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.