… you see worldwide financial and economic problems triggered by a poorly regulated sector of the US economy?
a) Propose to scrap all the regulations in the same sector of the UK economy?
b) Do something else?
If your answer was (a), congratulations – you too are John Redwood.
Yes, I’ve been reading once more the Conservative Party policy proposals he and his group came up with.
This time, please turn to page 60:
Mortgage Regulation. We see no need to continue to regulate the provision of mortgage finance, as it is the lending institutions rather than the client taking the risk.
10 out of 10 for ironic timing because what have we seen with the problems in the US sub-prime mortgage market? Yup, you’ve guessed it, it turns out the risk isn’t just borne by the lending institutions, but it is spread all through the international financial markets. So, for example, pretty much anyone in the UK with a private pension plan gets hit by the impact of problems in the US mortgage market (via declines in the UK stock markets, etc).
Nice to know that John Redwood thinks more of the this sort of stuff would be a good thing, hey?
(PS One of the other fallouts of the lack of proper regulation of mortgages in the US is that it’s become a very profitable area for criminals. The FBI estimates that in 2005 criminal proceeds from mortgage fraud topped $1 billion.)