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 Cable told The Times last night. The accusations come days after Moody’s, the credit ratings agency, downgraded nine of Britain’s biggest building societies.
Speaking on BBC Radio 4’s Today Programme this morning, Vince commented:
I was approached by someone who had a close view of what washappening in the FSA … and was extremely disturbed about how it was regulated, orhow it wasn’t regulated. He was talking specifically about the period 2005-2007. It was an absolutely critical period.
“This evidence, which seems very solid to me … the implication is thatthe FSA hasn’t just failed badly in its regulatory responsibility, butcompletely messed up it’s supervision of…building societies.” (Source: PoliticsHome.com)
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2 Comments
It is absolutely true what is being said. The FSA, under influence of Gordon Brown’s arrogance (“End to Boom and Bust”) and its own complacency allowed those reckless enough in the Banking Sector to lend ridiculously.
However, as a result, those more sensible organisations (mainly Building Societies) found their markets being cut from underneath them as the Banks took massive market share, based on their false profit models. In order to maintain their operations, continue employing staff etc, these Building Societies had lend virtually as recklessly, and go into the more dodgy areas of commercial lending to generate the (illusory) profits.
Ultimately, if you let a large sector to the financial market go wild, as Gordon Brown did, the contagion spreads to all corners.
I see Iain Dale is under CCO orders to try and rubish Vince.