'Millionaire bankers' blamed for credit crisis

Huge City bonuses have helped to trigger the credit crunch, industry chiefs said today.

Richard Lambert, the director general of the Confederation of British Industry, blamed "millionaire bankers" for fuelling the financial crisis now engulfing the world's banking system.

He said a culture of taking shortterm risks for massive rewards meant bankers were not cautious enough.

According to Mr Lambert, banks have been cavalier with other people's money and might not have taken such big risks if they were gambling their own equity.

"At the heart of many of Wall Street's problems has been a serious misalignment between the interests of managers and shareholders," he said.

"It's clear a number of investment banks overlooked basic risk controls in their drive to increase profits.

Mr Lambert added: "This pattern of behaviour has been exacerbated by a remuneration structure which has encouraged some employees to take spectacular short-term risks, confident that if things work out well they will reap huge rewards, and if they don't they won't be around to pay the price. If it had been their own equity at risk, things might have played out differently."

He also warned that private equity firms would become the next victims of the credit squeeze.