07/12/2012 03:27 pm ET

English Chancellor: British Banks Ran 'Ponzi Schemes' In Lead Up To Crisis

Ponzi schemes are partly to blame for England's 2008 financial crisis, according to one British official.

“The banks and those regulating them believed that the bubble would never stop growing, that markets were always self- correcting, that greed was always good, that their Ponzi schemes would never collapse, and that none of the debts would ever turn bad,” George Osborne, England’s Chancellor of the Exchequer, said at the Conservative Party’s annual conference, according to Bloomberg.

“They let down their customers, they let down their shareholders, and they let down their country.”

Critics allege that in the lead up to the 2008 financial crisis, banks around the world took on excessive risk, pushing themselves near collapse when their bets and loans went sour and putting the global economy at risk of completely collapsing.

Though the claims are damning, they’re not quite the same as a Ponzi scheme -- or a financial scam in which the schemer uses the deposits from later investors to high returns to earlier investors.

Still, Osborne isn’t the first to describe the behavior of the financial industry's pre-crisis behavior as a “Ponzi scheme.” Famed Wall Street critic Matt Taibbi said the banking sector is “one giant Ponzi scheme after another” in an appearance on the Colbert Report in 2009, adding that Wall Street is no longer about “helping investors find good business opportunities which in turn would create jobs.”

Ponzi scheme or no, the British economy continues to suffer from the effects of the crisis. Sir Mervyn King, the governor of the Bank of England, said Britain isn’t even “yet halfway through” the economic downturn, according the Daily Mail.

“When this crisis began in 2007-8, most people, including ourselves, did not believe we would still be right in the thick of it five years later,” King said.

Meanwhile, the British banking sector as well as those that regulate it are getting slammed over the revelations that Barclays and other banks manipulated the Libor interest rate in their favor. Barclays paid $450 million to settle the allegations and the Financial Services Authority, Britain's banking watchdog, is facing criticisms that it didn’t do enough to stop the manipulation before it happened, according to the Wall Street Journal.