Tag Archives: fsa

LibLink … Vince Cable: Flash a red light on reckless lending

Over at The Times, the Lib Dems’ shadow chancellor Vince Cable argues that the Financial Services Authority’s review on mortgages doesn’t go far enough to prevent a return to banks’ wild excesses. Here’s an excerpt:

Some of the more aggressive banks, seeking to expand their market share, are relaxing their offerings in terms of loan-to-value ratios. Any eagerness to return to former lending practices should be a source of concern. The housing market has not adjusted, at least yet, to realistic levels. Historical trends show a cyclical pattern of boom and bust, lasting roughly 15 to 20 years, going back to

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Daily View 2×2: 31 July 2009

Welcome to this, the final summer edition of LDV’s Daily View – the feature will return again at the beginning of September, as will the various members of the LDV editorial collective.

2 Big Stories

Treasury select committee slams Government’s “largely cosmetic” banking reform plans

Here’s what the BBC has to say:

The government’s plans for reforming the regulation of banks are “largely cosmetic” and “lack clarity”, MPs in the Treasury Select Committee say.

In its report on the banking crisis, the committee says that responsibility for strategic decisions and action remains “a muddle”. The report also says that the Financial Services Authority (FSA) “failed spectacularly” in supervising banks.

More importantly, here’s what Vince has to say:

This report rightly underlines the need for high quality and transparent regulation if we are to create a stable financial system. We must not create a regulatory system that just deals with the current crisis but one which is fit for all the challenges ahead.

“The cross party report also exposes the sheer folly of George Osborne’s proposal to hand all power back to the Bank of England. While it is true that breaking up the banks will be complex, it is also necessary. A bank which is too big to fail is simply too big.

“The secrecy in which the White Paper was created shows the extent of the deteriorating relations between the Bank of England and the Government and does not bode well for the future.”

Gary MaKinnon loses US extradition court battle

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Vince on reform of banking regulation

Lib Dem shadow chancellor Vince Cable has been delivering a speech on reform of banking regulation to the London Stock Exchange, outlining the ways in which the current regulatory model could be improved. Here’s the skinny:

  • RBS and Lloyds to be broken up before they are returned to private ownership
  • Highly paid bankers to publish details of their remuneration and confirm they are resident and domiciled in the UK
  • The FSA to remain as a unitary regulator
  • A long-term role for state banking, rather than the quick sale of state-owned banks
  • The scrapping of the “woefully misconceived” Asset Protection Scheme

And here’s Vince’s customarily pithy sound-bite:

The Government has yet to grapple with the challenge posed by the Governor of the Bank of England: that if a bank is too big to fail it is too big. One approach is to make it easier for big institutions to fail.

“Some aspects of the financial services industry are simply too big for the British economy to manage safely. The large, failed, British banks are the financial equivalent of Chernobyl. Like the former Soviet Union, the UK became over reliant on dangerous financial reactors.

“Britain has the highest share of banking assets in GDP of any major country, four times as high as the US. To prevent Britain from becoming the next Iceland, radical safety measures, like ones I have set out, are required.

“My approach to the City is not one of hostility, or of obsequiousness. I recognise its importance. But it needs ‘tough love’, not the freedom to run amok.”

But for those who want to read Vince’s words of wisdom in greater detail, excerpts from the speech transcript follow:

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Vince calls for investigation into FSA’s “appallingly bad job”

The Times reports:

The Financial Services Authority was accused last night by one of its former supervisors of complacency in its past regulation of building societies.

The unnamed whistleblower, who approached Vince Cable, the Liberal Democrats Treasury spokesman, said that the FSA ignored a warning three years ago that risky self-certified loans had been packaged and sold to building societies that thought they were conventional loans.

Mr Cable has written to Lord Turner of Ecchinswell, the FSA chairman, asking him to investigate. “This man experienced first hand the appallingly bad job the FSA did of supervising the building societies,” Mr

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