agree with the [Lib Dem] business secretary and support them in practice".
Mr Balls urged the chancellor to "provide clarity about its view of the commission' s recommendations as soon as possible and move rapidly to put in place the necessary legislation and rules".
Mr Balls urged the government to provide a detailed plan to implement the changes, and put as many reforms as possible into the current Financial Services Bill.
Mr Osborne responded by saying there would have to be another four years of apologies to make up for the "horrendous mistakes that were made".
But he rejected calls to apologise for his own stance on regulation at the time, saying he was in opposition while Mr Balls had been City minister when "Northern Rock totally lost control of its wholesale funding" and when the Royal Bank of Scotland launched its ill-fated takeover of Dutch bank ABN Amro.
Veteran Conservative MP Sir Peter Tapsell welcomed the "uncharacteristically guilt-wracked contribution" by Mr Balls, now shadow chancellor.
But Alistair Darling - Labour chancellor at the time of the banking crisis - told MPs: "Political parties on both sides of the House went along with a culture that lead to some of the problems we had to deal with and some of the shrillest voices calling for light touch regulation came from ministers now sitting on the Treasury bench."
The Commission was set up last year to look at how taxpayers could be protected from future banking crises after the credit crisis led to the government nationalising Northern Rock and part-nationalising Royal Bank of Scotland and Lloyds.
The ICB said its proposed reforms could result in a pre-tax cost of between £4bn ($6.4bn) and £7bn for Britain's banks.
The British Bankers' Association (BBA) said banks had already begun the process of making themselves safer.
"UK banks are well on the way to implementing the sweeping reforms already brought in and expected to be brought in by UK, EU and global authorities to make banks and the system safer and to ensure that banks can fail in the future with savers and taxpayers protected and the supply of finance to the economy maintained," the BBA said.