Britain's Treasury chief Alistair Darling told his party's annual convention Sunday that Britain would not protect businesses that make bad judgments -- despite a billion-dollar rescue of a struggling bank.
A run on deposits at Northern Rock last week, the first major financial jitters since Prime Minister Gordon Brown's Labour Party took office in 1997, has called into question the new leader's handling of the economy.
Customers formed long lines for days outside Northern Rock branches to withdraw savings, and the bank has absorbed a reported 3 billion pounds ($6 billion) in publicly funded loans to stave off collapse.
Darling said Britain needed new regulation to protect depositors, saying there were lessons to draw from the episode.
"No government should be in the business of protecting executives who make the wrong call or bad decisions," he said. "My job is to protect ordinary savers, so we need to strengthen protection."
Darling told The Times of London on Friday that he was considering U.S.-style deposit insurance, which would protect customers' money in the event of their bank's collapse.
Brown said Sunday that woes at Northern Rock were a direct result of the credit crisis in the U.S., saying it had prompted turmoil across Europe.
"There was a time when a small bank in America got into trouble it was bad news for that town, or state, but nowhere else," Darling told delegates. "But today, when a Florida householder defaults on his mortgage, the effects are felt not just in America but across the world."
Troubles at Northern Rock became public Sept. 14 when the Bank of England announced it had made funds available to the mortgage lender because it had trouble securing loans from other banks, many still smarting from the collapse of the U.S. subprime mortgage market.
Bank of England Governor Mervyn King was blamed by lawmakers for failing to prevent a run on deposits. Legislators claimed he should have announced earlier his plans to inject funds into the longer-term money market.