FSA admits huge mistakes
My jaw was on the floor after the first 45 minutes of watching the chairman and chief executive of the Financial Services Authority give evidence to the Treasury Select Committee.
To say that Lord Turner and Hector Sants admitted there were shortcomings at the City watchdog in the years before they arrived would be a bit like saying Nelson Mandela oversaw a modest change in the constitution of South Africa.
They totally repudiated what they called the philosophy of the FSA prior to the near total collapse of our banking system in the autumn.
Lord Turner said that the FSA, as a matter of principle, did not question whether banks had appropriate strategies. It adhered, or so he said, to a free-market ideology - as preached principally by Alan Greenspan, at the time the world's most powerful central banker - which broadly said that banks would by definition behave rationally.
The only role for the FSA at the time - according to Turner - was to make sure that the structures, systems and processes of the banks were ticketyboo. So it verified stuff like whether there were a sufficient number of bodies in the risk-management department; or whether the right kind of management and risk information was being gathered and disseminated to the right people; and so on.
But it wasn't apparently proper for the FSA to challenge banks on whether they should be growing so fast in the mortgage market, or loading themselves up with collateralised debt obligations manufactured from toxic subprime loans, or funding themselves to an ever-increasing extent from the sale of mortgage-backed securities.
I'm so shocked that I've come over all cockney. All I can think of to say is "can you Adam-and-Eve it?"
And my own answer is "no", if I'm honest.
Sants made an equally gobsmacking disclosure. He said that in the past, when deciding whether someone was fit-and-proper to be a senior banker, almost the only consideration for the FSA was whether the candidate was a crook. But it didn't take much of an interest in whether the bank might be appointing a dunderhead, an incompetent, as a steward of our precious savings.
There is some reassuring news, however. Turner and Sants both insisted that it's all change at the FSA.
The watchdog is now crawling all over the strategies of the banks and examining where these institutions that are so central to our economy are heading.
And competency is now a formal requirement for the FSA for appointment to the board of a bank. The FSA has even decided that it's going to meet and interview candidates for top positions at banks, to verify whether they cut the mustard.
If you said "about time too", I wouldn't be at all surprised.
Here are two more shocking disclosures.
Turner conceded that neither the FSA nor the Bank of England had a formal, legal responsibility for maintaining the financial stability of the system.
And he also said that the FSA would be increasing the capital requirements for the trading activities of banks by several hundred per cent.
This means that the securities trading and investment banking activities of the likes of Barclays will become more expensive for banks, much less profitable. Banks will be deterred from engaging in the kind of financial engineering that led to the creation of all those poisonous, subprime-based investments.
But it also implies that - again - the FSA got it wrong to a mindboggling extent in another absolutely core area of its regulatory responsibilities.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~30~RS~)
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Blimey.
Talk your way out of THAT Prime Minister!
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Can anybody give a definitive answer to the problem of how many tins are required. I started collecting in November and am down to 70 after eating 10 tins as an experiment in determining consumption requirement. From this I decided 250 tins a month are required - 50 for me and 200 for my wife. I also decided against buying lots of fruit and vegitables as this is wasteful. Whilst required they don't fill one up and should be kept to a minimum. Same for tinned fish. We don't eat much tinned food at all but I can recommed M&S Irish Stew.
Going to buy a garden water tank to collect water from the roof. Have aleady got 2 gas camping cookers from the previous scare in 2000.
If we get over this my wife assures me we are going to need it all in 2012 anyway. This is the next predicted apocalypse. Something about the Earth and moon going out of orbit. This will result in many premature deaths. Earth will be reconalised by more spritually aware beings. Only those who are 'enlightened' will survive here on Earth - in what form I'm awaiting clarification. On the up side she says there shouldn't be any politicians or bankers. Maybe we drop them all on the moon which causes the out of orbit condition.
So all I can say is we seem pretty doomed whichever way you look at it.
PS Would the last blogger please put the lights out - especially the big one in that mushroom cloud.
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Mistakes they'll be ordered to make again once the furore is over
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Well no major surprises on this score then......at least some kind of an admission of incompetency from the very body designed to weed out the incompetents.So,there you go.Horse-bolt-lock-stable door.
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So what?
Nothing will change - no heads will roll, the same broken financial system that has been abused by the people that still control it will carry on - to be abused once again - what is the point of all this bread and circuses? Where's the change? This is just boring now.
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Did this start in America too? Did Brown set this system up or not?
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If my recently built house collapsed soon after I had moved in because the design was not sufficiently robust to withstand its first winter wind, I would be seeking substantial damages from the architect. Please will someone remind me of the identity of the individual who constructed the regulatory system, which has proved so obviously unfit for purpose, in order that I may seek appropriate reparations? I take it from all the comments made by our Prime Minister that it was somebody in the USA . . . . .
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"About time too" was at least five years ago. I'm afraid that the FSA issuing "reassuring news" at this stage is not remotely reassuring.
Big jobs, big titles, big salaries, big pensions, big perks... and failure, failure, failure.
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Is anyone really surprised that people put in charge by NuLab turn out to be pretty poor.
NuLab know how to pick all the "right" people to do their "reviews" and come up with the "right" answers to suit the boss.
Whenever there is an "independant" expert put in charge one never doubts the outcome.
As i said..is anyone really surprised.
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Good stuff, RP.
Sock it to 'em.
Thats pretty much how we all feel about the FSA.
It needs to be put in the pay of HMG, not the banks,
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Brown's fault. He set up the FSA but didn't bother to make sure it was doing a proper job. He also insisted on the light touch approach..
He's got to go.
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There is yet another big issue to be addressed before we can consider banks as (almost) morally sound businesses: the issue of off-shore banking and tax havens and the trillions of dollars, euros, francs and pounds hidden away in Switzerland, Liechtenstein, Bermuda, Cayman Islands and many other similar places.
Now is the time to recover those looted trillions. Where are the morally upright political leaders that will 'serve the people' and not the looters and their well paid middle men (e.g.banks) Where are the politicians willing to enforce laws to bring those trillions back for a productive use in credit crunched societies?
Where are the true global leaders with a moral compass that will use this moment of opportunity to finally unmask the
impunity of those banks who helped to hide away trillions, with no questions asked. Can we expect Gordon to take this decisive step forward, to show global leadership? You could do humanity a great favour Robert, if you would call for a worldwide re-patriation of those looted and untaxed trillions.
Finally, a quote from Joseph Stiglitz, Nobel Laureate (2001)
in Economics:
""You ask why, if there's an important role for a regulated banking system, do you allow a non-regulated banking system to continue? It's in the interest of some of the moneyed interests to allow this to occur. It's not an accident; it could have been shut down at any time. If you said the US, the UK, the major G7 banks will not deal with offshore bank centers that don't comply with G7 banks regulations, these banks could not exist. They only exist because they engage in transactions with standard banks."
Let's get serious and have a long overdue, real global banking reform, for the benefit
of the majority of the world population. After all governments are there to serve the people, not the elite?
Also, my fellow commentators,
I ask you to help raise awareness for these issues on other blogs. This could help stimulate a wider mainstream discussion and, hopefully, one day to some real change.
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So nobody was really looking after the shop, were they?
So in 1997 when all the regulatory stuff was removed from the Bank of England, which had been doing it more or less successfully for three hundred years by then, it was turned into a tick box regime. Whose idea was that?
Well, we all know the answer to that one. So the tide encroaches upon the door of No 10 a bit further.
I am a bit bothered though that a lot of people were paid an awful lot of money just to tick boxes. Is this usual in the public sector these days? We need to be told.
It used not to be like this but I accept I am old-fashioned. Perhaps us old-fashioned people should be allowed to run the country.
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Now I've read the post I find it hard to believe your so surprised.
Everything is jobs for the boys - let's get some money!
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Finally it seems we have had the first meaningful admission of fault, with the FSA hopefully having learnt from its mistakes which it sees to have fairly brutally identified. (and only 20 Months into the implosion!)
Can everyone else (BoE, Treasury, ministers, banks, and those who borrowed too much) now do the same or is that too much to ask?
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So we are starting to see some frame work for the New World Order.... according to the FSA
From this seed I am hoping that the Gov will now work out what it is they are trying to recover too.
There is obviously never going to be the money available that there was in 2006/7 for mortgages and credit in general.
So where in the range from - only spending what we earn - through to - spending what we earn plus the 100’s of millions we borrow will a line be drawn....
Only when we know this will we have any idea where the bottom of this recession is..... and what to expect on the other side.....
I’m a little fed up with the presumption that the recovery will take us back to the ridiculous consumer levels of 2006.... IT WON’T
Well done FSA - more saving and less borrowing seems to be the foundation of a workable system........ it was a hard lesson, but you are learning!!!
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During the past few years, the British government was warned on many occasions that the burden of consumer debt in the UK economy was too high, and that the average mortage to buy residential property was 7 or 8 times average income.
The IMF, among others, repeatedly pointed this out. In 2006 the IMF stated that UK house prices were too high.
Gordon Brown just kept saying it was no problem, because interest rates were low and households "could afford to service the debt".
To say the FSA was asleep is not the full story........our government was also in denial.
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Who was it that gave the FSA the responsibility to oversee the banks?
Who should have put legislation in place to ensure that proper regulation - along the lines now evisaged - was followed?
Who was the chancellor who gloated to his EU and G7 counterparts that the UK's financial system should be adopted across the world?
Answers on a postcard to Culpability Brown.
Robert,
Without highlighting the above points you are only covering half the story. Although the Bank of England may not have had formal responsibility to maintain stability it is certainly an integral factor of any central bank and I feel that some curbs would have been put on the banks before the wheels came off.
Eddie George apparantly warned Gordon Brown of the risks of taking bank regulation off the BoE - isn't your role now to bring to task the person responsible for the mess you detail in your blog?
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NE's are supposedly on the boards of banks to protect the interests shareholders. In fact in my experience most get their positions through back scratching and the old boys network.
Isn't it time the FSA appointed NE directors to the boards of retail banks to protect the interests of the customers (ie depositors) ?
Although this is a radical suggestion the retail banks are so central to the UK's political stability it's madness not to have some greater measure of control. To my mind its like the government not having proper control of the army.
If the retail banks don't like it they can become investment banks instead.
And I think there should be separation between the retail and investment banks, like many people have called for. Then we can let the investment banks go to the wall when they foul up rather than having to save them because Joe Public will riot if a bank goes down.
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Three cheers! They're giving that stable door a whacking big slam!
Part of the reason for the historic hands off, innovation-fostering approach of the FSA was that it realised that it did not have the skill set to regulate the detailed activity in the market, and that doing so would impede creativity, and undermine the competitive position of London vs other financial centres. In the current climate creativity and innovation are dirty words and there is unlikely to be a race between financial centres to offer the most lax regime.
Greenspan thought shareholders would act as the best regulator on financial institutions. The FSA took his lead. Now Greenspan is shaking his head in disbelief as he realises he was wrong. Are the FSA now saying that the right people to regulate banks are "good bankers"? Because shareholders can't regulate banks, and regulators (much as they may crow now) can't regulate banks either.
Arguably all of this mess can be put at the feet of a few decisions: relaxation of capital adequacy requirements, refusal to regulate or even require transparency in derivatives. Who took those decisions? Not the bank bosses the FSA is proposing to vet. But the government regulators themselves.
Quis custodiet ipsos custodes?
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"Light touch regulation...."
HA!
*shakes head*
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Well, at least the USA continues its reputation of doing its deeds on a massive scale: FSA didn't stand by and let a Bernie Madoff run an obvious 50 billion scam in plain sight.
As far as I have read, only one head at our Securities and Exchange commission has rolled, and that one was a voluntary resignation of someone hired in 2005.
The economy here suffers to great extent because trust has been lost. The only way many of us can deal with politicians and the great and good of the business world is as follows: 'If his lips move, he's lying!'.
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Of course, what's worse is that things will - as a result of what's going on - be hammered into some sort of shape at last... only, in twenty or thirty years (if we're lucky, five-to-ten if we're not), it'll all be swept away by some idiot as "too onerous" and "out of date".
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Not surprised. Are these really revelations?
To me the FSA always was just another waste-of-space quango.
Why wasn't the Govt checking that the FSA were being effective in their role?
Surely these "revelations" serve to prove that the Govt was not just asleep at the wheel, but not even qualified to be at the wheel in the first place.
When are heads going to roll?
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Your surprise can only be that they have confessed so fully, Robert - because what they have confessed to was evident for all to see many months ago.
What they've said is really significant, because this 'FSA philosophy prior to the collapse' was no more and no less than what Brown (and Blair) dictated. They always had it in their power to do what they are now going to do.
We are beginning to to get to the bottom of things.
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Yes, this is horrific, if unsurprising.
However, just think back 3 or 4 years and imagine the FSA announcing they were introducing these checks then. Certain papers (lets call them DT and DM) along with the Opposition would have howled and screamed about such "Socialist, interventionist" policies, which interfered with the market.
Does no one else remember the pledges by successive Opposition leaders to wage war on "red tape", which was considered such a heavy cost to our successful financial industry? Wry laughs all round, I think.
I'm betting the same papers will shamelessly castigate the FSA for not doing this earlier! Oh, and it's all that Gordon Brown's fault!!!!!
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about time too :o)
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I find these admissions astonishing. You can't break wind in Insurance without passing an FSA check, and yet the banking industry appears to have been one big box that was automatically ticked every year.
But it's alright now, because the FSA are going to reform and become a lot tougher on the banks...
Incompetence on an apoplectic scale, get them all out, now.
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We should not be surprised by the announcements in today’s Treasury Select Committee meeting that the FSA did not adequately control bank’s strategies. Who could have expected staff at the FSA to tell banks that they must adjust their strategies because the regulator is concerned with particular developments in financial markets? Bank shareholders would have been appalled at such action when banks all over the world were pursuing similar growth strategies and no doubt the lawyers may have become involved if the regulator had forced such action on a particular bank. Although the FSA intends to meet bank’s board members on a more frequent basis going forward to discuss strategic plans, I cannot see how the FSA will ever be able to force banks to alter their strategies unless the FSA is provided with a legal mandate permitting this. They do not have this mandate at the moment. Although I believe that they should have such a mandate, if they had had this mandate previously no doubt we would have been suggesting that it was excessive red tape and another example of a “nanny state”. Such beliefs were endemic of the previous economic state. We have to accept that we are now in a new financial environment and that banks must now accept their societal responsibility. The regulator is provided with the responsibility of supervising financial institutions on behalf of society (because it is too expensive for each of us to do it on our own) and so the legal foundations to enable the FSA to supervise banks strategies should be instigated. May be this should include the FSA having a non-executive directorship in each large UK banking institution?
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"The watchdog is now crawling all over the strategies of the banks and examining where these institutions that are so central to our economy are heading.
Never mind the horse and stable door, this is a case of closing the lion enclosure door after the entire population of a near-by town has be mauled to death...
As you say Robert, jaw dropping, but lets not just blame the FSA - the Greenspan era was during the Thatcher/Major period in the UK, the Treasury Select Committee should be compelling both Thatcher (or members of her cabinet at the time) and Major to explain what they were doing.
As was said about nationalisation, it seems to me that bank regulation will be 'Back to the '70s' also, deregulation and the big bang has been a very expensive mistake.
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So, what strategies was Adair Turner using as vice chairman of Merrill Lynch Europe where he operated until 2006?
And what relevant qualifications did he have?
And for Hector Sants this comes from the FSA web-site
'He joined the FSA in May 2004 as Managing Director, Wholesale and Institutional Markets at the Financial Services Authority. Hector had responsibility for all regulated markets, the related infrastructure such as clearing and settlement, the operation of the UK Listing rules and regulation of firms or groups which conduct primarily wholesale or institutional market business between professionals.'
And taken direct from the 2000 Act
The regulatory objectives
3 Market confidence
(1) The market confidence objective is: maintaining confidence in the financial system.
(2) “The financial system” means the financial system operating in the United Kingdom and includes—
(a) financial markets and exchanges;
(b) regulated activities; and
(c) other activities connected with financial markets and exchanges.
Well where is market confidence? They had the power to make regulations. Why didn't they do it?
Apologies now? Puhleeese
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How can Brown survive this??
After all the FSA was his invention, his baby.
Brown created the regulatory structure which has failed us.
Brown trashed our pensions and sold our gold reserves at rock bottom prices.
Brown must be held to account for his role in this unfolding and unbelievably expensive mess!
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Surely it should not be very surprising that the FSA was as out of touch as the bankers in regards to what needed to be done to stave off financial collapse. They are all mainly former bankers after all.
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"when deciding whether someone was fit-and-proper to be a senior banker, almost the only consideration for the FSA was whether the candidate was a crook."
Was that considered to be a plus or a minus?
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Remind me who set up the FSA in the first place? And gave it its non-regulating 'philosophy'?
It wasn't a certain G. Brown, was it?
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Cor Blimey; I guess it's a start, but I can't help but feel suspicious of the apparent Damascene conversion of these people
Tea leaves will always promise to go straight if the police will just drop the charges and let them go, but they pretty much always turn out to be Dunlop tyres
the FSA, UK govt and City of London etc may be feeling that they need to be seen to be introducing better regulation before someone else does it for them
it appears that it might already be too late for that tactic though, what with the EU Commission report today recommending much tougher Europe-wide regulation
if the EU reforms are implemented then it really could be another nail in the coffin of the City of London as the UK's biggest generator of trade surplus
either way it looks like the party is over in the City for the foreseeable future
which is good, but we'll need to think of some way to replace all that 'economic activity' swapping derivatives etc with something a bit more real and respectable which is also of high value!
ideas anyone?
perhaps we should ask someone really clever like that Gail Trimble; she would be welcome to sail with me and chart a safe passage through the treacherous Goodwin sands
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Hi,
Just how much did we the Taxpayer pay the FSA for there inactivity on our behalf?
Who monitors the FSA, is it the Boe or the treasury, or maybe the bankers themselves?
Perhaps they, the FSA believe that they are so important that they don't actually need to be monitored.
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This comment was removed because the moderators found it broke the House Rules.
Yep, here we go again, someone else can be blamed and coincidentally and conveniently he's from the US - Greenspan.
So let's get this straight to close the case: the US and Greenspan made UK banks sell 125% plus UK mortgages to UK customers and their delaings gave a UK bank the reputation of lender of last resort to real estate developers and venture capitalists and buyout funds (forthose out of the know, HBoS).
But if Greenspan, who was knighted by Brown I think, is to blame, how come that Bllomberg today carried an incisive article today on the soundness of Canada's banking system. Not a penny aid has been received by the canadian banks and dare I tell you where Canada is: IT BORDERS ON TH US. So Canada's banks are sound and the UK's have all been bazooka-ed by the US.
Somehow this doesn't really add up.
PS What about the 28 or 29 cases similar to the HBoS dossier that the FSA was looking at when it thought that HBoS was sailing a tad close to the wind. The fact that the FSA had so many dossiers on its desk certainly doesn't chime with what Tuner and Sants are trying to convey. An investigative reporter seems to have his work cut out.
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I guess that reflects the philosophy inherent in deregulation, one which is still held by a lot of conservatives. Why bother with this agency if it was mandated to fulfill such a limited role?
Past banking problems in the United States and elsewhere should have provided us with a view of the iceberg. Our government and regulatory bodies should have heeded the warnings that these provided the importance of the banking system to the free market economy and to the instabilities inherent in a laissez-faire attitude.
That said it will be important to recruit very competent individuals to regulate this industry, if they are actually to be given real power. Otherwise we could be just transferring the power from one group of nincompoops to another.
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Apologise as much as you like, FSA, you shat on every complaint you ever had, and as a previous analysis of mine showed, you did very little in return for hefty wadges of dosh.
The problem is, the new team is simply a repeat performance of the old team's problems, same set of insiders, same game, so why should be believe things will be any better now than they were then?
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And as I've also shown, the entire regulatory system got unwound by Sir Philip Hampton, so don't stop here, keep going and sort the lot.
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The real problem in this whole mess is the 'Greenspan Put'. Doing whatever it takes to prevent a downturn is a patently false assumption. Not allowing central banks to price capital below reasonable levels would be a much safer way of avoiding a repeat of these times.
If we had suffered mild downturns in 2001 and 2004, then banks would have priced risk better. As they would have been exposed to it.
Nonsense about investment in property - traditionally a poor asset class, would not have gained credence, with a few downturns.
If we tried to prevent winters and make permanent summers, we would expend a lot of hot air for no gain. This inquisition is pretty much that. The waste of a lot of hot air. We now owe a lot of money and have to start repaying it. Roll your sleeves up boys.
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...and the architect fo the FSA was one Gordon Brown who , of course, has saved us all ...
except from himself.
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Speechless! and I'm not usually lost for words.
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Now, coming from someone who runs a small business in the "real economy", I can only observe that as the Government places banking and the operations of the City of London so highly amongst the importance of business, they have been either stupidly incompetent or negligently negligent.
The whole country will pay for this foolhardiness, yet Flash still harks on about a "global financial crisis" and people continue to listen!
How soon before the country wakes up to this?
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By rights all of the staff employed at the FSA since its inception, should be sacked without compensation or delay. They were not and are not, fit for purpose.
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So its 'mea culpa' for everyone at the FSA then.
Well, I should think so too.
But do you detect any movement, Robert, on the issue of the bankers having 'captured' the FSA via the FSA recruiting those very same people to make up its board?
They're all a load of insiders really - is it going to continue to be this cosy cartel of just ex-bankers who will get appointed to regulate their mates?
When Adair Turner says that this is a revolution I think we should be very sceptical. This sounds to me like a case of wishing only to move an inch.
His paper (www.fsa.gov.uk/pages/Library/Communication/Speeches/2009/0121_at.shtml), as you remarked yourself, was a very accomplished explanation of what has happened - but it points to him trying to solve everything via the route of the FSA regulate more and more.
Some more regulation is indeed necessary, but they key thrust of new legislation should be to force all financial institutions to be more transparent i.e. disclose a hell of a lot more information into the public domain.
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Apologies to bother everyone with a follow-up to my previous comment but what Mr Peston writes above really seems odd.
When HBoS with Crosby were investigated a few years ago, there were close to 30 of similar dossiers on the FSA's desks. That does noy imply that the FSA hardly looked at what was going on, which Turner and Sants seem to have said today. It implies that the FSA stepped back from taking unpopular decisions and taking appropriate steps following its findings; it did not order management to step down or change its ways. It implies the FSA was too chummy with its subjects, perhaps because some of the movers and shakers in the banking industry were on the FSA's board, like Crosby.
Parliament and reporters should sound out some of the FSA's junior staff who were doing the hard work of fact finding. Perhaps that can help shed some light on whether the FSA knew that some banking business models were dangerous but were left untouched by the senior, sanctioning FSA staff.
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It adhered, or so he said, to a free-market ideology - as preached principally by Alan Greenspan, at the time the world's most powerful central banker
Would that be Sir Alan Greenspan. The bloke that Brown got over to give Darling little chats and pointers on how to be an effective custodian of the economic health of the nation like me, Gordon Brown? A bit like Sir James Crosby late of this parish?
Time for Brown to get Hornby and Goodwin back in the dock again. More show-trial and ritual humiliation. This Holt bloke and Greenspan and Crosby are beginning to draw folks attention a bit close to the real culprit here.
PS what happened to Nick Moore since he alleged he had documents giving chapter and verse on Browns complicity and culpability? In a safe-house. Already slit his wrists? Did I miss the big story?
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The banks have said sorry
The FSA has agreed they made mistakes
The BoE has said "they didn't see it coming"
Isn't it about time for Brown to "Pony Up" and take ownership for his mistakes whilst Chancellor and PM?
After all Brown set the policy for the FSA and gave them all the Rules which they ignored...and who was supposed to check that his cosy club was actually doing the work? Must be Brown.
Will we now get the Brown apology, a stage managed exit, and a supposed revitalisation of the Labour Party under a new leader who has stood against what Bliar/Brown stood for?
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The naivity of these senior figures is staggering. Why should banks "by definition behave rationally"? I suspect the real answer would be along the lines of: because banks are run by jolly decent and honourable chaps in suits who are members of the same golf club and wear the same tie as oneself.
And as for checking that senior bankers were not crooks - well, experience shows they couldn't even get that right either.
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The FSA was, and is too much of a cosy club of partisan players nurturing their own pensions. We need a truly independent and critical body. That is the challenge.
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not sure, but tea for the BBC moderators seems today to have been accompanied by some very heavy scones
good evening!
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If the FSA had spent half the time they spent on Anti-Money Laundering procedures and "Know Your Client" on credit controls and liquidity stress testing instead, we would have had much better early warning of the crisis, even though it might not have been averted.
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Not entirely surprised with the testimonies from todays meeting.
It is truly mind bogggling that "the policeforce" of the financial services system did not ensure that banks had adequately qualified personnel or understand the mechanics of the complicated investment vehicles being used.
This has to change and become transparent enough for the man in the street to understand.
I would not be able to fly a plane or operate a lathe without the appropriate training, supervision and health and safety process.
It would seem however that I am suitably qualified enough to wreck thousands of lives if employed in a bank.
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Come on Robert..
How can you be shocked by these somewhat not very revealing revelations...
Let me paraphrase.... It wern't my fault guv, it wern't my job to keep an eye on what the banks were doing..
So now let me summaries what we have learned from the investigations and navel gazing so far..
Politicians - It wasn't our fault
Government- It wasn't our fault
Bankers- It wasn't our fault
Estate agents- It wasn't our fault
TV Property shows- It wasn't our fault
Regulators- It wasn't our fault
Remortgagers- It wasn't our fault
Self cert liars- It wasn't our fault
Now I wonder why with this formidable intelectual think tank we havn't managed to get ourselves out of this mess...
Just like alcoholics.. Until they recognise they were the problem, there will be no solution..
Me for prime minister!
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Hello Mr Peston,
I hope that you have recovered.
So who actually gave the FSA their brief?
Was it the then Chancellor GB who as PM is now running around saving the world with his side kick Darling throwing billions in to the banks laps?
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so that confirms it...it was all down to GB!
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Well great, someone has begun to admit, "we got it wrong".
But the main issue is not just what is going to be done about it, but also how quickly?
The clock is ticking fast.
More and more people are suffering worse and worse consequences of this downturn and more and more people are losing hope of ever earning a fair days wages for a fair days work, or of having a reasonable quality of life, or of having a worthwhile pension, or of ever seeing a stock market that they could reasonably invest anything in again.
Many are out of work, and many in work that is well below their training, skills and abilities ... but "its a job".
(For some, it's already too late, things won't recover sufficiently within their working lives to even begin to offset what they have already lost).
Something has to be done pretty quickly to rebuild trust and confidence in banks, the wider financial industries, the regulators and, indeed, the politicians.
Or the consequences and sequels will be even more tragic for even more people.
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There is a serious question here, but it is not one of "light touch" regulation, as opposed to more heavy handed approaches. Essentially, what needs to be addressed is whether regulators had an eye on strategic issues in the market, as opposed to viewing regulation as an instiution by institution task. What Lord Turner appears to be saying is that when banking regulation was taken away from the Bank of England and given to the FSA, no one thought about how you would monitor and address system wide, strategic issues within the regulatory framework. That is a failure by the politicians and civil servants (particularly Gordon Brown and the Treasury) to think carefully about what systems were previously in place and whether their new creation provided sufficient protection. I recall that Eddie George opposed banking regulation being moved from the Bank to the FSA for this very reason, but was overruled by Gordon Brown. We need to think very carefully about how we address this issue, which is about the fundamental design of the system and not about how easy or not regulators were on the banks under their jurisdiction.
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strange moderation here post 52 is the first to be moderated???
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Of course, now that what is probably required is the 'light-touch' regulation that fostered the admittedly unsustainable 'boom' in the first place, the FSA is clamping down so hard on the banks that theyare too terrified to lend to all but the most triple A of credit rated borrowers i.e almost nobody.
The Americans have a good phrase for this kind of activity -'Ass-Backwards'. The government wants the banks to lend more money, however they also want them to be much more circumspect in their lending practices - ergo the FSA baring its claws for the first time, but actually now getting in the way of the banks doing what the government wants
'Oh what a tangled web we weave...'
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1 hour, 49 comments and no moderation! Perhaps Lord Turner could suggest a radical overhaul of the moderation process! Surely only a few need detailed moderation which could be held back. whilst others are posted straight away. There could of course be a much more sinister reason why it is taking so long as opposed to just sheer incompetence-bit like sorting out the financial system?
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28th of March 2009
http://www.putpeoplefirst.org.uk/
I have decided to travel 200 miles to be there.
Might make a difference than writing in a blog.
Who knows?
But this is just getting crazy.
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But it also implies that - again - the FSA got it wrong to a mindboggling extent in another absolutely core area of its regulatory responsibilities.
I'm prepared to bet that it followed its 'core responsibilities' to the letter. It's just that the 'core responsibilities' that you might imagine would be the remit of the FSA and what they actually were as handed down by the Maximum Idiot would diverge wildly. Just like the 'independent' BoE's remit on inflation.
You might accept that the BoE would have a remit to target inflation. You might also imagine that inflation target to not be too concerned with a 2% increase in the price of bread or memory chips when houses were going up (as they did in the year to July 2004) by 20%. But again the layman's understanding of what constituted a significant inflation figure and Gordon Brown's were clearly at odds. The more cynical might even question why the inflation measure was changed from RPI (which at least had some housing component) to CPI (which doesn't).
I don't know what is stopping y'all at the BBC from pointing the finger at the real culprit. 72% of the voters have it figured out already. Why not give the other 28% a little push in the right direction eh?
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Whilst I was posting the last blog #51 has been printed but nothing before and after1 Some sort of technical hitch with my computer-or something more sinister? Help!
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love the comment about 'fit-and-proper' where almost the only consideration was whether the candidate was a crook! what can this mean?
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If Lord Turner says that neither the FSA or the Bank of England had responsibility for maintaining the financial stability of the system, surely that only leaves the Treasury?
In this season of public apologies, can we expect one from that direction?
No, of course not. Gordon Brown does not do "mea culpa".
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Surly the 80/20 rule should be that those in charge should be trained in "banking".
A few years ago my local Nat west employed a BHS Manager to run a big ranch. He did not last long.
Just out of curoisity are the political parties distencing them selves from these bankers. They must need to if they are going to have an unbised approch to what disipline processes need to be taken.
At the moment if you steal a mars bar from a shop you could get a criminal record; theres a lot more involed here!!!!!
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"What exactly were the FSA doing before the crisis? "
Easy one that, just think of another acronym using the letters FSA.
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Logic would suggest it is time for a damn good clear out in many areas including HMG. And please those who post to the effect everybody is just doing a spiffing job. Please dont bother. In how many ways do you need to be told it wasnt the case.
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Robert, are you really surprised? How many times did we see programmes showing Self Cert mortgages being roundly abused yet from the FSA hardly a peep... If they couldn't regulate mortage brokers effectively they were hardly going to be making more of an effort with banks.
As to regulators, well I have the pleasure of dealing with another regulator in my job. The target of the regulation spend heavily on pr, government relations and managing the regulator to very good effect.
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I am surprised you are surprised Robert.
The FSA lost the plot many years ago when it turned a blind eye to the explosion in off balance sheet activities and changed its mission statement from its legal requirement to maintain orderly financial markets to one of promoting London as a trading centre with flexible and accommodating regulation. The regulators had become fans of the deal makers and felt they were part of the money making system. They were that too, to the extent they allowed London to become the trading centre for any off the wall derivative dreamed up by merchant bankers who could not believe their luck.
Why on earth Hector is still there having overseen the developing fiasco and supported every misguided change in the regulatory box ticking regime is beyond me. He was of course supported by Gordon Brown, who had more form for off balance sheet funding structures and relableing government liabilities than the bankers, so Sanz probably thought fiddling figures was de rigeur.
I hope Lord Turner is ready to fight for a global return to full on-balance sheet accounting with capitalisation related to fully weighted liabilities. The whole Basel I and II structure encouraged falsification of risk calculations and propagated a false impression of "at risk" positions. There should be full weighting of good and less good assets and liabilities to allow for misjudgements of risk, otherwise the spread of risk is distorted and the "capital insurance" is inadequate when most needed.
This is not rocket science and if any formula applied needs a rocket scientist to translate it, it is wrong and by definition not transparent for regulators or the public who are the mugs picking up the bill.
Lets see the smoke screen of brilliant financial wizardry for what it has always been. Smoke and mirrors.
If the markets were so refined for derivatives et al, it should be impossible for bonuses of the size paid out to be earned by trading. The fact is all the billions removed in salaries and bonuses have come out of savings and investments which have not shown real value growth for all the past decade and beyond.
In two generations, The City culture has changed from providing a service to clients to fleecing punters at every opportunity.
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Kudos to poster #51 who seems to have by-passed the moderation queue of posts 1 - 50 entirely. What special powers do you have? And where can I get them?
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It's hardly jaw dropping stuff.
- after all Private Eye has referred to the FSA as the Fundamentally Supine Authority for years.
Turner and Sants confirming that the FSA were virtually useless for the purpose they were supposedly created for can hardly have been a surprise.
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The whole banking system as well as the country has fallen to bits.
But here we have some character saying don't worry we'll get it right next time.
If only we were all in a situation where we could guarantee we would get it right next time what a utopia we would live in.
What I also heard him say was that those from above had told them they wanted only light touch regulation which looks as if they meant no regulation at all judging from the chaos we now see.
The FSA should be scrapped completely for the useless quango it is and responsibility should go solely to the Bank of England.
At least we would know who to blame'
They'll also have to make sure they have the right people there first though.
This is all looking like a game of musical chairs or 'passy the parcel'
So many different characters involved and no one really in charge willing to take any blame.
Could it be that the only one who really had any say was the PM himself?
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But it didn't take much of an interest in whether the bank might be appointing a dunderhead, an incompetent, as a steward of our precious savings.
Rather like the Labour Party and the electorate in that respect I suppose.
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Mr Mod
How is it that only one post out of 72 is readable and that is number 51.
StrongholdBarricades at 51 - I am most impressed please let us into how you do it.
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Pleading incompetence rather than the other thing...
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It comes as no surprise.
When as internal auditor I recommended that criminal record checks be made on employees management response was
The FSA only suggest it would be a good idea so, as it is not compulsory, we do not accept the recommendation!!!!
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Good to hear some hands held up, honest talking and corrective action. So what was actually on the job description of the FSA staff pre this time?
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Civil servants are rarely rewarded for success, and often penalised for failure. Therefore they resort to box ticking and arse covering. We need the FSA to behave like private detectives. Those FSA staff who are able to produce evidence of wrong-doing by those they regulate should be well rewarded. If they start with the assumption that those they regulate are guilty of crimes unless they can prove they are not, then the FSA will not go far wrong.
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Come on you guys, give Gordon a break. Ok he was the architect of all this, but you know everyone makes mistakes and it is not easy being a failed radical socialist with no inate instinct for capitalism and its little ways.
And look at the man's obvious integrity elsewhere in government. His passionate backing of bombing Baghdad which reached such Churchillian heights Mr Sraw has decided we better no see the record of, lest we collectively come over all giddy and have to fight the urge to march on Downing Street and show our Evita style devotion to this great, great leader.
Gordon the musical is what we want.
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two hours for moderation
come on chaps and chapesses
why does strongholdbarricades get through?
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BLAH BALH BLAH the usual we were not to blame, we did nothing but award ourselves bonuses for not doing anything,
Guess what! i reckon the UK public know what oyu didi last summer and the summer before, and for that fact all the winters also, and everyone connected with the banking problems should be sacked and investigated by the police not given bonuses and be given a chance to say "we did nothing wrong".
Bankers your time has come, and i doubt the UK or the world will ever trust you again!
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i am confused
http://news.sky.com/skynews/Home/Business/City-Watchdog-Bonuses-Financial-Services-Authority-To-Pay-21-Million-Pounds-In-Bonuses/Article/200902415229759?lpos=Business_First_Buisness_Article_Teaser_Region_0&lid=ARTICLE_15229759_City_Watchdog_Bonuses%3A_Financial_Services_Authority_To_Pay_21_Million_Pounds_In_Bonuses
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Ok we all know by now it's all broken, enormous mistakes have been made.
The real question
How do we fix it ?
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And perhaps the FSA objective about maintaining confidence was considered moot since there was according to one G Brown no more boom and bust.
Or perhaps maintaining confidence was all about the traditional approach of boom and bust
Sad mrsbloggs13c2 that I am, I have scanned the 2000 act on more than one occasion. Since when do acts of parliament have objectives in them??? Its a bit to easy to draft legislation like that, isn't it?
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Robert
Any news yet on what the government is doing in the debt bond market?
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are the moderators playing games? i have never seen such moderation...
In damning evidence to the Treasury select committee, Financial Services Authority chairman Lord Turner said there was clear 'political' pressure not to question the business models of banks such as Northern Rock, HBOS and Bradford and Bingley....
the game is up Gordon, your dna is all over the crime scene!
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All these people have been living in a fantasy world. the bankers and the so called regulators. It has all been so cozy.Heads must roll bigtime PLEASE.
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Why do we, the taxpayer employ these incommpetent people so callled bankers and controlers,(I'm trying for the moderatorsto be polite), they present their aplogies, I call them excuses and then carry on as is nothing has happened. Maybe we should bring back some old,retired bankers to run things as so called consultants from the "lite touch" have demonstrated that they have no inew ideas,and so getting back to basics.
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All these people have been living in a fantasy world. the bankers and the so called regulators. It has all been so cosy. Heads must roll. PLEASE
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But despite the admission of guilt, Lord Turner said that staff at the FSA would still be paid an estimated £33 million in annual bonuses.
Feb 15th
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I had to check several newspaper reports before I could believe that the FSA, that failed so dismally to regulate the antics of Northern Rock
HBOS, Bank of Scotland et al, has awarded itself £3,000,000 - three million pounds in bonuses.
This is the latest manifestation of the 'snouts in the trough' syndrome that prevails in finance and government in this our "happy land".
'Happy' like punch drunk as more and more nefarious practice is revealed to our wondering
gaze. Lord Turner and Hector Sants gave a great impression of a couple of Spivs in front of the Bench as they defended the FSA - "Oh no guv. It wasn't us. And our mates was just doing what the Government told 'em to. Verdict "Guilty as
charged".
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Yesterday we mulled over 17.4 million for a corporate jet
Robert could you calculate the total running costs of the FSA over the last 10 years and let me know what value it has added
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How come Strongholdbarricades has his own personal moderator ?
~Anyway back to the FSA - light touch anyone ?
Call an election.
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what a joke. the fsa's response to their monumental failure seems to be to schedule endless pointless meetings. the honest guys have always told them the truth, the crooks never will. as long as it's the dumbest guys in the city chasing the smartest there's no prizes for guessing who wins
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I nearly forgot to ask:
What questions were asked about the FSAs bonuses?
And what is going to be the outcome?
Amazing that this subject is coming up when the FSA who let five out of ten banks go to the wall and are curtailing bankers bonuses!
If the FSA receive any bonuses, it will be the biggest reward for failure that Brown has ever allowed to happen.
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Like every other government department or quango, it was totally without clear purpose. There were no external checks on it's remit or on it's performance. Ussumedly it demanded increased resources annually as is the habit of these useless organisations and employed increasing numbers of unaccountable staff. The accountability of all of these government (taxpayer ) funded organisations, ministries and quangos is non existent and their purpose and prime goal seems to be the justification for growing their employment potential and their demand for more and more funding. In this present crisis, the time is more than ripe for the dismantling of dozens of these organisations and amalgamation of dozens more with a system of total accountability to the taxpayer introduced.
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The FSA.............Flipping Sod All regulation
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Heaven only knows why some posts get through and others do not.
I have had one bounced for defamation.
Please could the moderators give us all an open letter on how something that is TRUE can possibly be defamatory.
e.g. Gordon Brown LIED when he said he had stopped boom and bust.
Tony Blair LIED over WMD in Iraq.
Many bankers are crooks.
e.g. many managers at a major UK clearing bank were found charging first class rail when travelling second class the bank did not dare fire them as there were too many to allow the bank head office to run efficiently.
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Oh dear, oh dear. So someone, sometime a long time ago made a few mistakes - but we're going to fix it now (after a few 'reviews and quangos' have been set up).
Oh, that's all right then, I was getting a little worried that the people in charge in Westminster and the City were greedy, dangerous criminals who took us all for fools.
Seems I was wrong and they're going to fix everything - I'll go and have a nice cup of tea.
On another note - I'm glad to see that Machevelian Mandy is supporting selling off the 'good bits' of Royal Mail allowing us to take care of the little pension shortfall; at this stage of the game I suppose another couple hundred billion won't much difference.
Angry Groucho
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There is only one thing to be said:
Fire them all!
(the FSA management that is, and their advisers - especially their advisers and consultants!)
#51
"The BoE has said "they didn't see it coming""
I though they actually said the did see it coming but that is was none of their business! (see Sir John Gieve's comments.)
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Robert,
Is anyone, ever, going to ask Gordon Brown about Credit Default Swaps - you know, the thing that has actually caused this financial meltdown - we seem to be steered towards anything but the actual truth by politicians and journalists.
We have to cancel CDS obligations based on flawed mathematics or this crisis will go on forever.
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12
Possibly because they too have money stashed away?
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There's so much understandable anger, dissapointment and frustration on these blogs.
Ultimately it is very negative as it's pretty obvious that all HMG can do is serve up more of the same, so ranting here won't achieve anything at all.
We need another (online) forum - not the BBC. Anyone got any ideas - we have to move forwards - stock-piling tins of baked beans isn't really the answer.
Very Angry Groucho.
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Is 51. a moderator?
At 5:46pm on 25 Feb 2009, StrongholdBarricades wrote: and had moderated before pretty well everyone in front of them.
It is 7.19 now and fewer than 25 others are done.
What is your secret my friend?
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Wow #90. First un-modded comment at #51 and now #90 in splendid isolation. What a powerful mod-busting aura you possess.
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The Financial Services and Markets Act gives the FSA four statutory objectives:
market confidence:
maintaining confidence in the financial system;
public awareness:
promoting public understanding of the financial system;
consumer protection:
securing the appropriate degree of protection for consumers; and
the reduction of financial crime:
reducing the extent to which it is possible for a business to be used for a purpose connected with financial crime.
How does Lord Turner think he was going to do this if (as Lord Turner said) 'the FSA, as a matter of principle, did not question whether banks had appropriate strategies.'
I........can't write any more this is beyond belief!!!!!!!!
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The FSA were ignoring certainly one report of bad practices in the CDS market in the first half of 2007 - despite being lead by their noses right to the target. Private Eye have it exactly right - the "Fully Supine Authority". Light Touch? Jobs for the boys - Sir Crosby?!
A good story for Robert to investigate would be the location of the new Eurozone CDS Clearing House. Sounds esoteric but its not - it'll be a very important loss to the city as it likely ends up in Paris. The Clearing House should in fact be located in Monte Carlo - after the algorithm used in the rating agency models to justify the smoke and mirrors marketing of CDOs. It could employ out-of-work croupiers. Its shovelling exactly the same sort of crap. That way at least people would know when their fund mangers are playing in a casino.
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The moderator's being particularly ineffective - could qualify for a job with the FSA!
:)
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The cosy relationship between the FSA and those they are supposed to regulate continues, so interpretation of whatever rules there might be, might be somewhat forgiving.
When FSA staff hope their next move is to a lucrative hedge fund or banking position, why upset the people who might give you a job?
What price independence?
Anyone concerned that Sir Howard Davies ex FSA Chairman, moved on to become Chairman of one of the biggest short selling hedge funds in Northern Rock.
Knowing that FSA staff are to interview you for that top banking position might mean "favours" towards FSA staff will be even more rewarding for all concerned.
What a jolly relationship.
The FSA are hooked even more, in fact will be entrenched, into the "jobs for the boys" network.
Some people will clearly do very nicely out of the fiasco.
The FSA are doing an excellent job in capitalising from this fiasco which was largely of their, the Goverment's (including those dimwits at the Treasury- I thought they were meant to be the nation's brightest) and not least the BoE's making.
Meanwhile I note the bonuses are still to be paid at the FSA.
They and the politicians obviously think the great unwashed in Britain are stupid - maybe we are.
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Quit the whining. There can be very few people who lost out during the up-swing. Sure, it's going to be tough for two, maybe three years, but I doubt it will be as tough as the early 90's.
The time to complain was twelve years ago - the financial 'Big Bang' but of course our collective memories still dwelt in the 90's recession, we wanted deregulation, we wanted an expanding economy, we wanted lower unemployment, we even wanted immigration - needing somewhere to live underpinned rising house prices - and took care of the 'dirty jobs'.
You reap what you sow, live with it.
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Lord Turner has made his point! We have a previous Chancellor with one eye on the FSA and the other on his ambition.
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........as the Labour MP said in Parliament yesterday, "I shouldn't have believed a word they said.......and I won't again"
Same old, same old
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Looking back to when I did my economics A level things seem positively quaint . Then there was a reserve assets ratio of 1 to 10 , so for every quid they had they could lend only 10 and the only example of a run on a bank was in Mary Poppins or Little Dorrit . How things have changed , several building societies changed their articles of association so that they could borrow on the money markets . I think this crises has stopped that at least .
A lot of people are at fault over this , Shareholders - more expansion , more profit , more dividend . The bankers more expansion , more profit , more bonus , the risk managers being ignored , hey don't bother us were making loads of wonga . The Fsa money for old rope ( what good has that organisation done ) . The Government , don't regulate , might stop the tax revenue .Whilst all the time the asset bubble gets bigger ( when you can borrow 5 times your salary , you know there is something wrong ) , well things have gone phut now and we are only in the foothills of this mess and the himalays stretch out before us . When will we learn the lesson of Napoleon i.e do not overstretch yourself of your organisation .
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If these are the full and honest "confessions" from the FSA, then their biggest mistake is too trusting. It would be remarkable if they havn't had their hands tied and arms twisted by senior memebers of the current and past governments.
"make sure that the structures, systems and processes of the banks were ticketyboo."
Stalin once said - "The people who cast the votes decide nothing. The people who count the votes decide everything."
So, the people who make the rules decide nothing. The people who implement the rules decide everything.
For pensioners, remember Maxwell who once said "you can trust me".
For people with jobs, remember Enron whose slogan is R.I.C.E (Respect. Integrity. Communication. Excellence)
For people who like repectable, personal conservative investment service, remember Madoff who, like many, paint himself as a philanthropist.
There are many others.
For all of us, except a few, remember 2008, 2009, 2010, 2011, 2012 when we are robbed and forcibly indebted to give to ...
Last but not least, for FSA, remember 3 things
"There is no honour in money and power, only ways and means."
"Those who flatter can slander. Better honest, goodwilled criticisms, than honey coated poison of flattery."
"Those who lie for you WILL lie against you."
Good luck,
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brownwatch...461 days to go.
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This is one of the results of the FSA / HMG incompetence.
From today's news
http://news.bbc.co.uk/1/hi/uk/7909354.stm
Many, many unfortunates are yet to be evicted.
Is this the fate that awaits them?
http://news.bbc.co.uk/1/hi/world/europe/7908910.stm
Discuss.
OG
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HUGE MISTAKES?
SO MUCH SO WHEN FACED WITH KNOWING
HALIFAX PLC WAS FACING A WINDING UP
PETITION IN 2006/2007 THE FSA SAID IT
HAD NOTHING TO DO WITH THEM!
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The FSA gets its funding from .....yes, you guessed right - the banks.
As an employee (not a bank employee!) I get my funding from my employer. Would I want to annoy my employer? No, of course not and it's much the same with the FSA and the banks. The banks say jump and the FSA says - how high?
Of course, they're posturing at the moment because Europe is threatening to have a Europe wide regulator and that will scare the FSA and particularly the banks.
Europe, I think, is serious about having strict regulatory rules, but I don't believe Brown is. He knows that Britain has no manufacturing and he thinks that its only hope is for the banking fraud which lined so many pockets to be resurrected. So the FSA will soon be back to light touch regulation. They will just change the name - call it perhaps 'prudent regulation' or something equally meaningless. And the FSA bonuses will continue to roll in too. We all pay for them through our pension funds, insurance etc.
Finally, let's play a game called 'Financial Where's Wally' We currently have a new face at the FSA (of course) but I invite bloggers to tell us all where Mr Turner's predecessors are currently skulking. I'll start the ball rolling by identifying that Howard Davies (who was the Head of the FSA for most of the 'nice' decade, is currently Head of the London School of Economics where he trains future economists!! There were at least 2 others, I believe, after him - so that's your challenge bloggers. Where are they now?
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“What was the FSA doing”?
That's easy to answer. One of their most significant acts in 2007 was to fine Nationwide Building Society for not reporting the loss of a laptop (that may or may not have contained customer data) quickly enough.
I.E the FSA was fiddling (applying penalties to a Building Society that was not exposing itself to massive toxic debts and risks) while Rome was being burned by the Banks.
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If HMG and the regulators fall much further in the popularity stakes, historians will be comparing them (and their demise) to Nicolae Ceausescu of Rumania (google him if you were asleep in 1989).
By the time that happens the police (and army) will have been very busy trying to ensure that it does not happen.
Of course this may just be a bad dream as John Bull seems to have fallen asleep years ago... But is Ladbrooks prepared to take bets that John Bull might wake up?
My guess is that all bets are off. While 'official' comentators and MPs agree that "we are in un-charted territory" - they are wrong. There are plenty of charts - Russia, China, Rumania, Pakistan, and most of Africa; even good old Uncle Sam in Guantanamo .... it's just that they don't really want to look at these charts. They certainly don't want us peons discussing them.
Worried Groucho
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#30 - Boilerplated said...
As you say Robert, jaw dropping, but lets not just blame the FSA - the Greenspan era was during the Thatcher/Major period in the UK,
Bwahahahahaha. So the FSA, the great UK housing Boom and bust of 1997 - 2007, is, in your mind, the fault of Thatcher? What a beautiful mind.
Are you sure it's not all Disraeli's fault? Cromwell's fault? The Romans? Surely you can go further back than Thatcher. Although why you would chose to is beyond me when we have the architect right here, right now as our Prime Minister.
Even he's not blaming decisions taken 20 years ago. Presumably because he's had 12 years to fix them if he didn't like 'em. Indeed history shows us that while we had our very own Tory property bust in 1989-1992 there were no bank-runs, no quadrupling of national debt just to stop the entire economy collapsing.
This is like a Carlsberg recession. Carlsberg don't do recessions but if they did....
Nope. Truly we were unfortunate to live in a period when we had the two biggest incompetents of the age in charge of two of the biggest economies in the world. I suppose we should count ourselves lucky that George W and Boris Yeltsin weren't in power at the same time otherwise a banking collapse would be the least of our worries.
You are one of the 28% and I claim my five quid.
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The FSA is a waste of space and money. FSA was / is interested in the box-ticking of minutae, they were caught out by the big picture. They are now trying to justify huge increases in personnel and salaries to prevent a recurrence. All it really needed was a few competent people to analyse macro risk (say a few dozen, not an army of brainless box-tickers (yet more empire building)).
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USA questions the SEC...
http://www.youtube.com/watch?v=FOKSkaQoF_I
...worth watching Ackerman's other questions.
UK SFA answers before MPs...
http://news.bbc.co.uk/1/hi/business/7910699.stm
... not really worth listening to the FSA at all.
Contrast and compare. Seems we have quite a bit to learn from the US.
Curious Groucho
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The FSA was a complete joke from the start, just like NuLab, a big con. We contacted the FSA about our Equitable Life Pension long before 2000, but their response then showed what a miserable failure the FSA were.
NuLab and McBroon could have averted the current crisis, don't blame it all on the bankers, everyone is out for a short term quick buck with NuLab in power.
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Robert you state:
"competency is now a formal requirement for the FSA for appointment to the board of a bank"
WHAT ABOUT, "COMPETENCY RULES" FOR THOSE APPOINTED TO THE FSA?
Surely it's not rocket science is it?
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Well done Robert Peston.
The Fsa has no authority what so ever and all these Lords and Knights of the Realmn should all go!!!!!
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#46
"The whole country will pay for this foolhardiness, yet Flash still harks on about a "global financial crisis" and people continue to listen!
How soon before the country wakes up to this?"
The country is waking up to this, but to the whole story, this doesn't just go back to 1997, the roots can be traced back to at least the mid 1980s. This is why only the Lib-Dems are attempting to make any real capital out of the current turmoil, they are the only main-stream party who can honestly say that they are whiter-than-white, even the Welsh nationalist and SNP have had a hand in all this - this is truly a pan-political mess!
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about time we had THE official body with the power to control the financial industry, admitting that they did nothing at all.
but the negligence over the whole sorry mess does not fall at the FSA's door!
when our beloved leader came into office in 1997, his first and immeadiate job, was to give the bank of england "independance"
i questioned this from day one, here was a party packed full of ideas with a huge commons majority, why then would this new government's first action be, to give away its own power to control the one essential control it had over every single policy - the economy?
the truth is, gordon brown did not have any intention of giving away this power - so he created the FSA.
the monetary committee may have had some small independance, but the FSA had no such controls!
banks will make money regardless of the financial circumstances, that is their sole purpose, to make profit. they only operate under the rules they have imposed on them.
the FSA did not intervene in anyway shape or form, this is what the media should be focusing on.
not a single opinion of the public matters, until the self proclaimed "for the people" media, destroy the myths that exist around the government of the day, and reveal the entire truth as to why the government allowed (nay instructed) the FSA to act (or not act at all) in the manner in which has caused the UK so much damage!
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And to cap it all the FSA awards its employees significant bonuses this year !!!!!
For ticking boxes, form filling and missing the point.
G Brown does bear significant responsibility for this.
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I rather relish the future poverty of bankers and whether the middle classes can afford their pool boy for 2009 matters to me not one jot.
However, I'm seriously opposed to our government's attempt to re-inflate this particular bubble by buoying the housing market. If history teaches us anything we should know that re-inflating a bubble is impossible, supporting failing industries is hubris of the worst kind and letting the culpable 'get away with it' is the very measure of our class ridden society.
Whatever is to come our way, whether mullahs, national bankrupcy or worse let history teach us all a lesson. A house, flat, studio is a home and not an investment for our retirement or a free ride for our children.
Let the knashing of teeth commence.
Iain
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Everyone's hindsight is a truly wonderful thing. However, let's all remember one thing - you will never get rid of boom and bust, it's the way of the capitalist world.
When this recession/ depression is over, sooner or later there will be another crisis, and again there will be the same wonderful hindsight.
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"What's the use of MPs,
Select committees,
Watchdogs alert and awake on all fronts?"
So, OldGroucho would cry - back came the reply
"They're simply useless and overpaid ...."
Apologies to Lewis Carrol
OG
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"politically preferred..."
Says it all.
That's why I emigrated.
You can't buck the market as we are all finding out.
PS. Get the troops home. They might be needed if what the police say is half-way true.
The markets have devalued the pound by 30% that's were the assets are going despite the tax-payers money being pawned for years to come.
The market has spoken.
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30 boilerplated
Does that mean thick?
Let us blame Adam and Eve if it suits our politics.
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#137
For those who haven read the Snark...
"What's the use of Mercators, North Poles and equators, Tropics, Zones and Merridian Lines?"
So the Bellman would cry and his crew would reply
"Why, they're merely conventional signs"
Lewis Carrol - Snark
PoetLaureateGroucho
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37
The regulated pay for the regulator.
Conflicts of interest possibly?
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@75
Absolutely no idea why my post was singled out for almost instant posting
Seemed somewhat embarrassing as I was beginning to think everyone else had annoyed the moderators.
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Well, Browny Boy - what were you doing as Chancellor of the Exchequer...........er do the words "Naff All" come close?????
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Hmmmm...must be a glitch on the technical side...hopefully self correcting
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When there are problems the Government has three responses: first, to deny that there is a problem at all; second, to set up an inquiry, the results of which can be ignored; and third, to set up a quango to which it can 'delegate' the issue, thus absolving itself of responsibility. That's what happened with the FSA. No management of the quangos. No accountability.
Second point: everyone says that we can't go back to the world we knew. Who is working to design the world we need to build now? We need a big debate and a plan, not piecemeal adjustments. Your next task Robert - but you can consult on this one!
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perhaps we should swop the nit pickers at the HSE with the tick boxers at the FSA
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Bit of an unnecessary delay.
Just trying to get my viewpoint across... I’m only one man, I dare say, just like the moderators.
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142 144 passed the queue AGAIN
My Goodness.
If I put,
StrongholdBarricades,
on my premium bond, lottery ticket, bingo card, scratch card, betting slip, pools coupon and milk order
can I retire?
OR
its OK Tony, you can come out now.
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What is the all-comers record for slow moderation?
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It seems that most of the messages above are derived from a determinedly anti-Brown camp. I'm a solidly labour voter and of course I know full well that blame always moves to the top of manure heap while those actually responsible sidle off to well-paid jobs.
It's of course easy to assume a 'Trumaneque' approach and pass the buck to whomsoever is the leader. As it seems we're all so wise after the event and any serious objections were far from the mouths of the opposition during the feast of spending we all enjoyed I do wonder how we all slept durng this apparent disaster.
I suppose that the government spent on our credit cards buying more and more crap! I suppose that it was the government pursuing ever higher house prices and weeding out the poorer to live in homeless poverty.
I used to look out from my upper floor kitchen window at, perhaps, 5000 homes and wonder by what miracle this view had increased by 100% in 4 years. I wondered too where the 'wealth' had been created to support this 'paper' valuation.
Let the rich have a bad time for a while, let their selfishness be their gift to us all. Let their children receive the education we can afford, let their country homes rest in ruin and their Mercedes require unaffordable maintenance. Let the whole ghastly edifice fall and those pompous, stupid people fall in disgrace and ignominy.
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This comment was removed because the moderators found it broke the House Rules.
Okay StrongholdBarricades. Looks like your kung-fu is too strong for the BBC. Try posting some tip-top sweary vitriol about the Maximum Idiot and see if that just marches to the front of the queue.
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I see some german central banker declares the euro is under threat, no s*** sherlock!
http://news.sky.com/skynews/Home/Business/Karl-Otto-Pohl-Former-Bundesbank-Head-Says-Euro-Under-Threat/Article/200902415229838?lpos=Business_Carousel_Region_2&lid=ARTICLE_15229838_Karl_Otto_Pohl%2C_Former_Bundesbank_Head%2C_Says_Euro_Under_Threat
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HA HA HA, Its happening again !!!
141. At 8:44pm on 25 Feb 2009, sosraboc
This comment is awaiting moderation. Explain.
142. At 8:44pm on 25 Feb 2009, StrongholdBarricades wrote:
@75
Absolutely no idea why my post was singled out for almost instant posting
Seemed somewhat embarrassing as I was beginning to think everyone else had annoyed the moderators.
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143. At 8:47pm on 25 Feb 2009, umkomaas
This comment is awaiting moderation. Explain.
144. At 8:48pm on 25 Feb 2009, StrongholdBarricades wrote:
Hmmmm...must be a glitch on the technical side...hopefully self correcting
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Who in God's name wrote these guys' Terms of Reference? Surely this is a serious and pertinent question?
It's a bit like saying that the Civil Aviation Authorities' job is to make sure that airlines have the policies, procedures and resources in place to enable the movement of aeroplanes over our skies, but they couldn't give a toss who flies them, where, how fast, in what direction etc. Lord Turner is joking, isn't he?
Since the Treasury (politicians??) appoints the FSA Board, doesn't the Treasury then have some responsibility for the ensuring that the FSA's Terms of Reference are fit for purpose?
Er, Robert, can you remind me please who headed up the Treasury whilst the FSA was making such an ocean-going a**e of its duties? Sorry? Who? Oh, Gordon Brown! Now there's a thing.
Anyway, this screaming mess was all the Americans' fault wasn't it, so nothing for Gordon to answer for there then?
Oh boy. When does Her Majesty the Queen step in and put an end to all this on behalf of her loyal subjects? Since democracy is now shot in this country, where else do we turn? Oh, I know. Let's take up the Met Police's kind offer of "a summer of middle-class rage on the streets". I like that idea.
Pass me the placard Carruthers. See you in hell Lord Turner.
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#2 densesingularity
regarding your hoarding of tinned food, you may be pleased to hear that aside from economic collapse and wobbly orbits, a new climate change study suggests that the west Antarctic ice sheet is melting much faster than previously thought; I hope you are storing your tinned food a reasonable height above sea level and not in East Anglia
there was a lovely time-lapse segment showing the green shoots of recovery on tonight's episode of Nature's Great Events; it is in the Serengeti but is still uplifting
watch it on BBC iPlayer and it will make you feel good
there are also some lovely lions; they are killing and eating wildebeast rather than bankers, but just use your imagination!
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Bank regulation has been too lapse for years. Expense accounts are ridiculous and as for the lack of independent auditing- well don't get me started on that one. History did not stand as a reminder. The collapse of Barrings did not stay in the minds of bankers and financial regulators- that long established banks could be threatened. Now that even the rich are losing out and many banks have become almost unworkable- somebody at the top- i.e regulators, economists, politicians and bankers are going to try and rectify the mistakes. Far too little too late. If the medical profession had made comparable mistakes they would have had to be called to account. It seems that we are all to be silent and take the words of economists and those that work in top financial sector positions as gospel. Yet they have proved to either know nothing about financial competence or have been on the verge of being criminally negligent(my opinion). I could have told them 12 years ago that friends of mine earning combined earnings of £30,00 a year from poorly paid retail jobs should not have been given a £275,000 mortgage. Simple. It does not require a finance/economics degree. A similar problem is occuring in the public sector sphere too. Not enough tax and NI contributions to sustain a growing population for health, education and pensions. Nothing is costed out. I'm off to buy a £200 pound hanbag with a fiver- don't fancy my chances of a purchase but then i'm not an economist- so what do i know?
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Why, with so much light touch regulation, has the FSA been so expensive to both taxpayer and financial organisation for the past 10 years.
Goodness knows how much it will cost in the next 10 years...
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This comment was removed because the moderators found it broke the House Rules.
#81
"When as internal auditor I recommended that criminal record checks be made on employees..."
CRB checks are another example of Nu-Labour making an Act out of a political policy statement and completely missing the plot!
A clean CRB report is not worth the paper it's written on - only those who have been investigated (and that only occurs on the enhanced checks as I understand it) or found guilty show up, this means that a bank could still recruit a fraudster even after a successful CRB check...
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103
What was wrong with that?
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Refuse to publish?
problem with the truth??
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I was really disappointed that there were no questions about the knowledge and experience of staff employed by FSA. If we are to have effective regulation we need people who understand the wholesale markets inside out.
And I felt that the Committee could have asked more searching questions of Hector Sants who I think had a rather easy ride.
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McKinsey
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I can only assume that I was watching an entirely different hearing to that seen by Mr Peston. What I heard Turner say (barely even disguised in the language of Sir Humphrey) was that the FSA were entering the "Nuremberg Defence" - they were following orders from the government and the committee should look in that direction for those guilty of deciding the regulatory approach. Perhaps even more amusing was Turners barely disguised contempt for the lack of knowledge of the committee (such as when he explained level 1, 2 and 3 instruments). I was half expecting him to give them 100 lines - "we will swot up on the topics before exposing our stupidity in public".
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Please people....good people...accept the global position and that some people are now tasked for helping us out......don't blame the messenghers and that includes the politician's as the blame lies in the personal greed and beliefs of all of us.....proprty up.....loans and free cash...spend ...spend....spend...spend - a bit of collective resonsibity.
How many on her e can sya they didn't sell homes at maximum value...chase the next credit card deal
We are all to blame for the cresit crunch as we behaved badly
cheers but collectively we can change our behaviours and standards which will escaltate to business and banks...and Gov't.
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What is the answer to all this?
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While no one would want to return to the bad old days of light regulation, it is a fact that the reckless financial engineering that the banks engaged in, supplied the credit which drove the expansion of the world economy which many have enjoyed in recent years. If there is to be a much stricter regime, then there is a need for new sources of money, otherwise there is going to be very slow or even negative growth in the future.
Governments, particularly that of the US, are pumping money into the system, but this is regarded as only a temporary measure. Already right wing pressure from the Republicans in the US, and Tories in the UK is building against this action. In any case only a government with a very strong currency can keep it up for long.
One answer to this problem would be the creation of a world currency controlled by a world central bank, charged with the task of keeping the inflation index for that currency within certain limits.
Countries like the UK would object to the loss of economic independence involved and refuse to join. But might come round after a few more futile attempts, like Brown's setting up of the MPC, to go it alone in a global world economy.
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Curiouser and curiouser, cried Alice ....
Curious, isn't it? How passive we mostly are in the face of this shambles. Some hot air here (sic) and there but no great upset in the public fabric.
The government presides over a decade of gross financial mis-management, interrupted occasionally by hilarous examples of incompetance and corruption: hardly a squeak.
Businesses up and down the country are now being wiped out, tens of thousands of people are losing their jobs - and many their houses as well: some rumblings.
I wonder how bad things have to become before we get a bit cross?
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Please people....good people...accept the global position and that some people are now tasked for helping us out......don't blame the messengers and that includes the politician's as the blame lies in the personal greed and beliefs of all of us.....property up and up and up .oh no down....loans and free cash...spend ...spend....spend...spend - a bit of collective responsibity.
How many on here can say they didn't sell homes at maximum value...chase the next credit card deal etc yet we blame the regulators for our predicament
We are all to blame for the cresit crunch as we behaved badly
cheers but collectively we can change our behaviours and standards which will escaltate to business and banks...and Gov't.
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#75 re #51 142 144
Not just once but iteratively. You may float a hypothesis, but when it's subsequently confirmed (the only 2 posts accepted in 2 hours between 132 and 134) by facts, that then becomes proof that someone has a short-cut.
I'm fast starting to think that the coincidence of posters on Nick's blog who all have about the same number of posts - a mere 20 or so - and who all start behaving so blatantly abusively they get modded, isn't coincidence. What chance have we got to protest when the mods themselves are actively stacking the decks against us?
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Moderation
Hardly
CENSORSHIP
GETTING TOO NEAR TE KNUCKLE ARE WE??????????????????
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Both the solutions and the reasons why we are in this fine mess is because we do not go any further than the perceived wisdom that got us all into these disastrous affairs. In this respect we try to fix the problem by going back every time to the very people who actually got us into this whole debacle in the first place. Even Einstein said in as many words that we couldn’t solve our problems by the very means that caused our dilemma. Therefore why is it that the Media are not brought into the blame game as well as they are still even today, after all has been laid bare, pandering completely to the ill-informed wisdom of those who were and still are the culprits of this whole financial and economic disaster.
This thinking of going back to those every time who have brought the world to its knees (which will happen over the next two years I am sure) is complete madness. Indeed, what is really required is new innovative thinking and outside the 'box'. In this respect, it is a well documented situation in the history of science and technology that main stream thinking was never the reason why major technological breakthroughs happened. In this respect it has been estimated that 75% of all the inventions that have made the modern world what is it is today emanated outside advanced thinkers and from the minds of independent inventors. The TV (Baird, an amateur radio ham), Jet Engine Whittle an RAF officer), the chip (KIlby had a personal private interest not ordered by the company to invent the chip as they were totally involved with tube/valve making - now the basis and driving a $1.5 trillion global annual industry), the car (Daimler a mechanic), the airplane (Wright Bros. who were mechanics), email(Tomlinson invented it for himself not the company) , WWW(Tim Berners-Lee's thinking not CERNs'), etc, etc are examples of a non-ending list.
Therefore the media has to start being innovative and not be just stuck in the mud with the old guard that has got us all into this 'mother' of all messes.
The sooner they grasp this and let independent thinkers put their views across the sooner we shall solve the present situation. Is the media listening, I wonder? Probably not and where they will perpetuate the whole situation by not doing so.
Therefore the villains in this whole affair are,
1. Politicians
2. The Bankers
3. The Media
and in that order, and why, the G20 Summit in April 09 will fail also.
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The people running this country comprise less than 1% of 1% and yet not only have they caused the most monumental cock-up in financial history, they want us to let them continue without any accountability and responsibility.
I am a conformist by nature but day by day I am rapidly losing patience with these so called leaders and their establishment cronies.
Quite apart from the architects of the crisis being the government, the banks and the regulator, the Treasury Select Committee will soon add its name to the list.
I have never come across such a toothless watchdog in my life and if it does not probe and investigate further as a parliamentary body rather than as a majority party political sop, then I can see revolution in the streets by the summer.
Those responsible must acknowledge the collective blame and until these unfit for purpose goons are removed and the systems changed, I fear the worst for this country.
If you want to change an outcome, you have to change your behaviour; you cannot continue to do the same thing.
Since this crisis started neither the government nor the bankers nor the FSA have shown signs of changing their behaviour.
All they have agreed to do is more of the same by throwing larger amounts of money at the problem; there has not been one recommendation to fire those involved and with a clean slate start to create more improved systems with independent and non-politically minded people who really do care for the citizens of this country and not themselves.
The government, bankers and regulators should have their heads on a stake on show at the gates of every city; that should serve as a lesson for the next generation of unprincipled, incompetent, unqualified, selfish and egocentric individuals.
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Gordon Brown is unavailable for comment as he is rearranging the deckchairs on the Titanic this evening.
Maybe tomorrow.
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Yet another case of one of the villians of the piece taking the moral high-ground (looking at you mr Peston!) This artical is about as surprising as you saying to the parlimentry commitee last week that you don't believe you had any impact on the run on the Rock (despite many other well respected economic correspondents thinking otherwise) and then going on to say that even if you had though it would have caused the run, you'd still have done it anyway! At least the bankers have said they'd try not to repeat the mistakes, you on the otherhand say in effect "if it was a mistake i'd still repeat it!" Also, while you and the FSA/govt should take some blame for the run and the events that followed, try not to forget that the banks are the ones that caused it, you seem to do that everytime you get the govt in your sites, then remember it was the banks fault when you're in the scope, funny that!
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#126
"Bwahahahahaha. So the FSA, the great UK housing Boom and bust of 1997 - 2007, is, in your mind, the fault of Thatcher? What a beautiful mind."
But that is not what I said, how about you re read what I actually did say?!...
Are you seriously trying to suggest that Thatcher did not instigate the City's "Big Bang" and it's banking deregulations of the 1980s - that was my point, had the deregulation ball not started rolling in the Thatcher era then it would have been very unlikely that the de-mutualisation of the building societies and the 110% mortgages etc. would have occurred never mind that the FSA being created by Brown.
The stench of the current crisis goes back to the 1980s and any enquiry needs to get rid of the sewage, not just cap the cesspit. I don't care about the blame game, I want the truth to come out, look at it as a sort of 'Truth and Reconciliation' period (as used in South Africa), learn from the past and move forward, making sure that the errors can't be made again.
Sorry but some people really do need to take their rose-tinted glasses off were the Thatcher era is concerned, the lady did a lot of good but she also did a lot of damage, much of which is only just coming to light.
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#97
NPV income about 250m a year, ie 2.5bn
Fines about 20m a year, ie 0.2bn.
It was last suggested they should manage by results about 2 years ago. Needless to say, they didn't.
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2 hours
Stifle debate.
USELESS
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#139
I refer you to my post @ 177.
Deregulation, and the 'money is King' ideology started in the 1980s, not the late 1990s. If others want to twist history that that is up to them...
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#146
"perhaps we should swop the nit pickers at the HSE with the tick boxers at the FSA"
Perhaps we should just scrap both?
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#153
"I see some german central banker declares the euro is under threat"
Not only the Euro, but the EU it's self (at least in it's current form), this has been so since day one of this crisis - if/when protectionism kicks in within EU member states the single market is dead and buried, if not the EU...
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Anyone (like me) who has worked in Financial services Marketing and has been on the receiving end of 'FSA Guidance', knows what an impractical, intellectually deprived, vascillating body it was/is. A body that justified every policy and long winded document by saying that it ensured protection of consumers, when everyone knows that putting 'treating customers fairly' stickers on computers and desktop calendars does aboslutely nothing to protect consumers. Whilst they were fighting the 'false' war, elsewhere the economy was being looted by Sir Fred and co. Truly pathetic!
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Peston
continue to kick arse, you are the hero of middle england- chancellor Peston anyone? got my vote
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Belief systems
A lot of hot air is spent poking at the problem without pinning down what exactly is wrong.
A key spin off is a herd like acceptance that anxiety is a natural consequence.
This anxiety influences spend decisions.
Which adds feedback making the crisis appear to spiral out of control.
People are social animals. Managing expectations can promote orderly mass behaviour.
Even though the safe world of managed expectations is in tatters, publicly held views on the nature of the crisis and publicly held views on the solutions thereto are surely key.
Planning rant (again)
It is hard to view the lack of a fall back plan, and the ineffective administration as signs of competence.
What surprises me is the lack of vision, beyond pumping public money into broken institutions.
Economies are interwoven so big business going bad has systemic consequences.
Who does stress testing for these behemoths and how good was it?
Of the banking systems not contaminated by toxic product, is there any evidence of upgrading these to stand in for the broken institutions?
Is there any evidence of 'fire-breaks' or 'inoculation' and how did they fare?
How good has the response to this 'systemic credit crisis' been?
Was it really what we have seen so far?
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#150 hollandiain: I´ve got some bad news for you. The rich have no intention of having a hard time - that´s been reserved for people like you and me.
You may want to laugh at the rich, but they are laughing at you. They are laughing at the fact that they have taken all your money (and, if you have any all of your childrens and grandchildrens money). They are especially laughing at the fact that you think ZaNu Labour somehow represents your interests.
They don´t care whether you think they are living in ignomy or if you think they are living on Mars. They intend living with all of the wealth, and that is the only thing they care about.
the rich and their public representatives wouldn´t even p*ss on you or me if we were on fire.
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#106, the mathematics behind CDS is perfectly sound. What is proving less sound is the probability of default used in the calculations.
To use a technical term, GIGO. In this case, possibly very expensive GIGO.
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Could this be one of those merry-go-round blame game where the each guilty party confess a little, blame the rest to others and the victims, so no can be held accountable. Ending in never-never and the victims picks up the bill as well as the losses.
I think closing the stable door after the event is not good enough this time.
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It is totally mindboggling.
Was it in the job description?
Did they do their job?
I do not want to hear 'Lessons have been learned'
I would really like some of the government/
FSA to atually show that they can shape up and take responsibility for some of this mess they have orchestrated. Now we are going to have another person helicoptered in to fix it. There is no easy answer, but we will have to balance the books and pay for it all. The politicians and all these people who are now parading in front of us will be off living on their pensionsand on the stash that they have put away whilst SERVING US!!!!
You really have to laugh as they will not suffer one bit or pay for an of it, we will.
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Why blame PM for a global banking Crisis
We all benefited when he was chancellor---
The FSA was an improvement to what was in place when interest rates were 15%---Therefore the BoE was given control to manage and prevent this happening again--Gordon was able to reduce the country's deficit and the extra revenue from successful business's helped to provide the huge list of improvements to public services and ordinary peoples lives --
WE SHOULD NEVER FORGET THE YEARS OF THATCHER--SHE LOOKED AFTER THE WEALTHY AND CLOSED THE DOORS ON THE NORTH OF THE COUNTRY--THE WORKING CLASS WILL AND SHOULD NEVER TRUST THE TORIES AGAIN---
I believe the PM and Chancellor will be successful in getting the country through the downturn --
Gordon Brown & Alistair Darling are respected politicians throughout the world.
The do -nothing Tories are a disgrace and show they have no idea in how to deal with the economic crisis.
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Good grief!
Moderators have got their hands full? Or maybe skeleton staff for skeletons in the closet? I notice they are very busy on Nick's blog moderating out the 'off topic' comments which express genuine, heart felt condolences for The Cameron family. I know that the rules do apply on that blog, but surely, just this once, they could show a little flexibility?
On this FSA business-definitely not an apology in sight as far as I can see. I agree with the poster citing the 'Nuremburg' defence-following their instructions-same as the B of E.
Light touch regulation was obviously no touch regulation. Didn't we all know that anyway? FSA all fluff and no teeth or claws. Even if they did find something, what remit did they have to do anything about it?
No blame is going to stick with them-not my fault.
I would venture to suggest, as many of us have already, the FSA is not, and never has been fit for purpose (as advertised to the public anyway)
There is no point in having them. Disband the organisation.
So precisely, what, exactly have they done to earn their sickening bonuses? Lots of paper and files on desks to look busy maybe?
None of this is a surprise, Robert. All Lord Turner is doing is absolving them of any responsibility and distancing the FSA and himself from the mud slinging as best he can.
It's all a farce at the nation's expense.
Stop the show trials, scrap the quangos and toothless tigers, get someone in to disinfect the system!
Financial drain cleaner-now where can I get me some of that?
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Unfortunately, I can't see any resignations coming in the wake of this FSA business in the next month-Gordy won't go until he's played host to the G20 at the very least. After all, he is the self appointed global saviour, so needs to be available for further global advice!
As moderating is taking so long, I won't stay up and wait for it-probably won't get posted anyway!
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Robert:
I am very glad that the FSA admitted that there was many mistakes made during this situation....so far!
~Dennis Junior~
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For a PPt Slideshow about the Financial Crisis, please go to
http://www.accaglobal.com/economy/analysis/atw
For a 15 minute verbal comment about the Financial Crisis, please go to
http://www.audioacrobat.com/play/WQ0prrWs
Please contact me if interested in this
Solentary
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Here you are folks,
http://www.fsa.gov.uk/Pages/About/complaints/index.shtml
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It is sad to have been so reduced as we are. There are those how are to blame, and those who are blameless. Guess who will do the suffering?
Same as it has ever been.
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Was it or is it not the FSAs responsibility to annually audit debt/asset of financial institutions , even Dickens wrote about it and its really simple to understand....debt £1 assets £0 ...insolvent .....now thats not hard to grasp .SO HOW DID THEY GET AWAY WITH IT FOR SO LONG !!!!!!!!
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Maybe people should start asking the right questions! It is not about light touch or not it is about skills! The FSA did not have the skills and did not understand properly risk and risk management. As long as they do not have the skills more regulations will not help, if anything it will create a bigger mess as we have seen it recently.
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#137
For those who haven read the Snark...
"What's the use of Mercators, North Poles and equators, Tropics, Zones and Merridian Lines?"
So the Bellman would cry and his crew would reply
"Why, they're merely conventional signs"
................
"Other maps are such shapes, with their islands and capes!
But we've got our brave Captain to thank:"
(So the crew would protest) "that he's bought us the best—
A perfect and absolute blank!"
This was charming, no doubt; but they shortly found out
That the Captain they trusted so well
Had only one notion for crossing the ocean,
And that was to tingle his bell.
He was thoughtful and grave—but the orders he gave
Were enough to bewilder a crew.
When he cried "Steer to starboard, but keep her head larboard!"
What on earth was the helmsman to do?
Then the bowsprit got mixed with the rudder sometimes:
A thing, as the Bellman remarked,
That frequently happens in tropical climes,
When a vessel is, so to speak, "snarked."
But the principal failing occurred in the sailing,
And the Bellman, perplexed and distressed,
Said he had hoped, at least, when the wind blew due East,
That the ship would not travel due West!
Lewis Carrol - Snark
quite prophetic.......
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Also from the snark...
The Bankers Fate
............
To the horror of all who were present that day.
He uprose in full evening dress,
And with senseless grimaces endeavoured to say
What his tongue could no longer express.
Down he sank in a chair—ran his hands through his hair—
And chanted in mimsiest tones
Words whose utter inanity proved his insanity,
While he rattled a couple of bones.
"Leave him here to his fate—it is getting so late!"
The Bellman exclaimed in a fright.
"We have lost half the day. Any further delay,
And we sha'nt catch a Snark before night!"
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This sums up the economy crisis
Bank lent, we spent and the regulators had no ends.
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The Bellman, who was almost morbidly sensitive about appearances, used to have the bowsprit unshipped once or twice a week to be revarnished, and it more than once happened, when the time came for replacing it, that no one on board could remember which end of the ship it belonged to. They knew it was not of the slightest use to appeal to the Bellman about it—he would only refer to his Naval Code, and read out in pathetic tones Admiralty Instructions which none of them had ever been able to understand—so it generally ended in its being fastened on, anyhow, across the rudder. The helmsman used to stand by with tears in his eyes; he knew it was all wrong, but alas! Rule 42 of the Code, "No one shall speak to the Man at the Helm," had been completed by the Bellman himself with the words "and the Man at the Helm shall speak to no one." So remonstrance was impossible, and no steering could be done till the next varnishing day. During these bewildering intervals the ship usually sailed backwards.
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Hate to say it but most of us spotted this a few years ago when the bubbles and "financial instruments" were quite out of hand. Unable to do anything about it we had to sit and watch the cards tumbling down.
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Some of the contributors seem to think that better regulation and a change of government in the UK will sort this mess out. Well, it won’t. Banking business can be carried out more or less anywhere and pretty much instantaneously. The clever idiots who designed all these dodgy products are still out there. They also infected banks in many different jurisdictions. If the British who regulated HBOS, the Dutch who regulated ABN Amro, the Germans who regulated Commerzbank and the Swiss who regulated UBS tighten up their acts, the worst excesses will happen in places like Jersey, the Cayman Islands or Liechtenstein. Governments and regulators certainly need to do more, and their actions need to be better co-ordinated. However, if there is a weak link anywhere it will be found and exploited again a few years down the line whoever our Prime Minister is at the time.
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PEOPLE MUST REMEMBER WHO SET UP THE FSA----GORDON BROWN.
SO AS A RESULT OF THIS DISCLOSURES BY THE FSA.
GORDON BROWN NEEDS TO FINALLY ADMIT HE GOT IT WRONG WITH THE WAY THE FSA WAS STRUCTURED.....AND RESIGN AS PM ON THE SPOT.
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FSA - not fit for purpose obviously.
Who's been chancellor and PM for the past decade?
They have been sleeping on the job.
Also not fit for purpose.
Gordon - you're fired!
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#190 I assume you to be drunk
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That's it Robert. Keep putting up these stories to divert attention from the real architect of the UK crash.
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It is near impossible to write a comment that would pass the moderator on these matters. Can't we sack all senior managers and get the Chinese in. After all when they cock up they get shot - not walk off into the sunset with 600,000,000,000,000,000,000,000 * 10^23 pounds for life - has anyone got a list of bankers addresses - only jokeing moderator!!
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207 no 190 is not drunk he is probably Gordon's PPS.
By the way I also remember the sell off of everything - started by Mrs T. I also remember deregulation - another of Mrs Ts bright ideas. Oh and there where 3 million plus on the dole. The fact of the matter is we have been badly governed for eons. Now where is that pistol and bottle of scotch, I think we have hit an iceberg!!!
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The FSA were/are incompetent fools and they are only now closing the barn door after the horse has bolted.
And another thing in Roberts report… neither the Bank of England nor FSA had formal responsibility for system stability. If it wasn't clear then it's obvious to me that the person who setup the bodies didn't do a very good job.....
Remind me who setup the tripartite.. Oh yes it was our very own incumbent Prime Minister.
Never mind the bankers getting bonuses and big pensions what about Tony and Gordon, shouldn't we claw back some of their salary/pension/bonus/expenses!
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#207
When I saw #190's comments I crafted a thousand word reply in my mind.
Then I saw your comment.
I think you said it all !
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What I want to know is why no-one is following up the previous FSA head Callum McCarthy who was there from 2003 and presided over the main problems so far as I can see. Haven't heard his name out there at all since October... One for the real investigative journos, Robert! or maybe he knows where the bodies are buried or is otherwise untouchable??
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I echo your surprise, Robert.
Not at the incompetance, of course, but that it is being admitted publically and so readily. That really is something jaw-dropping.
I do hope this is setting a precedent for those in public positions. Then we can expect to hear cabinet ministers apologising for getting things completely wrong, top policement for being inadequately PC, and Radio 4 broadcasters for being so rude.
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#186 An excellent contribution
I agree that the vast majority of the bloggers represented here are probably supporters of the Conservative Party but this should not be taken for granted by the odd (meant in all senses of the word) NuLabour Party supporter or any socialist (the two are not compatible).
The paucity of many government supporters available for debate including the Cabinet (Milliband's in Iraq; the rest of them wish they were too) is either embarassment or because they know they their responsibility for the economy is in tatters and they don't know what else to do.
There's no point saying that we would be in a worse mess if the Tories were in power because first they weren't and secondly they would not have changed the regulatory set up as deviseed by GB; for years they have been jeered at by the public for the BOE made 'independent' - now we can understand why they were saying it.
There's no point saying that Thatcher or any other Tory started the process; even if they did the important thing to understand is how far they would have let it go. There would have been a point which was sensible, then a point which would have been negligent, then recklessness, and then full throttle ahead intent on maximum return with extreme consequences. The Tories did not have the opportunity to choose this end point because events overtook them in 1997.
Anger is being directed at GB right now, not because he is NuLabour, although that obviously could be a reason, but because his management of the economy has been apalling and shows no sign of improving.
It is important to separate 'management' and 'political and economic management' here because this is where the NuLabour Partyy supporters and the socialists (the two are not compatible) are getting this all wrong.
They make the incorrect assumption that if you're left of centre and you support NuLabour, you're poor and if you're right of centre and support the Tories you're rich.
Wrong! wrong! wrong!
The growing unrest is coming from all the people, left centre and right, who are fed up with leaders mis-managing the country in just about every aspect. Even if GB were to raise the higher rate of tax to 90% and redistibrute the proceeds to the needy, he would still make a Horlicks of it. I may not agree with that policy but that's not the point; it's the fact that he and his party are cack handed at organising anything, taking the credit when it suits them and shifting blame when it doesn't.
And another thing, the same party can't run forever whether it be the Third Reich or the Communist Party in the old Soviet Union; even if an iron fist is used.
Just as the Tories ran out of steam after 18 years so the same will happen to NuLabour.
The Tories won't win the next general election, NuLabour will lose it. That's the way it is!
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#116:
I thought he only had one eye...
No wonder he missed half of what his banker mates were doing..
LOL
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GREENSPAN WAS RIGHT
The banks DID act rationally.
Unfortunately the rational behaviour is what led to this recession.
The chasing of diminishing markets resulted in higher and higher risks being taken.
So he was right.
Does anybody really believe that the FSA will change?
No
No
No
No
Game over
Game over
GAME OVER
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I can 'Adam an Eve' it.
I think it fair to say the FSA remit was never intended to be that of 'police force' keeping an intense and deeply penetrating watching brief over the antics of the financial services sector. That would never have done for the 'cosy club' executive members of that industry.
From what I have been told by various smaller player practitioners in financial services, such as insurance brokers and IFA's , the FSA has functioned more as typically over zealous paper gathering bureaucracy rather than truly 'regulating' anything.
It does not require a genius to work out that a regulatory body which is largely managed and controlled by executive managers recruited from the very industry it is purportedly 'policing' is hardly likely to impose severe regulation upon its its own 'incestuous' family.
In short, the FSA has been just another layer of impotent, bureaucratic window dressing designed to fool the public into believing that strict regulatory procedures are being applied when, in reality, that has not been so. However, in that respect at least, it has been remarkably successful but, hopefully, that 'bubble' has at last burst.
I have to say though, I am sufficiently cynical to believe that despite all of the current rhetoric, nothing will really change and senior executives from all walks of big business life will continue to write their own employment contracts and, thereby, ensure their technical legal protection against any redress for their selfish avarice and greed.
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#215:
Well said. Sums up the present situation nicely!
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Mr Peston, your jaw may have been on the floor on Wednesday morning when you listened to the FSA giving evidence to the Treasury Select Committee but by the evening you had recovered from the shock and bounced back ready to assist with the Government's diversionary tactics in leaking the story about Fred Goodwin's pension. Gordon Brown has admitted that he knew about the pension issue a few days ago. Surely, the timing of the release of this story to you was to divert you from reporting more widely on the far more serious (but less sensational) comments about the FSA's monitoring of banks and the political pressures that were under. I am sorry to say that it appears that you have led the political posturing and fallen hook line and sinker for the Government's 'news management' tactics.
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I think that we should simply let them go bust. Over time, the banks have done this to many businesses. It may be instructive for them to find out how this feels. Perhaps they will accept it in the same casual manner that they have applied it to their clients.
Treating customers fairly? don't make me laugh!
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The FSA also paid bonuses even though it was incompetent in regulating the Banking sector.
Oversight of banks should have never been removed from the Bank of England.
What action did the Banks' internal and external auditors take regarding their sign off that the systems of internal control were functioning correctly?
It seems that Bank internal and external auditors not only benefited from the Bank's irresponsible behaviour but also endorsed what was going on. How can that be professional behaviour?
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Robert
One can only be fearful of where the economic road we are travelling is taking us. Our government and the BOE are throwing everything (including debasing the currency) at the demand side. Its "economic leemingism." Furthermore, its policy measure on top of policy measure without any time being given to allow policies to work through. No wonder the markets have acted the way they have.
Chillingly, there is another side to the economic model - the supply side. The massive imbalance in policy will surely come back and bite as hard. We have had "Stagflation" in the past, but what do you call it when you have inflation in a declining economy? "Shrinkflation".
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There seems to be a lack of professionalism in the banking industry, I've seen a similar problem in the engineering industry where the professional body effectively hands out accreditation for the price of a subscription. Given the obvious importance of the banking sector to the UK economy the professional qualification of people who handle billions of pounds of money needs to be more thoroughly monitored and accredited. The people who do not adhere to these professional standards could be struck off and face criminal proceedings as other professions do e.g. doctors.
The failings of the regulator and the BOE to ensure financial stability reiterate my long held view that the tri-partite system for financial regulation is a 'buggers muddle', with the finger prints of the tinker man Brown all over it. He (Brown) looks to create systems and policies where the path of responsibility never leads directly to his door, an almost obssesive paranoia not to be blamed for any problems that arise whatsoever. 'Not me gov', maybe this is how he got to where he is, but now he's got there he appears to live in fear of being the one at fault and so constructs these insane systems and structures to avoid all responsibility. Darwin help us all.
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This acknowledgement adds more weight to the disgruntled bank shareholders claims of compensation from the government. In effect this is an admission that the main reason for this mess is a failure of regulation and the structures of the bodies created to provide that regulation.
If this was purely a case of poorly conceived business models then the government should have responded in one of two ways in response to the problems at Northern Rock.
1.) It should have allowed the bank to go into administration if it really was insolvent. As such all liabilities and assets should have been resolved in the normal manner. i.e. all debts should have been called in meaning all loans and mortgages would have had to be payed back and the hierachy of creditors payed back accordingly, which undoubtably would have lead to losses for a lot of depositors/savers. Not an option I would advocate but the only fair means of dealing with companies in this situation, and banks are at the end of the day just another type of company. (I think the conservatives initially favoured this idea but then withdrew it on the grounds of political popularity).
2) Not have allowed the liquidity problems to arise in the first place. And taken one of the several opportunities to avoid Nationalisation beforehand. First opportunity, put in place the regulation to have prevented the build up of such huge risk of bank's wholesale borrowing. Second, supported a takeover by Lloyds bank in early 2007. Third opportunity, the BOE to have performed it's responsibility to maintain systemic financial stability, acted as lender of last resort, provided the necessary liquidity and implemented some of the strategies it subsequently has done to avoid a complete systemic failure instead of getting involved in the politics of the situation and obsseing over 'moral hazard'.(special liquidity scheme, insurance of toxic loans, quatitive easing).
Gordon Brown admitted himself the other day that the problems in the banking sector were due to systemic issues akin to a business suddenly loosing it's electricity supply. With this admission how can he justify the nationalisation of otherwise solvent businesses at the expense of the shareholder? A more reasonable action would have been to give back the shares to the shareholders at a point when the company was able to pay back to the treasury the money it had put in to keep the business going, with this money being loaned at more reasonable terms (not 12%). It becomes more and more obvious that the governement's real agenda is to use the systemic problems it created as an opportunity to obtain an astronomical amount of money in the form of a stealth tax on the shareholders.
As a bare minimum the governemnet should resign from it's position on the grounds of gross misconduct, with the guarantee that the banks ownership would be returned to shareholder at some point in the future.
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Will the FSA correctly monitor the banks during quantative easing? I doubt it!
Yet again the banks will sit on the money to try to keep their books looking good so that share holders won't see further drops in the share price. But as we see so far, no amount of money will stop the stocks and shares plummeting. And I know why that is:
1. The banks are not lending to ordinary citizens who would normally buy products which in turn keeps businesses going. Even those with good credit scores!
2. Banks are preventing fair competition when someone wants to get an accurate APR quote for a loan. The banks say that "to give an accurate loan APR rate an individual must go through the loan application process". The process however, contacts the credit score companies and automatically drops the individuals credit scoring if he/she trys to ask another bank for their accurate APR offer hoping it might be a better rate and so on. No wonder the banks are not lending. Everyones credit score = 0.
3. The FSA is blind to what the banks/credit scoring companies are really doing.
4. Individuals have to pay anything upto £20 to get a full credit report from these credit score companies and often the data they hold is incomplete or inaccurate. These reports should be free in accordence with the freedom of information act!
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Robert
Your jaw is on the floor, well you should be talking to over a thousand investors of a certain Scottish investment firm who have been suffering stress and hardship since November last year due to the heavy handed tactics of the FSA.
Why because small independant firms are easy pickings for them and the FSA are just not interested in the investor only their need to tick the right box.
Pity they didn't apply more effort to the real problem.
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I would like to add to Brian1948 comment about a Scottish company who have been hit by the FSA. If it’s the same company we are talking about (I’m not sure if I can name them so I will refrain for now) then I sympathise with him, This started in September 08. I am a creditor in that company and prior to the intervention of the FSA my money was safe. What I don’t know is the situation with my money now as I am unable to get any answers from the FSA. What I’m disgusted about is. As far as the FSA are concerned I have no rights in what I’m aloud to do with my own money.
It would be nice to hear from others who are tied up in this nightmare
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Sorry for my typing error I’m just to quick with my fingers. See Gordon it’s easy to say!
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229
If this is the same company then yes it is a NIGHTMARE for a lot of people throughout the country who are caught up in this issue.
It would appear that the actions of the FSA are causing a lot of hardship for the innocent people who are clients.
The FSA are supposedly there to protect people and their investments but like the Banks they seem to have failed and are simply not interested in the ordinary person only there cosy well paid jobs.
In this particular case its appears the FSA have put at risk or actually lost the investments by what appears to be heavy handed tactics or to put it simply "A NONE COMMON SENSE APPROACH"
Hopefully the truth will come out in the end, but I have my doubts simply because I have no faith in this Government nor the FSA to deliver any truth whatsoever.
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Robert, Perhaps you could explain what the FSA meant when you consider the wording of the FSA source book (FSMA 2000) came in to being when they said Senior Management would have to take responsibility and be personally liable if the bank failed to have adequate systems and controls. I am unable to see what the FSA are doing especially when banks (esp ex failed building Societies) state that millions are required, kept in reserve, to absorb losses due to Fraud. I remember the FSA saying it would use its powers to the fullest when banks failed to prevent and detect financial crime. Was this just more rhetoric?
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