26 February 2009

Lord Turner twists the knife


Lord Turner gave evidence today to the Treasury Select Committee and he demolished the regulatory framework set up by Brown. 

They existed within a political philosophy where all the pressure on the FSA was not to say 'why aren't you looking at these business models?', but 'why are you being so heavy and intrusive, can't you make your regulation a bit more light touch?

We were supervising people like HBOS within a particular philosophy of the way you do regulation, which I think in retrospect was wrong.

The regulatory philosophy was the product of "political assumptions at the time", he says. "I think there was a philosophy of regulation which emerged, not just in this country but in other countries, which was based upon too extreme a form of confidence in the markets and confidence in the idea that markets were self-correcting."

If the FSA in 2004 had tried to tell mortgage banks to cut back on lending, it would have been shouted down. "So, with hindsight, perhaps it would have been better if we did but I suspect we would have been pushed back politically if we had."

Strong stuff and very damaging to the arguments Moses is using on the causes of the recession.

It is reported that the FSA is to pay bonuses of £21m to staff!

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