Tuesday, 2 June 2009

The Lords slate Brown's regulation

At last.

The House of Lords Economic Affairs Committee have reported back and come up with the conclusion that Gordon Brown's financial regulation has failed.

No sh!t Sherlock.

A choice exerpt from the HOL report -

It recommended taking the responsibility for supervising the banking system as a whole away from the FSA and giving it to the Bank of England.

That would be the exact opposite of what our unelected leader did all those years ago that led to the financial crisis in this country.

Whilst the banks bankrupted the country, extended their lending multiples and waived the need for income verification on mortgages, the FSA spent valuable resources chasing me around to make sure I was adhering to their new initiative - Treating Customers Fairly.

I've got news for this government quango - unlike the FSA I operate in a competitive environment. If I don't treat my customers fairly they use someone else and I go bust.

The FSA needs to concentrate on more pressing matters like making sure the banks are not allowing the population to sink further beneath a tide of debt. Or better still the FSA should be abolished and replaced with a regulator that knows what it is doing.


AntiCitizenOne said...

But the banks were following what the regulatory regime told them to do. Basically CREATE CREDIT.

Credit volume used to be regulated as part governments role of currency monopoly administrator.

Why they changed from making banks lend a limited amount of credit to the best risks to making banks lend to everyone is a mystery.

It was obvious (with even limited knowledge of systems + FRB) that it would be a disaster.

CROWN said...

The banks were working within the rules. The regulation never told Northern Rock to lend 6 times income without checking the income.