FSA break-up: What happens if eurozone implodes?
Following my disclosure yesterday that George Osborne will announce on Wednesday that he's pressing ahead with the break-up of the Financial Services Authority, here are a few more relevant details and a couple of additional questions.
To begin at the beginning, the FSA was created in 1997 to be one of the world's first truly integrated regulators.
The word to focus on is "integrated", which means that breaking it up won't be quick or easy.
The FSA's conduct-of-business operations, which the coalition government wishes to hive off into a new independent Consumer Protection Agency, are thoroughly enmeshed with financial supervision and regulation activities, which would be transferred to the Bank of England.
Or to put it another way, before the supervision/regulation arm of the FSA can become a subsidiary of the Bank of England, the FSA actually has to create supervision/regulation as a discreet entity.
That will entail complex personnel negotiations and decisions, plus tricky judgements about where the line between supervision/regulation and conduct-of-business actually lies.
Also both the Bank of England and the FSA have slightly odd legal structures: they operate independently from government; they fund themselves; they provide public services; and neither is a classic nationalised entity.
So turning an important part of the FSA into a subsidiary of the Bank is probably easier said than done.
In any event, there is little possibility of the Bank of England being able to complete the takeover of supervision/regulation in less than two years.
So the FSA will be with us for a while longer, with all its employees knowing that they will be transferred to another organisation - but not quite knowing, for a period, when and where they will be going.
Managing this transition will be tricky. There'll be the kind of atmosphere of uncertainty that may persuade the better FSA executives to quit.
Remember that the FSA's existing chief executive, Hector Sants, has already announced his departure.
And only last week Sally Dewar, the director in charge of risk, said she'd be off.
Who'll be the new chief executive? There must be a good chance that Dewar's peer in charge of supervision, Jon Pain, will fill the role, at least on an interim basis.
But there'll be a significant burden placed on the chairman, Lord Turner, to prevent the FSA imploding in the last two year's of its existence.
Which brings me to the two material points.
First, most dispassionate observers would say that the FSA has improved its performance since 2008.
You may say they couldn't have done any worse in the few years leading up to 2007-8, when we experienced the worst banking crisis since the 1930's.
That said, there is evidence that the FSA today is fulfilling its core functions of preventing banks and financial intuitions from taking crazy risks and also biffing cowboys and crooks much better than it was.
So if it is already back from being bust, why fix it?
More germanely, and as readers of this column will know only two well, we are living through a renewed period of stress in financial markets.
The risks have risen of a second wave of banking disasters, this wave caused by the repayment difficulties faced by certain over-stretched eurozone governments.
Which is why this may not be an ideal moment for the FSA's senior executives to concentrate on internal reorganisation rather than preventing collateral damage to British banks and insurers?
None of which is to argue that Mr Osborne is wrong to see benefits in giving the Bank of England overall responsibility both for maintaining the stability of the financial system and making sure individual financial institutions don't collapse and undermine that stability.
And he may also be right that by combining consumer protection and financial supervision/regulation within a single organisation, the FSA may have been doomed never to do either in an optimal way.
So the issue is probably not the logic of his reforms but the timing of them.
To which I presume he would say that if an important reform is worth doing, then there are significant dangers in delay.
Which is why I assume that the chancellor will push the FSA to behave as a subsidiary of the Bank somewhat before it actually becomes a subsidiary of the Bank.
Finally, and at the risk of boring you, I should add that there are other legal and management challenges of a highly demanding sort that flow from the FSA break-up.
It won't be speedy to crunch the consumer-facing bits of the FSA with the part of the Office of Fair Trading that regulates consumer credit and thus create a Consumer Protection Agency.
Nor will it be a walk in the park to establish a new Economic Crime Agency - because that will entail the merger of the FSA's arm that investigates and prosecutes financial crime with the Serious Fraud Office and with relevant parts of the Fraud Prosecution Service, Revenue and Customs and the OFT.
Or to put it another way, no one should doubt the scale of Mr Osborne's ambition to reinvent financial regulation, crime investigation and consumer protection.
Where he may face criticism is whether - with the financial system still so fragile - this is the best possible moment to distract regulators from their fairly important day-jobs.