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Tory plan to sanitise banks

Robert Peston | 19:10 UK time, Sunday, 19 July 2009

The Conservatives' "plan for sound banking" (as they call their 52-page policy document on reforming the banking system to be published tomorrow) differs from government policy in a number of significant ways.

George Osborne on Andrew Marr Show Sunday 19 JulyFirst, as I've written about here several times in the past few weeks, a Tory administration would transfer to the Bank of England responsibility for preventing banks, building societies and insurers - both individually and collectively - taking excessive financial risks.

A Financial Regulation Division, responsible for regulating and supervising financial institutions, would be created at the Bank and it would be headed by a new Deputy Governor for Financial Regulation.

This would strip from the City watchdog, the Financial Services Authority, one of its most important functions.

What would be left at the FSA would be its consumer protection functions and its responsibilities to ensure that financial institutions conduct business in a fair and proper way.

So the Tories would rename the FSA as the Consumer Protection Agency. And this Consumer Protection Agency would absorb the bit of the Office of Fair Trading which licences and regulates consumer credit businesses.

These institutional changes would be part of a broader initiative to shift the balance of power from banks and insurers to consumers.

Thus the Tories would force credit card companies and banks to provide much more information directly to individual customers about their charges and terms for a variety of products, from credit cards, to mortgages and savings accounts.

George Osborne, the shadow chancellor, wants financial institutions to provide this information in a form that could instantly be uploaded into product comparison websites, so that customers can instantly see whether they are getting a good or bad deal from their banks.

This is an idea that Osborne has borrowed from one of the pioneers of "nudge" behavioural economics, Richard Thaler.

Also, in the event that the Tories win the next election, Osborne would - in the words of the policy paper - "ask the Office of Fair Trading and the Competition Commission to conduct a focussed examination of the effects of consolidation in the retail banking sector".

Such a competition probe would look at whether choice for consumers has been reduced in a seriously damaging way by the takeover of HBOS by Lloyds, the acquisition of Bradford & Bingley and Alliance & Leicester by Santander, and the withdrawal from the UK of various overseas institutions and assorted small firms.

Since the opinion polls indicate that the Tories will form the next government, the likes of Lloyds and Royal Bank of Scotland will doubtless instruct lawyers almost immediately to prepare their cases for why they haven't acquired excessive market power in recent months.

But these banks will note with some trepidation that Osborne says the findings of these competition enquiries would determine his strategy for how to dispose of the government's huge stakes in Royal Bank and Lloyds, together with its 100% ownership of Northern Rock. There is an implication that he would break up RBS and Lloyds.

Finally, the Tories are going further than the government in detailing plans for what's called macro-prudential regulation, which is about preventing the kind of lending binge that took place in the three or four years before the summer of 2007 and precipitated the worst financial and economic crisis since the 1930s.

The paper talks about creating "a powerful new Financial Policy Committee within the Bank of England, working alongside the Monetary Policy Committee", which would have tools - such as varying how much banks can lend relative to their capital resources - to prevent banks in general from taking excessive risks.

However, although the Bank of England's size and power would be massively increased by these reforms, the Tories want to curb the personal power of the governor of the Bank of England.

The paper says that "the new structure will... reduce the institutional reliance on the position of Governor, with a collegiate approach to policy on financial stability and more use of external expertise".

The point is that responsibility for the supervision of banks and for limiting risks in the financial system would be vested in the Financial Policy Committee, which - like the existing Monetary Policy Committee that sets interest rates - would consist of Bank executives and outsiders.

So the governor of the Bank of England could not dictate - as he can in limited areas now - how the bank will act in a financial crisis.

What is striking is that - as a backstop to the powers of this Financial Policy Committee - the Tories are committing themselves to the introduction of a leverage limit, or a simple ceiling on how much banks can lend in gross terms relative to their capital resources.

But what's also conspicuous is something of an internal contradiction in the Tory analysis.

On the one hand, the paper is quite clear that certain banks - such as Royal Bank of Scotland - borrowed and lent far too much and became far too complex for the health of the economy. They became instruments of economic destruction.

The paper says that there are "some valid arguments in favour of some degree of structural separation between the riskiest banking activities and deposit taking institutions [or those that look after individuals' savings]".

However, it thinks that unilateral action to force banks to divest these allegedly dangerous activities would not be feasible and would damage the City as a financial centre.

So it's relying on the Bank of England to impose the equivalent of a punitive tax on banks that do considerable trading for their own account of a speculative kind, by forcing such banks to hold disproportionately higher capital reserves.

And the Tories believe that this approach "would result in the separation of the riskiest activities if retail banks find the additional costs of engaging in them are too great".

Well, we'll see. Interestingly, this is one of the few policy areas where the government and the Tories are somewhat converged in their thinking.

There's a good deal more to say about the Tory paper. And given that most in the City assume - rightly or wrongly - that the Tories will be in power next year, it'll be studied in minute detail in the City over the coming weeks.

But I'll restrict myself to four additional observations.

• First, the Tory paper is vague about what will happen to the FSA's oversight of regulated markets and listed companies, and its powers to investigate market abuse and insider trading. That said, I understand that these roles might well end up - in the longer term - merged with the Takeover Panel and the Financial Reporting Council as part of a new regulatory authority with broader responsibilities for the conduct of publicly listed companies.

• Second, the management of the FSA now faces a nightmare few months: given the high probability that its days are numbered, retaining and recruiting staff will not be easy.

• Third, breaking up the FSA in the way that the Tories want to do is easier said than done, in that recent reforms have created unified teams within the FSA of those who look after consumer protection and those who are responsible for checking that banks and insurers are lending and investing prudently.

• Fourth, on the assumption that Lord Turner, the chairman of the FSA, becomes the new Deputy Governor for Financial Regulation (my sense is that the chief executive of the FSA, Hector Sants, is planning to leave the regulatory fray next year), we'd see the start of a compelling contest to succeed Mervyn King as Governor in 2013.

This would probably be a death match between Turner and the Deputy Governor for Financial Stability, Paul Tucker.

Which, of course, is to trivialise these weighty policy matters, but is not uninteresting.


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  • Comment number 1.

    Wahey I'm the first person to post. You all have to read my message. I say reintroduce something like Glass-Steagal Act. Separate investment banking (Goldman Sucks) from Commercial banking (NATWEST). That Way Taxpayer will not be held ransom by these Banksters. Sometimes big banks serve a purpose eg HSBC as it is spread round the globe. RBS and LTSB-HBOS, these two big banks need to be broken up as they did not become large organincally. They become big by rash acquistion and govt interference. Little Georgie Osbourne, OAP Vince Cable and the Magnificient Alistair Darling have all lost the plot.
    Robert sort them out, prescribe something.
    Happy days, England to beat the Aussies tomorrow.

  • Comment number 2.

    52 is my lucky number
    I hate the tories and would happily work for the FSA but not the CSA

  • Comment number 3.

    Porosity is a measure of the void spaces in a material, and is measured as a fraction, between 01, or as a percentage between 0100%.There is no such thing as being totally safe, you still get germs when you screw around regardless of protection.

  • Comment number 4.

    Just tinkering around the edges, no "structural separation between the riskiest banking activities and deposit taking institutions"

    Both Labour and the Conservatives still believe that the 'City' is the most important part of the UK economy and do not want to seriously restrict the City's activities. After what has just happened (some 10 Trillion British Pounds were destroyed worldwide after financial institutions, regulators and politicians all got it wrong) one has to ask what else has to happen before the naive, almost religious belief in the glittering value of the current financial system can be overcome and financial institutions are strictly controlled. Boring banks are needed, safe for UK citizens to use. Of course, international solutions are essential. This is easy to say for politicians, but where is the action following this insight and where are the politicians that demand strict international regulation right now and are determined to act on their rhetoric? Action, not words are desparately needed, globally coordinated action.

    Please read more at:

  • Comment number 5.


    You write: "Tory administration would transfer to the Bank of England responsibility for preventing banks, building societies and insurers - both individually and collectively - taking excessive financial risks".

    This is very easy to write. I have a few concerns. 1 will the BoE be responsible for the activities of all subsidiaries of banks here and overseas? If so, how will it be able to exercise control over subsidiaries subject to foreign regulation and control?

    I don't think the Tories have thought this through! (Or the Tories intend to create a smokescreen to permit the banks to do just what they fancy, as they do now.)

    There seems to be no understanding of the limitations of National Regulation is an international World - or are the Tories also going to introduce Exchange Control? (that they abolished!)

  • Comment number 6.

    anyone care to comment on this in relation to the Bank of England
    [Unsuitable/Broken URL removed by Moderator]

  • Comment number 7.

    Hogg Wash, both parties are in the pocket of big money, and niether are doing anything to truly change what is a big rip off of both customers and tax payers. Three years after the OFT report on unfair charges to customers, other than the credit cards, most other financial institutions are still ripping off their customers with unfair and disproportionate charges. There is no change, both the tories and labour
    have done little or nothing to curb the greed of their paymasters. Who runs this country, the people who donate the most money to the political elite, the money club. The idle rich do not donate large amounts of money to either party from the goodness of their heart, it is for leverage, heard that term before, no doubt will hear it again, leverage in the money markets is god, leverage in the political market is also god. If you believe their spin you will believe any thing.

    They send our troops out to fight ill-equiped yet find trillions to bail out our wonderful bankers. Our big fat overpaid under performing unqualified bankers, a few W`s missing here, get trillions, our troops get rubbish equipment or not enough. I know where I would prefer to spend my money. The money is being robbed from us, Robin Hood in reverse, rob the less fortunate to pay the fortunate or rich. A poor world we live in.

  • Comment number 8.

    A lot of the regulation of financial institutions is derived from European law. Whether its the FSA or some renamed body there is still plenty to be regulated. Is there not a risk that curbing the FSA will play to those on the other side of the Channel who want a Euro super regulator?

    All that said, regulation of the banks should be restored to the Bank of England and in this respect the Conservatives are absolutely correct.

  • Comment number 9.

    some ideas within the sector will help and to overcompensate by killing off a system without fully looking into the ramafications could be just as bad as doing nothing.
    on another subject it seems the reports of tony blair running for EU presidency has gone by without any real comment i can only wonder why??

  • Comment number 10.

    Our country has the most honest system in the world.
    E.g. didn't we just do them for dodgy expense claims?

    The City old boys network and drinking lunches in the pub culture
    no longer exists. Everyone in Canary Wharf goes to girlie wine bars
    and buy sushi for lunch

  • Comment number 11.

    Previous | Main
    Tory plan to sanitize banks

    Robert Peston's grammar gets a FAIL
    It's Sanitise not Sanitize you sell out
    This heading is spelt American NWO
    Plan's stinks of corruption already

  • Comment number 12.

    As usual, the simplistic answer is rarely the right one. The simplification is not Robert's fault - and it may not even by the Tories' fault. If anything, it's our own fault for not demanding a more detailed and informed debate.

    So here are the real issues. The banks are a red herring, the FSA is definitely a red herring - the question is how WE the consumer should behave, as investors or borrowers:

  • Comment number 13.

    Sound banking requires a reversal of the credit expansion that caused this crisis, and this will take decades to achieve.

    No government will be given the mandate to do this, as it will lead to a massive decline in living standards while we adjust to living on what we earn and paying off our debts.

    It doesn't matter whether we have red or blue leaders, neither party has a policy that will put us on the right track - it's all lies and we desperately strive to continue believing them.

  • Comment number 14.

    The start to another new week and I am sure many of us will enter the week with a real desire to work at keeping the economy turning in the right direction which will benefit everyone in the UK. But yet again the BBC business editor writes another cheap article on banking!!!! When will someone have a word and say lets look at real issues that are effecting real people everyday.

  • Comment number 15.

    Compair this poilcy idear with the latest unjust undemocratic descision by a goverment department:-

    The victim compensation scheam, which has has with out consulting parliment, just descided that IF you have had an motoring offence in the last 5 years you will have your goverment pay out cut.

    So if you get a parking ticket and pay the fine and get the points, but 4 years later have the mis-fortune of being blown up by a terrorest bomb, you will get less compersation than the guy sitting on the next seat who got exactly the same ingeries as me but dosnt own a car.

    Is ths just or just another stelth cut by this broke, lame duck goverment and its quangos.

  • Comment number 16.

    Of the comments so far I feel more atuned to #4. However it is true, I think, that the "City" is the most important part of the British economy, but it shouldn't be. Britain needs a well balanced economy, not one where manufacturing represents less than 20 %. Anyway given that financials are so important shouldn't the powers that be have taken better care of them? I mean not let it fall into the hands of rogue traders. I fear it may be many years, if ever, before London regains some ethical stature in the world.

  • Comment number 17.

    The competition angle regarding Lloyds bank group and RBS will be dealt with by the European competition Commission whoever is in power. This body has teeth and is not afraid to use them - whether their understanding of the UK financial system is at ther same level of the UK's is another matter. Or even if the European self interest is put before the UK's best interests.

    The tri partite system has not worked. The FSA's role of consumer protection needs to be examined closely. When I took out a travel insurnace policy, I was subjected to a 10 minute spiel on the phone about my rights etc. After a year I opted for renewal and was subjected to same rant, as effectively it was not a renewal but the sale of a new policy. The extra cost of the consumer protection spiel was covered by more clauses inserted denying claims for more illnesses and accidents than was covered in the first place before consumer protection was introduced!

  • Comment number 18.

    #7 Mick. Have to agree.
    This is another example of the kids trying to run the parents. The kids, - in this case the political parties - are in no position to dictate to the parents - the earners in the family (that's the banks then)how they should behave responsibly. The parents earn all the money, and allow the children their pocket money (in donations) therefore if the kids misbehave, then they can have their pocket money reduced.

    Does anyone still think that political intervention can work?

  • Comment number 19.

    Probably the biggest mistake that UK bankers made, in terms of being generally suckered into the Anglo-American, 'big bucks fast', Harvard Business School culture of doing business, was to underestimate the value of reputation.

    Many years ago, the UK was a safe place to put your money, not because it would get high returns and quick profits, but because people considered that the regimes were mainly scam-free because "the Brits wouldn't put up with that sort of Sh@#!

    Now we live in a business culture where the repute of companies is worthless. You take an insurance or a loan out with one, and it gets sold on without any consent from you. Your debts are sold between companies like second-hand cars. The chief executives of banks are on five star reward packages whilst their customers get fifth rate service.

    Normal day-to-day customers of the UK financial industries again and again feel they've been scammed to some degree, or at least think they've not been treated fairly.

    Nowadays, everyone knows that the UK public will put up with any old Sh@# from anyone and the financial industries give it out to them by the cartload.

    Even the Government's approach to stopping the most obvious scams, is to not put resources into the financial regulators, or the trading standards professions, or the Office of Fair Trading, or indeed into anything else very much but just to provide "help yourself" leaflets and web-sites and that is about all people realistically get by way of help.

    Now if this, or any other, Government could start to re-build the basic notion that those who con others in UK society, even those who are in BIG banks and BIG other financial institutions, won't and don't get away with it, then we might get back to having a reputation for being fair, reasonable, and safe for finanicial business as a nation.

  • Comment number 20.

    Take regulation away from the FSA and give it to the BOE.
    Leave the FSA only with consumer protection.
    "Financial Policy Committee" in the BOE, (no more oligarchs).
    An "implication that he would break-up RBS and Lloyds".
    "Structural separation".
    "A punitive tax on banks that do considerable trading for their own account of a speculative kind".
    However, what about remuneration control?
    Or we may end up in the manure again.

  • Comment number 21.

    There are two separate issues that need to be addressed, some of which seem to be covered by Tory proposals. One is removing banks' free ride on deposit funding underwritten by the taxpayer. Another is securing competition in banking services, whilst at the same time protecting consumers.

    There is no need to separate institutions to achieve the former. Simply force banks to pass on to depositors the going risk free interest rate in the market, and set strong solvency and liquidity constraints on the deposit taker (or any institution wishing to borrow from them). This forces deposit takers to pay market rates for the (currently free) funding, which in turn would force through charging for banking services (transactions, statements, etc.) separately. Exposing the true prices of these services is the only way of ensuring real competition, dragging banking operations into the 21st century by favouring modern, efficient operations that result in lower fees (those who want branches can pay for them).

    Passing on the true returns from simple risk free savings would go a long way to encourage saving, and reduce the demand for higher yield (higher risk) savings products, and with it much of the consumer protection that it requires. In a stroke it would allow consumers to spot exactly how much extra return they were getting for their risks.

    Prices of banking operations and of that of money have separate, important signal effects that should not be allowed to be muddled together as it is today.

  • Comment number 22.

    So the MPC stay? and the FPC is created without indication of how they work together. Well it is a recipe for chaos and infighting. Obviously the current system does not work but the Tories have done little more that devise a more complex version with apparently more teeth. What is needed as well as powerful regulation is ecomonic management tools that at the macro level regulate the development of the economy so it is sustainable in the longer term.

  • Comment number 23.

    Begin an enduring love affair.

  • Comment number 24.

    So the Tories get in and bring this about. What happens next The Hedgies/investment funds fall over themselves to donate to the party and are looked upon favourably. The consumer yet again is not given the rights and protection they deserve. I dont see any other conclusion. Perhaps we should legislate to stop MPs taking jobs in the city/industry where they have direct or indirect contacts whilst in power. Then the hedgies etc would not wield so much influence.

  • Comment number 25.

    I'm about to take you on a George Porgie mission

    I met him in a club hangin out one night
    He said, "Hello I'm George.. hi Lyte!
    How's everything goin, huh, how ya doin?
    Hope everything's fine, ooh, and umm

    I gave him the number, I saw it in his eyes
    "She gave me the number? Hmmm I'm surprised"
    Good conversation, over the phone
    He began to come for me whenever I was alone
    George was sweet, so nice and so neat

    See cause Georgie was into making your girls cry

    "Kissed the girls and made them cry"

  • Comment number 26.

    Controls over remuneration seem vital to me.
    IT IS A MATTER OF DECENCY AND RESPECT for the public that has saved the Citys' neck.
    If the Tories want to last more than one term, or even survive one term, they must surely tackle City pay.
    We all know where much of the bill for all those obscene bonuses ended up...with the public.
    If City greed is allowed to run wild again, I believe that a special rate of tax on City bonuses must be introduced...perhaps 90%.
    20 million people operate the companies that the City is gambling on.
    Are all those 20 million people slaving away for the benefit of 50,000 City workers?
    The greed in the City could still wipe it out.

  • Comment number 27.

    Another thought that has crossed my mind, which no-one seems to be politically addressing is - how does a nation like the UK address the consequences and sequels of allowing the financial industries to catapult us into this downturn?

    Whilst some infamous people have done very nicely with their greed and big bonus, fast buck, way of doing business, we now have increasingly vast numbers of people unemployed.

    That is a particularly important issue because those people are not being supported and assisted adequately because such Government organisations as JobCentrePlus are inadequately resourced to deal with doing anything meaningful for the large numbers that are now out of work. There are totally inadequate training / re-training scheme places available, Job Seekers Allowance stops after 6 months, there are inadequate job-creation schemes, and inadequate resources put into countering racial, ageist and sexist prejudice and bias in the job market.

    So, whilst the notoriously incompetent are enjoying their pensions and bonus rewards, many others are looking at being long term unemployed as they de-skill and are unable to get into other industries.

    That does not just have an effect upon the individual, it also has an effect on the skills base and experience of the UK workforce and its ability to adapt to changing situations.

    So, just how well did these famously, allegedly-competent, bank executives serve the UK? Answer, not a flipin' lot of use to anyone.

    Now, isn't that the whole problem with the 'globalised' banks? Is Spanish Santander really bothered about its impact on the UK economy, or is the HongKong and Shanghai Banking Corporation (HSBC)? And even for the ones with nice British sounding names, the same is true.

    And, I would dare to say, THAT, is really why these big banks need to be broken up.

    No, not because they are 'too big to fail', though that is a valid point, but because they are too big to bother about the consequences and sequels of their action upon the people, economy and pooitics of the UK. In their "global" operating cultures, the UK isn't important enough to worry about.

  • Comment number 28.

    The first thing we have to recognise about Osborne's statement is that it is the first big announcement by anyone in politics since the start of the credit crunch to actually propose radical change in the City. This at least is to be welcomed.

    The second thing everyone has to understand is that over the next ten months this despicable government is going to rubbish the proposals on the one hand whilst implementing most of them by stealth on the other.

    The City is going to have to do a lot of adjusting over the next few years. As a taxpayer and a saver I am angry that a kleptocracy of bankers, regulators and politicians has sought and is still seeking to steal my to them very meagre life's savings.

    I think they are just going to have to accept that what Osborne and Cable propose today is the best that they can get. Otherwise they will find themselves dealing with the likes of me and I am thinking of No 1 Court at the Old Bailey followed by a tumbril to Tyburn.

    On an historical note it is amusing that for the second time in history the Bank of England has had its powers removed from it only to have them restored following the spectacular failure of the alternative agency. The last time was after the South Sea Bubble when the South Sea Company -previously the Sword Blade Bank - sought to take over the management of the national debt from the Bank of England. The parallels between the collapse of that bubble and the still current yet albeit bubble are quite extraordinary. Perhaps Gordon Brown would have performed better if he had studied something other than Labour history.

  • Comment number 29.

    I gave him the digits, that wasn't a problem but it was the Tories who invented IR35 and when it went to court the judge didn't understand company dividends for 3 days

  • Comment number 30.

    Message 28 Correction

    This sentence should read

    `The parallels between the collapse of that bubble and the still current yet albeit reduced bubble are quite extraordinary.'

    I should point out that I am expecting a further deterioration in our economic circumstances as all that current policy has achieved is a gradual reflation of the old bubble. The only perceiveable interest left is in how long it will be before we have to learn the same old lesson all over again.

    How many more lives are going to be sacrificed on the bloody altar of Mammon by this ignorant government?

  • Comment number 31.

    Well, it's good to see a few constructive steps forward from the Tories.
    A lot of what Osborne is proposing makes good sense - but he does not go nearly far enough.....

    We need:
    - a better separation between deposit taking and casino banking than just higher capital requirements (I think most people can see the arguments in favour of separation.... but no-one has yet satisfactorily explained the argument against).
    - much much much greater obligations on disclosure. Basically, all financial intermediaries (and this includes investment funds, insurance companies, hedgies, banks, BSs, Trusts etc etc) should be forced to completely open up their management accounts (except for actual names of customers) so the market can judge what risks they are taking, and so we can promote a bit of real competition between the lot of them. Maybe we should INCREASE the levels of disclosure required the larger and the more complex the organisation is?
    - some sort of size limit for any financial institution. If we don't get this, then we do need to have a 'wind down' plan i.e. a clear understanding of what happens to a large complex organisation that gets into trouble.
    Or are these politicians going to pretend that it can never happen again?

    We need Vince Cable for his part now to come out with an even more radical proposal, and then see Brown and Darling's reaction......once they realise that this whole issue is becoming (as it absolutely should) a critical part of how the next election will be won, then they will surely have to desert their cosy banking friends and change their tune.

  • Comment number 32.

    And perhaps the Tories should consider this....
    City greed has ruined the Labour Party.
    City greed may yet ruin the Tory Party.
    I'm no fan of far-left, far right or communist parties, but if City greed continues, voters are not going to be feeling very "liberal".
    Politics could get really nasty, and everyone will lose, including the City.

  • Comment number 33.

    I bet Georgie does not understand Agent Principal relationships or Third Party or Counter-Party Relationships or could produce workflow diagrams for business processes or have any idea about Fixed Income products as he has no experience of business issues and the enforcement of project deadlines or development techniques and schedules as his scope of expertise is for different clients and organisations.

  • Comment number 34.

    "Which, of course, is to trivialise these weighty policy matters, but is not uninteresting."

    Ah! The delicious irony, Robert.

    Bankers have trivialised what money is for, obsessed as they are with bonuses, and politicians are just as bad, as the expenses scandal has shown. The constant jockeying for power amongst the top few in the financial world will never end while we have a culture that sees enormous wealth as the only measure of importance in society.

    The injustice of turning money - our money - into their prize for being the biggest shot in their nasty little empire has reduced us to slaves again. Until we make bankers realise that they are servants and not masters, nothing will change. The battle over who is going to be Governor of the BoE will undo any good that a Tory administration might bring with any proposals to create sound banking.

    What Obama said a week ago in Africa applies equally in the City : We dont need strong men, we need strong institutions. And the only way to make sure that we have strong institutions is to penalise the individuals who have corrupted the system. I'd like to vote for a party that will guarantee that happens.

  • Comment number 35.

    No more City greed that financed the ZaNu-labour spending spree , that has been seen by many as a way of buying votes.

    No more blind eyes turned to the golden goose to pay for this addiction
    to mortaging the futrue to pay for now.

    Once the next gov has sorted out this mess. We need a frame work to prevent any future governemt going on such a binge again too.

  • Comment number 36.

    "33. At 10:32am on 20 Jul 2009, Bootlicker wrote:
    I bet Georgie does not understand Agent Principal relationships or Third Party or Counter-Party Relationships or could produce workflow diagrams for business processes or have any idea about Fixed Income products as he has no experience of business issues and the enforcement of project deadlines or development techniques and schedules as his scope of expertise is for different clients and organisations."

    Exactly the same can be said about Brown and Darling.....

    And look what a fine mess they have got us into!

  • Comment number 37.

    Untold Tories Stories

    Who cares what the Troys think.
    We the Lumpenproletariat* have not voted anyone in yet

    *i.e. a German word meaning "raggedy proletariat" defined by Karl Marx and Friedrich Engels in Ideology

  • Comment number 38.

    " The paper says that there are "some valid arguments in favour of some degree of structural separation between the riskiest banking activities and deposit taking institutions [or those that look after individuals' savings]". "

    Isn't this just harking back to the Glass-Steagall act? Why was it revoked in the first place?

  • Comment number 39.

    In #27 I wrote "pooitics" instead of politics.

    I'm still trying to figure out if it was a typo, or a Freudian slip!

    Whatever, I rather like the term that I seem to have accidentally invented - 'poo-itics'!

    It kind of says it all in a certain way.

  • Comment number 40.

    38. At 10:44am on 20 Jul 2009, Squaremind wrote:

    Isn't this just harking back to the Glass-Steagall act? Why was it revoked in the first place?

    Primarily, I would suggest, because the get-rich-quick, fast-buck brigade put a lot of pressure on the politicians that were part of their old pal's act to ensure the US revoked it.

    Some would suggest that such politicians were directly 'in the pay' of these big global financial industry players but I couldn't possibly comment upon that.

  • Comment number 41.

    It is all very well shifting, merging and renaming parts of different regulatory bodies but will that really make a difference to how well regulations are enforced. It is highly likely that the same teams at the FSA in charge of monitoring the banks will just move over to the Bank of England. So what is the point? As Peston notes the FSA now faces a nightmare few months: given the high probability that its days are numbered, retaining and recruiting staff will not be easy. Will it do more harm than good?

    The idea that price comparison websites will help consumers is rather worrying. They exist to make money through commission and referral bonuses and nothing else. I believe promoting them may cause more harm to the consumer finance industry (savings, credit cards, mortgages etc.) through an inevitable drive to the bottom in headline price. Surely one of the problems in the lending binge was the downward pressure on lending rates from the likes of Northern Rock forcing others to lower their rates (too far) or miss out on customers.

    Read more of my thoughts on this here:

  • Comment number 42.

    This is a brave and bold move by David Cameron and his colleagues.
    It is amazing how political parties in opposition can make promises to the electorate in a bid to get elected.
    The question for the country is: "Will this be implemented if the Conservative party is elected into power?"
    There is little doubt that David Cameron will need a substantial majority if he is to implement these ideas.
    How is he going to sell the idea to his back-benchers? Afterall the Conservative party is the traditional friend of the financial community.
    How will other members of his party react to such dramatic changes to the financial institutions? Not very well is my guess.
    So, once in power David Cameron will then have to balance his own position as leader of the Conservative party, against the mutterings of his supporters in the City and the 'shires'.
    I believe that when it comes to the crunch Cameron will have to compromise just to stop the great and the good of the Conservative party from thowing him out on his ear within the first year!

  • Comment number 43.

    "Macro prudential regulation" sounds like an implementation of the most important element required in any reform of the banking system. It is not just a matter of saving the Banks from their own folly, but would give the BOE the second club that the MPC needed in order to succeed in its task of maintaining the health of Sterling.

    The MPC would have been much more effective if it had been able to vary a limit on the volume of bank lending denominated in Sterling, rather than having to rely on varying the base rate alone. Direct action to check asset bubbles before they became dangerous would then have been possible.

    It is doubtful whether the BOE should try to micro manage risk taking by the banks. It would be better to make it clear that there would be no question of rescuing banks by transferring risk to the taxpayer in future. Large banks should be broken up so that they can be allowed to fail.

  • Comment number 44.

    The BOE is going to have the same problem as the FSA, namely that you have to get accurate figures out of the banks and be able to interpret which of these look risky. On the retail side of the banks the numbers are probably quite easy to interpret and should identify any future Northern Rock type problems (provided the banks are giving honest figures).

    It probably means that the big banks will have to be broken into units (with the retail bank being 1 unit) under the group and I suspect these will have to become separate accountable business to ring-fence customers deposits. Flows of revenue between units should then be easier to track and its these that should start to show odd trends. The investment and gambling arms of the banks would then be the bits requiring the most scrutiny.

    Getting relevant and accurate info out of the banks will be the problem. No doubt the banks will try to argue that such info is commercially sensitive and more internal creative accounting will be done to massage the figures before reporting to the BOE. The BOE need to be able to understand what these figures really represent. As the FSA never got to the bottom of them (although they probably hadnt asked for the right info) and that many of the people displaced from the FSA will probably end up in the BOE, what is going to change to make the BOE more proactive?

    I think hindsight is a wonderful thing.... Can the BOE even identify now what info would have allowed them to spot the problems with RBS and RBOS earlier? And what info should they ask for now to allow them to identify the next problem in the future?

  • Comment number 45.

    The Financial Support Agency (FSA) are a glorified post box for the closed shop banking industry, which will be rebranded shortly into the Financial Money Enforcement Agency (FMEC) which will be a waste of money and time as they will use the same answering machines and ignore legal complaints unless you can prove malfeasance in a tribunal.

  • Comment number 46.

    re 45 typo
    FMEC = Financial Monies Enforcement Commissions
    I was still looking at the old paperwork letterheads and telephone and address numbers etc

  • Comment number 47.

    It sounds good to me. Labour have "Hummed and Hawed" and done precisely nothing. Which is what they will carry on doing.

  • Comment number 48.

    Isn't it about time someone told the real story about CDOs and similar devices that they were and are premeditated swindles? Sold on entirely fictitious mortgage debt to property equity ratios and unsustainable predictions of growth of property values, the lenders not content with ripping off their customers at every opportunity finally resorted to swindling each other. This scam enabled lenders to collect the fees and commissions and waltz away from the risk they had created deliberatly hiding the rotten apples in the barrel. Once in the loop of pass the parcel they then promulgated the scam. These deals are all recorded. How about forcing the lenders to reverse the deals? We would then see where the true criminality lies and see who has no "confidence" in whom.

  • Comment number 49.

    Actually, isn't he talking of completely scrapping the FSA and starting from scratch. From my personal experience that would be a really good move. The FSA has a deeply entrenched culture from it being set up by this Govt; you just can't tinker around a bit and expect it to work. Sooner the better as it has been an undeniable failure.

  • Comment number 50.

    I doubt that any regulation will be efective!
    Consider this: Thousands of people who commited the CRIME of being unemployed are being persecuted in the courts by banks!
    Get behind on your payments and you will either be forced to allow a charging order on your property, with all that implies, (ie eventual sale of your property.) refuse and you will be made bankrupt!
    This is by banks that are surposed to have a banking practice, and whats worse supported by the courts dispite "government disaproval".

  • Comment number 51.

    Target Practice

    52 is a magic number

  • Comment number 52.

    re 51
    whoops missed sorry

  • Comment number 53.

    #29 bootlicker. it was labour that brought about IR35 Not the Tories.

  • Comment number 54.

    You can tinker with the system or completely overhaul it, it ain't gonna make a shred of difference on how the City is run until you bring to account those who brought the system to its knees. What is worse the same people who were responsible for this disaster, and who should be facing charges, are being trusted to fix it. By this logic the treatment of Goodwin and Madoff is a bit harsh. They should be made in-charge of the FSA and FED respectively..

  • Comment number 55.

    It would be a good idea to transfer powers from the FSA to the BoE. What would not make it a good idea would be to allow senior post-holders from the FSA to take up senior roles within the BoE.

    A few may be honourable individuals, but the rest are clearly either incompetent and/or had malicious/selfish intents. We can't take the risk else this whole exercise would be pointless.

  • Comment number 56.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 57.

    George Osborne and the Conservatives have shown pure genius in coming to the conclusion that the FSA was not working. Fairly and accurately blaming its abysmal failures of its management and inability of staff to do the job well, not forgetting that a certain G.Brown added to the already systemic failures there by creating a singularly unworkable triumverate management structure.
    All they have been expert at is closing doors after horses have bolted.
    The Bank of England are no saints but sustantially better qualified to address banking reglation.
    Turner, Sants and the rest of the motely crew at the FSA should resign asap. They would not be missed and for sure the whole regulatory infrastructure would benefit overnight!

  • Comment number 58.

    Court Case Circa circa 2000-20001 A.D.
    (Just After Y2K)
    IMPLEMENTED TAX YEAR: 5th April 2000 to 2001 with payments due for current and previous year

  • Comment number 59.

    The banks are a cartel, they are designed to make money for their owners and to deprive the rest of us of our wealth.

    The Great Depression was engineered by the banking families to allow them to buy up anything of value at a fraction of its real market value, the same can be said for every recession/depression that has happened since.

    Save yourself, change to a co-operative or mutual bank and refuse to have any dealings with the major banking cartels otherwise you will one day wake up to find that you are homeless & in crippling poverty because we have allowed the banks to fleece us for everything we've got.

    You've been warned, now what are you going to do about it ?

  • Comment number 60.

    A brilliant perfirmance by George Osborne on the Andrew Marr show, at last teh Conservatives have a Chancellor in waiting who doesn't spin and rightly put the blame hwere it is due, and most importantly provides the necessary alternatives to the sham created by Gordon Brown .
    The electorate can at last see a light at the end of the tunnel once Crash Brown, P. Meddlesom, and A. Darling have been kicked out to the Scottish highlands and beyone forever.

  • Comment number 61.

  • Comment number 62.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 63.

    Does anyone believe this nonsense being spouted by the tories?

    It's turned into a competition about which body should be responsible for the inevitable failure of regulating the system.

    The only difference between the Tories and the Labour stance is with Labour you get 2 bodies to kick and blame when it all goes wrong - with the Tories it will simply be the BoE.

    Why can't anyone see the contradictions in regulation.

    1 - The regulators are often made up of the people who used to be regulated
    2 - On the one hand everyone congratulates 'financial innovation' - but then despises the banks who innovate themselves around any legislation or regulation.
    3 - Historically financial regulation HAS NEVER EVER PREVENTED A BUST - or even smotthed one - so why should this time be different? Are the British public really that stupid to fall for it yet again? - I'm hoping not.
    4 - In many cases recently institutions have actually broken the regulation and simply endured the fine aplied by the FSA - mainly because the money they make far outweighs the fines dished out by the regulator.

    One of the ideas touted around is to make directors 'personally liable for losses at a bank'. Even though this sounds excellent, in practice it would fail immediately as directors will simply refuse to work as paid employees and instead contract their positions through a limited company - and although the limited company is liable - it will be folded if anything bad should happen.

    There isn't a regulation you can come up with that cannot be circumvented - so who actually polices the regulation is a moot point - however it doesn't stop the punch and judy show arguing over the details of a failed plan in order to score points of each other.

    I think the arguments going on between Labour and the Tories over regulation merely demonstrates their lack of understanding of the true causes of the financial crisis.

    Until they show they understand the cause of the financial collapse - they have no hope of a solution.

    BTW - who actually thinks this is all over and that we're on a road to recovery? - want to make a wager?

  • Comment number 64.

    The one thing that is abundantly clear is,there was next to no oversight of the banks before the crash,and what there was was totally ineffective and there in name only.

    So any change to that structure has to be welcomed, these people have not been doing there jobs...they have to change.

  • Comment number 65.

    #56 invisiblehandadvisor

    I fully agree with you about tax havens.

    THE BANKS ARE THIS COUNTRY'S SECRET MAFIA. long as tax havens are allowed to exist then we will all continue to be subject to mass fraud.

  • Comment number 66.

    #58 IR35 was a press statement after the 1999 budget and release without
    much noise to keep it quite.

    labour have been in power in 1997,

    Apparrently the treasury officials tried twice and failed under the tories to bring this in.

    I remember where I was when this was brought in/announced in 1999.

    PCG was setup to fight this and have done a wonderful job.

  • Comment number 67.

    The big banks receive a massive hidden state subsidy in the form of a guarantee on their debts, this is one of the reasons they are so profitable. Also, a state guarantee becomes more valuable the more risk you take on.

    Consider this: suppose your mum wanted to lend your company £10,000. If your company went bust she could lose everything. If instead she lent her money to a large bank by making a deposit or buying bonds she can be sure based on rcent history that the state will bail the bank out and she will not lose any money. So she chooses to lend her money to a bank and instead of borrowing from your mum you borrow from the bank and pay extra interest and fees for the privilege. The only reason you and your mum involve the bank in the transaction is the guarantee your mum will not lose her money. This is something which was provided free of charge by the state but is charged for my the bank, therefore it is a state subsidy to the bank.

    The state should charge for this guarantee and just like an insurance company it should charge a variable amount based on its view of the risk of a particular bank failing an invoking the guarantee. The charge for the guarantee would be very large - if we assume that the present crisis has cost £100Bn and it will repeat every ten years and the state applies the same kind of rules an insurance company would apply to this sort of risk to make a profit then maybe £20Bn/year spread over the big UK banks.

    If the banks were paying a commercial price for their state guarantee they would be a lot less profitable and a lot less able to pay their people ridiculous salaries and bonuses. Charging a variable amount according to the perceived risk would make banks more careful about taking on risk and incentivise them to make their affairs more transparent so they can prove they have limited risk.

  • Comment number 68.


    I beg to differ, the name kenneth clarke mp rings a bell..
    He was part of the Cambridge Mafia, He has contested the Conservative Party leadership three timesin 1997, 2001 and 2005being defeated at all attempts.

  • Comment number 69.

    It is impossible to legislate ethical behavior. Everyone, governments and bankers, keep presenting that all of this was a result of some economic theory or accounting practice. This was greed, this was unethical banking and investment practices and this was a total and complete lack of oversight on the part of governmental and financial agencies with responsibilities to protect retirement and investment accounts. The truth is that there have been no consequences for the governmental or financial services industry personnel who hatched this scheme. Since no one has been held accountable there have been no barriers put in place so that it does not happen again. This fooling around on the edges is nothing more than smoke and mirrors. Gutless wimps unwilling to stand up for what has happened and unwilling to make any attempts to punish those who brought this all on. They are paid well but of course they are the best prostitutes in their business. You have to have more respect for the common thief, most don't pretend to be something else.

  • Comment number 70.

    As both the FSA and BANK OF ENGLAND both told me that SERVING A WINDING

    UP PETITION ON HALFAX PLC was NOT an issue for them.I JUST wonder if



  • Comment number 71.

    [Update on the 12 springs.
    It may have been Only A Splash, but at 5-to-1 this Water Well gushed nicely on Saturday.Know your place of water.]

    Common business practice:
    Bank mortgage rates 3.99% +
    Bank balance transfer rates 6.9%+
    Bank purchase rates 12.5%+
    BOE interest rate 0.5%
    Bank Libor rate 1.0%
    Banks(and govts) must be making billions as trillions of pounds in loans and debt are rejigged to 'fat of the land' deals.
    where's the sanity ?
    where's the change ?
    Either taxpayers will reap the reward in LT ownership of bank shares(subject to EU approval,of course) or private ''enterprise'' is in for another windfall.
    Spitting up the banks may seem good, but you are just advocating for more highly-paid managers on the easy (gravy)train.

    More capitalist talk,more of the same.

  • Comment number 72.

    So Lord Myners still thinks the tripartite system is the best system.

    For some one who should have been sacked he's the last one to take notice of.

    He's speaking for Brown who is so obstinate he will not admir that the system he set up was the major cause of the banking crisis.

    Things still go on as they did only this time the taxpayer is guaranteeing losses before they are made. What on earth is going on here?

    Does anyone have any idea what is happening in these semi nationalised banks and what the cost will eventually be to all of us?

  • Comment number 73.

    71. At 3:12pm on 20 Jul 2009, SSnotbanned wrote:

    "More capitalist talk,more of the same."

    Absolutely - and guess what, the thirst for profits will ensure this recovery is very long and very painful. The spread between the LIBOR and the actual street rates are putting off millions of first time buyers.
    Only existing (and generally tracker) mortgage holders are benefitting from the BoE cuts - for FTB's the situation is now WORSE.

    Those of us on trackers (like me) are wary of spending the additional cash as we might be out of work soon. We're currently all paying down our debts as a safety measure - which unfortunately is not profitable for the banks (they make money by lending, not by getting it back)

    House prices may have fallen slightly, but seeing as the high street rate hasn't and the deposit requirements have pretty much doubled - something has to give.

    As long as this impasse continues - there will be no recovery.

    P.s. - Saw a great lie on the TV this morning - claiming the fact that house prices have risen for the nth month in a row is a sure sign of recovery.

    Don't these people know what SUPPLY is?

    There are 2 sides to every curve and you cannot liwe your way out of a recession.

  • Comment number 74.

    You must watch the Alexi Sayle interview on the Andrew O'Neil politics show.
    Watching Michael Portilo try to explain the root of the current crisis was totally laughable. If I understand him correctly I think he admitted that the plan which Margaret Thatcher hatched has failed (although he wasn't so direct in saying it).

    I understand the argument is / was:
    "If you reduce regulation and reduce the tax overhead for the wealthy this will encourage growth and be good for the country. However it's important that the people who obtain that additional wealth USE IT RESPONSIBLY - i.e. by investing in enterprise and do not waste it or send it abroad"


    Are / were they serious?

    Nu Labour then carried on with this bizarre belief that the rich will 'do the right thing'......
    ......and look how that turned out. Giving a greedy man more money to play with doesn't make him any less greedy.

    I am wetting myself reading the 'news' (because it's not really is it) about the Tory plans for regulation and the creation of the 'super BoE'.

    What ever happened to the core Tory liberal principle of minimal government?

    Isn't it funny how principles all go out the window if MP's think there are votes to be captured.

    So we have the Blues who now want more regulation of the financial markets, the reds who want to re-arrange the responsibilty - but who stand by their failed system of regulation and the yellows who now seem to be the reds in calling for more nationalisation of the banks.

    Confused? - you will be by next June.

    I should recycle your voting slip and at least that way you will be doing something good for the environment!

  • Comment number 75.

    Does anyone know why Nick Robinson's latest blog isn't taking comments?

  • Comment number 76.

    Good that sounds like a start to the policy and lead we so need from the Conservatives but it is essential that we start to put an holistic policy for our nations future.

    A sound policy to build a socio economic policy that can be sustained and meet the needs of the broad spectrum of our community for the next ten years.

    That means a proper balanced view of globalisation and fully rounded policy to meet the needs of society as driven by modern and emerging technology

    The needs that development creates on every aspect of life style and the needs and abilities of our modern society and its demographic profile, not just a quick document knocked up over the weekend.

  • Comment number 77.

    UK citizens are taken for a ride by a financial system that works primarily to line the pockets of a few thousand people in senior positions in finance, accountancy, law, etc. It seems that all political parties in the UK are paralysed and hypnotised by the 'glamorous' City and its so-called profitablility. Where are these profits if seen from a longterm perspective? Profitable for whom? There can't be much of a profit left for the UK economy over the past decade if one counts the recent massive losses. I am not writing this to advertise any radical political ideology. It just is so obvious that there is no fair or equal treatment for tax purposes in the UK. It is too obvious that there is a huge difference when it comes to tax enforcement and financial rewards in the UK, with 'ordinary citizens' on the one side and a financial oligarchy on the 'other'. Now is the time for change.

  • Comment number 78.

    The idea of Lord Turner skipping over to the BoE fills me with horror. I'd have thought part of the logic of scrapping the FSA would be that Turner could be scrapped as well.

    As the Private Eye wrote "Lord Turner's unstinting criticism of the regulatory system shouldn't have surprised too many. After all, he was never going to blame the bankers, having been one of them himself until not too long ago"

  • Comment number 79.

    POST 75

    I just tried it does not WORK!!

  • Comment number 80.

    76. At 4:08pm on 20 Jul 2009, hack-round

    What a load of diatribe.

    Big, meaningless words which actually say nothing.

    Surely you are a politician.

    Are you George Osborne in disguise?

    If you are reflective of the people of this country then they will get what they deserve.
    A bag of empty promises and conjuring tricks from a party who have shown they value votes over principles (as I mentioned earlier) which will all be gone 5 months after they get in.

    Did you learn all those phrases on the last management course you went on?

  • Comment number 81.

    #75 Ian_the_chopper wrote:

    Does anyone know why Nick Robinson's latest blog isn't taking comments?


    Yeah, I know why!'s because of all the posts that Nick receives complaining about him being so biased towards New Labour. When they go over the 95% hit rate mark, the blog just simply switches off!

  • Comment number 82.

    77. At 4:14pm on 20 Jul 2009, invisiblehandadvisor

    I can asnwer your question regarding the profit. The answer is the banks have taken the profit they EXPECTED to EXTRACT from the WORKING ECONOMY in the FUTURE (i.e. those of us who actually work for a living).

    Unfortunately, like Michael Fish, their forecast was WRONG. The boom did not continue forever and the result is EVEN MORE value needs to be extracted from the FUTURE WORKING ECONOMY through TAXES and CUTS to public services to make up the SHORTFALL.

    The answers are simple - the politicians seek to confuse us and point to something else, because they know when we all eventually work it out there will be a REVOLUTION and it's their head which shall roll....

  • Comment number 83.

    I am so saddened by the number of people who continue to swallow such rubbish. You may not like the goverment, but they must be given some credit (no pun intended) for their positive actions, which has saved this country from going down the crapper! If George Osborne and his BFF David Cameron had their way, the banks would have failed and so would the british economy. The financial markets are recovering and no thanks to the tory boys. RBS and LLoyds will be able to repay the goverment bak with interest either in part or in full over the next few years. I agree the FSA were inadequate, but by moving the responsibility around and giving it to the BoE does not guarantee protection. Reading Roberts blog, on what the tories hope to achieve scares me to death. It should do you!!

  • Comment number 84.

    I have been censored (being referred to the moderators) twice today for no obvious reason (#4 and #56). This is getting interesting. Some sensitivities (financial interests?) seem to have been touched. I trust that the moderators, once they have reached their verdict, will have a mechanism in place that will prevent that the complain button can be repeatedly used as a form of censorship by fellow readers.
    If you want to learn more about the destructive role of tax havens, offshore banking and the global shadow banking system please click on my user-id above.
    Please do your own research.

  • Comment number 85.



  • Comment number 86.

    The REAL cause of the problems in the financial world come down to the established theory of Alienation as created by the division of Labour. Although this theory was based on manufacturing - the same applies today in Banking.

    The fund managers who bought and sold CDO's were alienated from the actual contents of the package. No one person could see end to end and therefore every man in the chain simply did his job - not one person in the chain realised the true consequences of their actions - and therefore they had no moral dilemna.

    Working in investment management it's clear to see alienation in action. Many people in the industry go for long lunches clapping each other on the back about 'how much money they made today' and chortling about how clever they are.

    Sadly not one of them has the insight to investigate up or down the pipe to see what the consequences of their actions are.

    Fund managers the world over pocket millions and not one of the asks the very important question "WHERE DOES THE PROFIT COME FROM?"

    So in conclusion, with regard to the Tory, Nu Labour or any other capitalist plan - the following is found.

    1 - History tells us that regulation never works. Even the much hailed Glass-Segal act was removed by a politician who was persuaded that it impacted business. Most regulation is announced before it's made legal - during which time most institutions have found a way around it (or through it) - before it's even enacted. Can anyone name a single piece of financial legislation that has stood the test of time?

    2 - Alienation ensures that the people doing the damage are so far removed from the damage that is done - that they cannot be guided by morals or ethics. It's hard to apply moral judgement to something you can't see or feel. Maybe in the old world where the bank manager lived in the community where he lent money and therefore could be guided by morals - that world is long since gone. Did Gordon Gecko understand the plight of the airline company he took over? The job losses etc?

    I just wish a thirtsy reporter would pick this up and fire it at the political world as it completely invalidates all the talk of regulation we're currently being offered to fix the system.

    It's a sad world where the politicians can spout such amazing tripe and nobody actually questions it thoroughly.

    I'm off to get myself a dose of swine flu...

  • Comment number 87.

    Post 81 thanks for the explanation.

    I wondered why he chose that subject for a post when there seems so much more to post about politically speaking today.

    Robert, as you seem to be the man re banking failures I wonder if you want to further investigate the following story re AIG & EU banks

  • Comment number 88.

    Fact is the FSA call themselves regulators. Fact they clearly ignored or were blind to the warning signs which were obvious to the man in the street. Property prices were rising at an alarming rate, yes alarming, purely and simply because of cheap and easy money lending practice and nothing whatever to do with a person's income.
    Generations of people are now saddled with extremely alarming debt levels that are acutely exposed to even modest interest rate increases and the FSA did nothing to stop it.
    Fact, insurers are going the same way. Taking on big risks at ridiculously low premium levels. They cannot get out of the downward spiral because of market forces, mainly because too many brokers have become too big and powerful. The tail is wagging the dog and the tail never has to face the music i.e. pay claims.

  • Comment number 89.

    83. At 4:44pm on 20 Jul 2009, Goshawk8

    I agree with your sentiments regarding the Tories - but you must be reading too many press releases from the treasury...

    "The financial markets are recovering and no thanks to the tory boys. RBS and LLoyds will be able to repay the goverment bak with interest either in part or in full over the next few years."

    Recovering? we'll see about that. Don't think that a slowdown in decline is a recovery.
    I also would be very cautious about the prediction of taxpayers being repaid 'with interest' over the next few years. With the decline in lending still going on I wouldn't be surprised if we have to take a BIGGER share in the banks we currently have shares in, in order to keep them afloat.
    Where does the new business come from to re-ignite the Economy for this spectacular recovery?
    Most businesses and individuals are already over-extended, they are reducing their borrowing - not increasing it.
    The only people who are increasing their borrowing are those who have lost control and have no choice but to extend.

    They are bad credit risks - and we all know where that will lead....

  • Comment number 90.

    88. At 5:00pm on 20 Jul 2009, aka_bluepeter wrote:

    "Fact is the FSA call themselves regulators. Fact they clearly ignored or were blind to the warning signs which were obvious to the man in the street. Property prices were rising at an alarming rate, yes alarming, purely and simply because of cheap and easy money lending practice and nothing whatever to do with a person's income."

    I agree - but I wouldn't blame the FSA solely for this - who took the mortgage payments out of the inflation figure? (RPI instead of CPI)

    Mr Brown actually poked the FSA in the eye - which stopped them seeing the true state of the Economy. Otherwise interest rates would have been higher and we would all be much less exposed to the downturn....

  • Comment number 91.

    @ mickthebish post 7.

    You got that right, why aren't you saying something similar Robert?

    Step out of the box Robert, time to make your real mark and tell the whole truth, if the beeb will let you?

  • Comment number 92.

    This was my comment from the last debate about the FSA.

    Bankers more confused
    08:08am on 09 Jul 2009
    [55. At 08:08am on 09 Jul 2009, Ikantbelieveit wrote:
    This all sounds like change for change sake.
    It will cost us millions to dismantle the FSA and create a new body that will have the same people running it. I haven't got a solution but "better the devil you know" comes to mind.]

    My call to all political parties.. Dont dismantle the FSA! It'll be a waste of our money, just put people in charge of the FSA that have crystal clear objectives and authority to fine the banks and then name and shame them when they get out of line.

  • Comment number 93.

    post 89.... the ruse wherby The Govt took a new class of shares in RBs to add to it's ordinary massive majority holding (presumably because if they had just done the straightforward thing they'd have got to 90% and HAD to offer for the rest---therby being 'forced' to nationalise it)told everything needed to be known really.

    The continual talk of ...'and we'll sell them back and even make a profit'...fools nobody.

    I think where we are now is similar to those times when people try and decide whether 'capitulation' has occured (and simply by so doing prove irrefutably that it has not) The bust and the present 'suggestions for radical change' make me think that there has to be another downward fall before the politicians 'capitulate' present they seem to be calculating that it'll be 'business as usual soon'.

    That won't happen because the coming together of the various elements...end to the cheap energy era, global warming, and commodity price squeezes as well as the bubble bursting mean business-as-usual won't work however they struggle to make it do so.

    Most people on this blog seem to know that---but by their actions it seems the 'Ancien Regime'..... (Bankers, Politicians and regime journalists and so forth), still believe the storm will pass and the status quo be another Lehman-moment style shock is probably needed before they are panicked into action...unfortunately for the rest of us.

  • Comment number 94.

    Yawn - yawn -yawn. The day the Tories announce they will pass a Law that stops the Banks' daylight
    robbery of the public by making it illegal to charge more than 10% per annum interest on any loan,
    overdraft. credit card etc. then they will get my full attention. Until then I'll carry on seeing their PR attempts
    as pathetic and boring beyond belief.

  • Comment number 95.

    If the vast majority of ordinary citizens can so easily understand the immorality and recklessness of the 'City' one has to ask why journalists and politicians have such difficulties in understanding the immoral, lawless and unfair structures of power that dominate the current financial system (especially when it comes to taxes and financial rewards), structures of power which greedy oligarchies always manage to exploit. Is a fair society not the highest value everyone aspires to?

  • Comment number 96.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 97.

    George Osborne has failed to understand a single, simple, fundamental point. The FSA did not fail. Banks, plural, failed.

    Messing around does nothing to address the fundamental problem: banks failed. These policy suggestions are little more than creating the impression of achievement, by shifting the main actors in a failed system from one location to another.

    The concentration of power in a single business makes future failures likely to be a good deal more catastrophic.

    George Osborne, like many of the others in Parliament, has failed to grasp the simple principle: he is elected to represent the best interests of his constituents. If the best interests of his constituents means a politician advocates root and branch reform in banking akin to those root and branch reforms in the Coal and Steel Industries in the 1980s then that is what they are obliged to do. There is no best interest served in messing about with regulators.

    The reform required is reform of the businesses. Businesses that take deposits or payments and deliver goods and services at the hidden cost of making customers empoverished are pathological. The only cure is some strong medicine that George Osborne is terrified of even contemplating.

    The Tories, in a spurious attempt to save money are establishing a series of ideologically driven policies that they will advocate in the next parliament. By appealing to the Banking and Financial sector in this craven fashion they hope to get support from the electorate. This is delusion: why should the Electorate reform the way in which it manages its financial affairs in order to pander to businesses with a history of failure and broken promises?

  • Comment number 98.

    "....the Tories would force credit card companies and banks to provide much more information directly to individual customers about their charges and terms for a variety of products, from credit cards, to mortgages and savings accounts.

    George Osborne, the shadow chancellor, wants financial institutions to provide this information in a form that could instantly be uploaded into product comparison websites, so that customers can instantly see whether they are getting a good or bad deal from their banks.

    This is an idea that Osborne has borrowed from one of the pioneers of "nudge" behavioural economics, Richard Thaler."

    Rather ironically (and forebodingly), B
    havioural Economics proper
    has absolutely nothing to do with what people allegedly 'think', it's just that Kahneman and friends appropriated the term 'behavioural' from the operant people (like Chung, Herrnstein, Rachlin etc) doing the original work, largely because of the extremely bad press which he and his clan had generated with all the talk of 'cognitive science' since the early 1970s.

    A word to the wise, this is basically snake-oil in that the 'judgement under conditions of uncertainty: heursitics and biases' research is largely research on human cognitive diversity/error which should make one look more closely at behaviour itelf rather than what people report that they think/decide/want etc... That's a raher subtle point for those who do not understand what Operant Analysis/Behaviour Management actually is.

    True Behavioural Economics research, like most useful behavioural and medical science, is actually done on non-humans (largely rats, pigeons, Drosophila, C.elgans etc), as it's more informative.

    Still, I may as wall ask people to deny the holocaust as try to get people to take a serious interest in Behavioural Economics, as it gets the same treatment as IQ research, and for exactly the same egregious political-economic reasons.

  • Comment number 99.

    What I am about the say will be inconceivable to many, but to some, truth is all in 'the mind', and everything is essentially show-business (narcissistic supply), i.e. a means to pursue fame and fortune - think Hollywood. Such people do absolutely anything in pursuit of those ends if they can get away with it. If the rules of the game make it unlikely that they can be shown to be wrong, all the better, and they will lobby for legislative change to increase their opportunities. There are 'crooks' in the most unlikely of places, except what they do is in fact legal, it's just not truth-functional.

  • Comment number 100.

    What is it about Osborne and Cameron yes very like Blair the Tories never helped anyone but the rich they are not going to help the man in the street except to rob off him no one asked what party the banker voted for I bet there was no many for the working man. Bailing them out with our money so we have the right to say what we want with a vote, no chance of that no matter which party is in the banks run this country and were was Mr King when all this was happening I notice he does not suffer from loosing his job how many houses does he still have? and he comes on and says what ever people now close their mind to it all blinding people with science no matter which party they all knew about what would happen and moved their money out of shore till the time is right.Those who had little or nothing never get asked what they feel or think its those who live in London and not those who are poor, we are supposed to send our kids to war so that the banker and PMs keep their life as they are used to. Nothing has changed much of what has happened was set in motion by Tories. It will get worse and not better as the many have so little and so have no power.

    Is Osborne out in the street and Cameron talking rubbish it does not matter whom we vote for as they are all tarred with the same brush and will never be trusted no matter what they promise the rich and the very rich are doing so well .


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