The FSA and Northern Rock

It was interesting to hear the retiring Head of the FSA effectively blaming the government and the Bank of England for the collapse of Northern Rock this morning. Apparently the FSA recommended helping Lloyds to buy Northern Rock before the run on it. At the time I recommended the Bank simply made more loans available to Northern Rock, on good security, to replace the wholesale money that had dried up. That would have been cheaper and easier than the route they followed. Allowing Lloyds to buy it reflects the regulatory support for mega merger banks, which was part of the problem of that era.

55 Comments

  1. Jed Dawkins
    June 13, 2012

    You are so wrong.

    Your attitude chimes with the prevailing political classes in prefering to bail out bankrupt businesses. This has therefore created a sovereign debt crisis on the bank of what was a banking crisis.

    The Tories seem to have forgotten their history and lost their Mojo to take the hard decisions for the good of the country.

    Baroness Thatcher oversaw the breakup of systemic bankrupt businesses, from British Rail, British Steel, Brtitish Leyland etc., all of which were draining the public purse. The banks have literally raped the public purse and yet suffer no pain or loss.

    Seems you need to be reminded that in a capitalist society business that are broke go bust. What we have now is nigh on fascism, private ownership with heavy government intereference.

    The reluctance to make the hard decisions by the political elite will eventually destroy world fiat currencies as governments resort to the printing press to maintain liquidity.

  2. Jed Dawkins
    June 13, 2012

    You are so wrong.

    Your attitude chimes with the prevailing political classes in prefering to bail out bankrupt businesses. This has therefore created a sovereign debt crisis on the bank of what was a banking crisis.

    The Tories seem to have forgotten their history and lost their Mojo to take the hard decisions for the good of the country.

    Baroness Thatcher oversaw the breakup of systemic bankrupt businesses, from British Rail, British Steel, Brtitish Leyland etc., all of which were draining the public purse. The banks have literally raped the public purse and yet suffer no pain or loss.

    Seems you need to be reminded that in a capitalist society business that are broke go bust. What we have now is nigh on fascism, private ownership with heavy government intereference.

    1. Tony Baverstock
      June 13, 2012

      “The banks have literally raped the public purse and yet suffer no pain or loss.”

      I seem to remember that only 2 of the major UK banks were rescued. The other 2 continue to make very large payments to the UK Government.

  3. Kevin Ronald Lohse
    June 13, 2012

    Mr. Sants’ attempt to distance himself from complicity in Gordon’s disastrous stewardship is understandable but ultimately futile. His protestations will be greeted with derision from the general public, and those in the know will not change their opinions on the strength of this statement. Even on leaving, Mr. Sants could not resist carrying on the war between his department and the BoE. He would have been far better advised to go quietly with what remained of his reputation intact.

  4. Brian Tomkinson
    June 13, 2012

    Encouraging Lloyds to “rescue” HBOS didn’t work out very well either.

    1. lifelogic
      June 13, 2012

      Encouraging Lloyds was it? Are the Directors not supposed to act in the best interests of the shareholders.

      I least I had no shares in any of the banks?

      1. Brian Tomkinson
        June 13, 2012

        My recollection was that Brown encouraged the Lloyds deal with HBOS. The directors were mistaken in listening to him.

        1. lifelogic
          June 14, 2012

          “mistaken” well perhaps. Certainly it did not do much for the poor shareholders. Surely it was clear it was not going to.

  5. lifelogic
    June 13, 2012

    Exactly it is not the mega banks and size that matters it is how well they are run and having some real competition going. This is, to a large degree, compromised by the deposit protection scheme which afford all banks the same “insurance” protection. In protecting them this way the government has a clear duty to ensure they are not taking on undue risks with this deposit protection and to monitor it. Support should be in the form of liquidity given on good security, when needed, as you say to retain confidence. Any limits on gearings and the degree of risk or gambling need to be in place.

    Absurd incompetence and buck passing, as is usual in the UK state sector. After all it is not their money and they do not even lose their jobs or bonuses it seems. What do they care? This attitude show up everywhere from the bank regulation, to roads, to public transport, the tax system, the NHS, the education system, planning and so much else. No one ever takes responsibility – Lord Carrington was the last honourable resignation I can remember, quite rightly over the Falklands disaster?

    1. Tony Baverstock
      June 13, 2012

      Mr Redwood

      There has been a lot written about the DPS but few facts. Do you have any information about how much of the banks liabilities are covered by the scheme? Since customer deposit are quite small compared to the millions lent to the UK banks by the UK corporate and financial services sector. I have always assumed the percentage was quite low, maybe as little a 30%. Which means the DPS is of little value in a bank run because the serious money is withdrawn by the large lenders.

  6. Adam5x5
    June 13, 2012

    Seems to me to be another civil servant/politician type retiring and saying
    “Wasn’t my fault, guv. Was t’other guy.”

    Why so few of this breed of person can actually stand up and say
    “Yep, I made some mistakes and this one was a real doozy. Sorry.”

    This is why people are becoming so disengaged from politics.

    1. alan jutson
      June 13, 2012

      Adam5x5

      Agreed

      We seem to have lots of people who thought things were going wrong at the time, but did nothing except hide.

      Strange how they manage to find a voice once they are retired, and are on a large and secure pension.

      1. norman
        June 14, 2012

        Labour will be back in charge in 3 years time, we’ll be no further ahead in dealing with the structural problems than we are at the moment, and things will go to rack and ruin.

        I know we can’t expect a few dozen right wing MPs to perform miracles but people will be justified in asking ‘What did you do while Cameron and Osborne were failing abjectly?’

        We can see they’re failing, the rest of the country can, it’s too much to expect intelligent MPs can’t.

        And I know John Redwood has done more than most, written books, resigned from cabinet on principle, keeps up this blog, and most likely a whole lot more behind the scenes we don’t know about and I’m not having a go at anyone in particular. I mean that statement collectively.

        The Lib Dem (approx. 15% of MPs) influence is plain to see, where are all these bright young things of the 2010 intake we hear of so often? Either waiting for a miracle or a junior government post it appears from the outside.

  7. APL
    June 13, 2012

    JR: “At the time I recommended the Bank simply made more loans available to Northern Rock, on good security, ”

    That might have been a good idea if Northern Rock had any good collateral. Let’s not forget this was the lending organization that specialized in 120% mortgages.

    That meant that should the economy take a dive, the Northern Rock was immediately exposed on its loan portfolio.

    The previously tried and tested loan standard would be 80% loan to valuation. Northern Rock was the equivilent of the auto ‘chop shop’. The failure of the FSA was to have allowed it to continue at all.

    No prosecutions? Odd, maybe managers of NR, the FSA and the BOE are all members of the same London club.

    1. Tony Baverstock
      June 13, 2012

      Please do not let the absence of facts effect your analysis. NR did do some lending at higher multiplies, and a lot of self-certificated lending.

      However, its loan book was not significantly higher risk than other lenders. Its problem was that its business model was to write mortgage loans and then package them up into securities which were then sold to investors. Look up Granite!

      NR had no exposure once the securities were sold so its exposure to the UK property market was limited.

      The problem was when fears of inflation surfaced and the market feared a fall in property prices and potential loses to lenders the buyers for these securities disappeared and with it NR business model.

      With no ability to write new business NR could not make profits.

      1. lifelogic
        June 13, 2012

        Indeed

      2. APL
        June 13, 2012

        Tony Baverstock: “Please do not let the absence of facts effect your analysis.”

        Tony I thought for a second that you were going to refute something I wrote.

        Tony Baverstock: “NR did do some lending at higher multiplies, ”

        Thus you confirm my assertion as fact.

        Tony Baverstock: ” and a lot of self-certificated lending.”

        Otherwise known as ‘liar loans’ thus confirming Northern Rock loaned against ‘dodgy’ collateral, which was my other assertion.

        So, no absence of facts then.

        Tony Baverstock: “Look up Granite!”

        Yea, what I know about Granite would almost certainly be censored by our host.

        Tony Baverstock: “The problem was when fears of inflation surfaced and the market feared a fall in property prices and potential loses to lenders the buyers for these securities disappeared and with it NR business model.”

        Ha ha ha! Tony, you are funny.

        1. APL
          June 13, 2012

          Tony Baverstock: “The problem was when fears of inflation surfaced ..”

          Just to expand on this a little;

          Northern Rock’s business model was so robust, that mere ‘fears of inflation’ destroyed the company?

          Northern Rock collapsed before QE and government devaluation of our currency really got inflation roaring, in fact the collapse of Northern Rock, followed by RBS & BOS were the trigger for the QE that has caused the extra inflation.

          Just trying to figure out how something that resulted from an event, can be put forward as the cause of that event.

        2. Tony Baverstock
          June 14, 2012

          “Tony Baverstock: “NR did do some lending at higher multiplies, ”

          Thus you confirm my assertion as fact.”

          But so did all lenders. There is no evidence the NR loan book was any worst than the other UK lenders.

          “Tony Baverstock: ” and a lot of self-certificated lending.”

          Otherwise known as ‘liar loans’ thus confirming Northern Rock loaned against ‘dodgy’ collateral, which was my other assertion.”

          Self-certificated lending was mainly to contractors where the normal income certification was not available. It had nothing to do with the value of the collateral which was the borrowers house and would have been subject to normal valuation rules.

          “Yea, what I know about Granite would almost certainly be censored by our host.”

          Hum I love that. While I agree the bonds are in technical default because of the nationalisation of NR they bonds continue to repay investors and there have been no capital loses for even the junk holders. I wonder what you could say.

          I agree as an investor if you want to sell now you would suffer a loss because there are no buyers for abs. However, I expect they will meet the requirements for the AAA rating they had at issue by repaying all investors interest and capital at maturity.

          In case you fail to understand the meaning of a long term rating it shows the likelihood of a bond paying interest and capital it does not mean you can always sell it for par.

          “Ha ha ha! Tony, you are funny.”

          Yes I am.

          1. APL
            June 15, 2012

            Tony Baverstock: “But so did all lenders. There is no evidence the NR loan book was any worst than the other UK lenders.”

            Apart from the fact that Northern Rock collapsed, what more evidence do you require?

            Then there is the fact that two other big UK banks collapsed so Northern Rock being no worse than other UK lenders is hardly a recommendation, is it really? In fact it was just the weakest and most exposed as a result of its reckless banking practice.

            Tony Baverstock: “Self-certificated lending . It had nothing to do with the value of the collateral which was the borrowers house and would have been subject to normal valuation rules.”

            So the collateral that could have been used as per John Redwoods original suggestion, was real estate which we know was overvalued at the time in some cases by Northern Rock own valuations by 20%, in anticipation of the market continuing to rise.

            So should NR try to use these assets to raise more capital, it had either been passed to Granite, so was unavailable to use as collateral, or it was grossly overvalued in a declining market and so largely worthless.

            In either case Northern Rock had no collateral with which it could raise more capital as per John Redwoods original suggestion.

            Tony Baverstock: “While I agree the bonds are in technical default because of the nationalisation of NR they bonds continue to repay investors and there have been no capital loses for even the junk holders.”

            This is a corker!

            The bonds are in technical default, because of the nationalization of the company. Was Granite nationalized?

            But they continue to pay and there have been no capital losses. Perhaps that is because the UK tax payer is supporting the company, otherwise it would have collapsed along with Northern Rock?

  8. Barry.Oblivion
    June 13, 2012

    John. I tell you what would have stopped the run on NR dead. Simply a proper bank deposit protection.

    At the time only the first £2000 of savings was 100% guaranteed. Anyone with a deposit over £2000 would have been queuing up to withdrawl their cash. Ie most people.

    Why was the UK’s bank deposit protection so poor before 2010? Whose responsible for that?

    1. APL
      June 13, 2012

      Barry.Oblivion: “Simply a proper bank deposit protection.”

      Nope.

      The bank run was a symptom of the problem not the cause of the problem. People only tried to withdraw their money from NR when they thought NR was bust.

      What would have stopped the run on Northern Rock would have been sound banking practice, rather than the NR strategy of going ‘hell for leather’ for growth.

      Lending above and beyond the valuation of the property in order to finance ‘home improvement’ or the holiday or the new car. All ‘assets’ that have a diminishing or non existent value as collateral was the root of the problem.

      The FSA should have stopped that dead in its tracks. But it didn’t and now having seen Gordon Brown (saying things others deny-ed) oath at the Levinson enquiry, ‘it wanna me’, ‘I didna do it’, ‘not my responsibility’, the former head of the FSA thinks he can get away with it too.

      You know what they say, a fish rots from the head!

    2. Mark
      June 13, 2012

      In 1986, the Financial Services Act offered a guarantee of 90% on the first £48,000 of deposits. I think that it was probably Gordon Brown who reduced that to £35,000, despite intervening inflation. To equate to the 1986 level of protection the limit would now be £100,000.

      1. lifelogic
        June 13, 2012

        And if you are giving depositors government protection you clearly have a duty to ensure the bank warrants the trust any pays accordingly for the insurance.

  9. waramess
    June 13, 2012

    Your view would seem to be far more appropriate than that of Sans, after all given the inherent lack of liquidity in the banking system, when the interbank market comes to a halt, the role of a central bank is to provide liquidity.

    King now claims that he was not about to provide funds to an insolvent bank but he does no more than re-write history. At the time, the failure of Northern Rock was due to its reliance on the interbank market for funds.

    1. Tony Baverstock
      June 13, 2012

      True but only in the short term its model was then to package and sell the loans.

  10. forthurst
    June 13, 2012

    The ex-head of the FSA is mistaken; however, his organisation was not lender of last or resort or lender of any sort so it understandable that he would not have been able to offer a sensible solution to resolve the Northern Rock crisis. The BoE, without any direct responsibility of oversight for the NR situation murmured about moral hazard as the Chancellor dithered. Mr Santos’ postulation that had the NR situation been resolved promptly according to his prescription, public confidence would have been maintained and the banking crisis might have been avoided, suggests that he neither then nor since has actually understood the reasons why wholesale money dried up when it did, reasons which were within his remit to discover before they caused the banking sector to fail.

  11. Lindsay McDougall
    June 13, 2012

    Please answer my questions. Why do we need the FSA? What useful function does it serve? How much of a reduction in the public sector payroll could be achieved if it were simply scrapped?

    Reply: The FSA is about to be scrapped. There will, however, be regulators at the Bank of England and a new retail regulator instead.

    1. APL
      June 13, 2012

      JR: “There will, however, be regulators at the Bank of England and a new retail regulator instead. ”

      Would you like to tell us up front what the European Union connection will be? Just so we don’t have to go wading neck deep through tedious boring tomes of European Union directives to catch you all out trying to stitch us up again?

      Thanks.

      Reply: They will be under the overarching system of EU regulators.

      1. APL
        June 13, 2012

        JR: “They will be under the overarching system of EU regulators.”

        You mean the regulations passed by our puppet UK parliament, will simply be interpreting the EU regulations into United Kingdom law?

        With a few knobs on!

        1. uanime5
          June 13, 2012

          EU regulations don’t have to be converted into UK law, they apply to all EU countries as soon as they’re created. EU directives have to be converted into UK law.

          1. Lindsay McDougall
            June 14, 2012

            Does the UK parliament have a right to vote either of them down, to exercise a veto? I don’t want a load of piss and wind, a simple ‘yes’ or ‘no’ will suffice.

          2. APL
            June 14, 2012

            uanime5: “EU regulations don’t have to be converted into UK law, ”

            Can you cite your source please?

            Lindsay McDougall: “Does the UK parliament have a right to vote either of them down, to exercise a veto?”

            I’d imagine we have the right, but with the spineless lick-spittles we seem to have elected to represent Ha! they do not have the inclination.

            Governing is such difficult work, much better to pick up the well padded pay check, and leave all the tricky stuff to the civil service who are in cahoots with the EU nomenclatura.

            Delegation is the Westminster catch phrase, these last three decades.

            Reply: For once uanime is right, that Regulations are directly acting from the EU. Most of what we are talking about are not, however, EU regulations. They are EU Directives, which require member states to put in place their own regulations to a centrally agreed specification. The Uk Parliament has no “right” to vote down EU Regs or Directives, once approved, unless we wished to amend the 1972 European Communities Act and unilaterally change our relationship with the EU.

        2. APL
          June 13, 2012

          In that case, why do we need our vastly overpaid MPs?

        3. APL
          June 15, 2012

          JR: “For once uanime is right, that Regulations are directly acting from the EU.”

          But only because ‘we’, that is you [collectively in parliament] refuse to do anything about it.

          JR: “unless we wished to amend the 1972 European Communities Act and unilaterally change our relationship with the EU.”

          BINGO!

          No remind me, who do MPs represent? The political class, who are fully on board with erasing the UK, or the population of the UK?

          Reply: I have always said Parliament could re-establish supremacy if it wished. That has never been the issue. The issue is that most MPs do not wish to do that, as I have repeatedly explained, because many people vote federalist.

          1. APL
            June 15, 2012

            JR: “The issue is that most MPs do not wish to do that, as I have repeatedly explained, because many people vote federalist.”

            Federalist parties. That would be the three big federalist parties, Labour, Tories and limp dems.

    2. lifelogic
      June 13, 2012

      Hopefully they will outlaw loans above say 40% APR – which serve no one and bring much misery. Also loans where the lender can increase the interest rates (as they choose) when they know the borrower cannot repay and load dubious fees on the account. Also loans where the agreement is of such complexity that only a maths graduate, with four days to waste can work out the interest and charges.

    3. Lindsay McDougall
      June 14, 2012

      If the new regulators were also scrapped, there would be nobody left for the EU regulators to ‘overarch’. You can’t boss around someone who isn’t there.

  12. backofanenvelope
    June 13, 2012

    Northern Rock became a problem because Gordon Brown dithered for six months. It could have been nationalised; closed down; refunded or sold. But no one was in charge.

  13. English Pensioner
    June 13, 2012

    We are obsessed in this country with the concept “Biggest is Best”. Whilst this may apply in a few areas such as supermarket type retailing, by and large it has been a complete failure. Yet officials at organisations like the FSA still cling to the concept and want bigger and bigger banks and presumably insurance companies etc.
    Have they learnt nothing from the demise of the British Car Industry, when in stages, all the small failing manufacturers were merged (with the aid of government money) into the huge British Leyland, then Rover car companies, which then finally collapsed taking the taxpayers’ money with it?
    We need smaller, more innovative banks, not only because this will improve competition and provide better service, it will end the “Too big to fail” mentality, and also allow those at the top to properly oversee, and understand, the company’s activities which I believe is impossible with these megabanks.
    Nevertheless, I expect we will see more mergers, more problems, and even more post hoc regulation.

  14. s macdonald
    June 13, 2012

    I’m sure I recall reading that the BoE had twice officially warned Chancellor Brown of Northern Rock’s dodgy finances, but that he had ignored the warnings.

    Can anyone verify this?

  15. Mark
    June 13, 2012

    Diversionary nonsense from Sants. If he and the FSA had been doing their jobs, Northern Rock would never have gotten into such deep trouble in the first place. The FSA took their eyes off the ball on every aspect of the property market while busying themselves with a tick-box culture of regulation that ignored the real world.

    They were responsible not only for the banks, but also financial intermediaries such as mortgage brokers who were complicit in creating the bubble of over valued mortgage assets. They missed spotting countless frauds (“liar loans”) as well as failing to understand high risk business models such as depending on overseas wholesale funding from a small range of counterparties being rolled over. Frankly they should have stepped in no later than 2003 when BBC Panorama produced a programme that unveiled many of the problems – a genuine example of the BBC actually fulfilling its public service remit.

  16. Leslie Singleton
    June 13, 2012

    Much of the Bank of England’s authority, hard won since the late seventeenth century, having been wantonly destroyed by that megalomaniac Brown, the alphabet soup of the FSA didn’t have credibility with even its own creator. Of course you are right to say the Rock should have had its deposits topped up to fill the gap caused by the interbank market drying up. It’s not as if the Government has done much by way of Management alongside its Ownership–it wouldn’t know what to do except maybe encourage bad lending for macro reasons.

  17. JimF
    June 13, 2012

    My guess is we’re being fed half a story here. Did Lloyds want to buy NR? Would their shareholders have agreed? It opens up a whole new can of worms to ask whether, had that merger gone through, Lloyds would also have been asked to swallow HBOS, which would certainly have seen it underwater.
    It just reminds us how our politicians are meddling dangerously in what should be free markets, and creating this no-man’s-land situation between private and public ownership.
    Why not just have a 100% deposit insurance scheme, premia paid by all banks? When the bank goes bust it then does actually go into administration, handed over into total state ownership and supervision, all non-functionaries are fired to be replaced temporarily by regulators and civil servants, whilst it is split up and sold off to the highest bidder?

    1. lifelogic
      June 13, 2012

      Insured by whom?

  18. peter
    June 13, 2012

    I seem to remember Tony Blair stating that Gordon McBroon was spending too much during his later days as Chancellor to which most sane people would ask

    ‘you were PM at the time so why didn’t you get a grip of what the Treasury was doing?’

    – sounds like another it ‘wasn’t me guv’ style excuse to me.

    I had an argument on Twitter the other day with someone who thought the previous PM did a lot to rein the banks in, it wasn’t all his fault, far more complex than that – typical labour supporter, blame everyone else except the root cause.

    He agreed with me in the end, though he didn’t like the fact my evidence came from Tory sources but he still tried to say labour under the then Chancellor did a good job when they were in office……

  19. Glyn H
    June 13, 2012

    I can only but agree with much of the comments above concerning the ‘not me gov’ attitude of Sants and Mr Browns disasterous handling of NR and others but no one has observed that it was a partisan political descision to nationalise NR. That is to use public money in the Labour party interest. A typical Brown move. It should have been put into administration. That is Capitalism working but in the Labour heartlands the rest of us bailed it out. One of the huge number of things Mr Brown did to debauch our economy trying to seek reelection. Starting with private sector pensions; that was either deliberate or incompetant; like almost everything else that man did!

  20. Webwrights
    June 13, 2012

    The entire Conservative Party seems reluctant to deploy in its support the series of fundamental facts which, more than any other, absolve the Tories (and, indeed) the unfairly pilloried Bank of England and its Governor of blame for the recent financial catastrophes.

    1 It was Labour which, after the 1997 election, announced the new regulatory framework in which (inter alia) regulation of the banks and building societies would be removed from the Bank of England and handed to the new FSA. The SFA (the Keystone Gestapo) was already a home for financial incompetents, and the FSA was to prove little better.

    2. The FSA simply did not and could not have the very special skills needed to monitor and regulate banks. The Bank of England maintained a continual watching brief on its ‘charges’, ensuring that its liabilities were adequately covered at all times.

    3. With the change in regulation, the banks and building societies (i) were able to gear up irresonsibly and (ii) handed management control to non-bankers like Fred Goodwin (accountant) and Andy Hornby (general management & marketing).

    4. Without prudent management in-house, and in the absence of real-time regulation, the banks went mad. Northern Rock wrote 130% mortgages, Bank of Scotland indulged in incontinent corporate lending under Peter Cummings and RBS was grown irresponsibly under Fred Goodwin.

    5. Northern Rock simply would not have happened under continued BoE regulation. If, however, NR had found itself in even slight difficulties, a takeover (possibly by Lloyds-TSB) would have been quietly brokered by the BoE. There would have been no bank ‘run’.

    6. Neither would HBOS or RBS have collapsed. They would have been smaller, and would have grown far more slowly. And wouldn’t that have been good for everybody?

    7. The only bank which was being run by bankers throughout was Lloyds-TSB. It was the only bank which was in good financial shape in 2007/8; dull but dependable. Brian Pitman was a banking genius. It is wretchedly unfair that Eric Daniels is continually vilified as one of the architects of our financial ruin. Lloyds-TSB was effectively forced by the Brown government to put HBOS out of its misery, and Daniels was given not time to go over the books.

    8. With regulatory oversight retained by the Old Lady of Threadneedle Street, we would have sailed through the 2007/8 crises. Of course, the terrifying downside is that we would still have an incompetent sociopath as our Prime Minister, and would probably be breaking in yet another wet-behind-the-ears leader of the Conservative Party.

    9. It’s therefore all the fault of the Labour Party; all the fault of Brown, Balls and Miliband.

    10. For the record, I’m not a banker and I don’t know any of the people whom I have mentioned above.

    1. peter
      June 13, 2012

      Here here – try telling that to a labour supporter about their precious labour party. When you look at a problem you should always go to the root cause and I’m afraid people have short memories.

      If I was in government I would be putting pressure on the PM to set up a Leveson type enquiry to establish first of all who designed the regulatory framework, who implemented it, who failed to acknowledge warnings from Eddie George and why – I think I know the answers but I guess they would come better from a formal stage.

      Then further down the line, who was informed of bank weaknesses (a certain Lib Dem gentleman did speak about it but no one was listening) and what they did to mitigate those warnings – if nothing why not.

      Lets have a lessons learned inquiry on how NOT to run a countries financial systems and show the public what a shower these labour politicians really are in case they get elected again and of course to hope that future politicians won’t try to do anything as stupid again.

      I’m not partisan to any party but I had a vote in ’97 and even I did not fall for all that Blair/Mandelson propaganda like most of the rest of the UK and therefore helped return a tory MP –

      You could argue that its the people to blame for falling for a Clinton copycat election campaign and allowing themselves to be taken in.

  21. Jon
    June 13, 2012

    The only thing the FSA knows how to do is to be a (unfair enforcer-ed) imposing costs and fines. (How do they differ from a corrupt -ed) police will ask for 5 grand to keep your licence for going 1 mph over the limit. What about Equitable Life, that showed them to be totally incompetent. They would meet the board, the minutes would jot down that they were paying out far more than they could afford and that the boss was doubling up as the chief actuary, in other words the auditor and did nothing but say lets meet same time next year.
    We want some regulation in financial services but these are clowns.

    1. Webwrights
      June 16, 2012

      I don’t know about the FSA, but the SFA used fines to fund the staff bonus-pool. There was, therefore, a disgraceful incentive to impose ludicrously disproportionate penalties for the most minor of real (and imagined) transgressions. Remember the uproar when the Police proposed such a disgraceful thing?

      That was what destroyed my own business. We had a fractional and arguable error inflated into what the SFA portrayed as a client-jeopardising irresponsibility.

      The (SFA-ed) ignored the inconvenient fact that client funds were under the control of our clearing agents, and were never at risk. The bonus-pool must have been looking a bit thin as the fine was absurdly pitched. I secured my employees’ livelihoods by selling that part of the business, kept the registration separate and fought the (regulator-ed) at a tribunal. They even had to change their rules of evidence to build their case.

      I knew 3 Tory MPs at the time (counting 2 of them as good friends), and gave each of them the complete file showing the SFA’s (tactics-ed). Guess what, they were all too spineless and terrified of the regulator even to reply. Politicians eh, pfui. No offence, of course, Mr. R!

  22. Acorn
    June 13, 2012

    I have just watched, on the parliament channel, the most abysmal spectacle of so called parliamentary democracy. You can understand why our socio-economic problems never get solved; we have a bunch of politicians playing “Ya Boo Sucks to you” games all day, that add no value to anything that matters to the 99%. I watched a flock of vultures hovering over the carcass of a Secretary of State for Culture. We’re doomed, I tell you, doooomed…..

    I estimate that this Westminster farce was costing us taxpayers, circa £300,000 an hour. Even the BBC gives better value costume drama than that!

  23. Iain Gill
    June 13, 2012

    just like the rubbish hospitals in the NHS who should be allowed to fail and shut (protect the patients by giving them MONEY to go elsewhere, and you could bet your bottom dollar the market would provide capacity if the patients had money) rather than being regularly supported when they run out of money or when all the customers would prefer to go elsewhere…

    the banks being supported as if they are critical national infrastructure is a nonsense, sure guarantee the deposits but no reason to support the banks themselves in my view, letting a few banks go bust would be good in my view. a few bankrupt businesses encourages the competitors to avoid that fate.

    and so on

  24. libertarian
    June 13, 2012

    When I heard that Alistair Darling had prohibited the Bank of England from loaning NR a short term loan of £90 million due to the money markets freezing up I knew the proverbial was about to hit the fan. As the lender of last resort this was exactly what the BoE was for, the political decision to not allow it has cost us trillions. Thanks Gordon

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