Banking regulation 'not to blame' says Chancellor

[David Guyatt]

Dear Darling,

I just read the below news article. What a load of old bollocks you talk. Is assisted self-strangulation an option that will cause a shift in your perception.

I think so.

Sincerey,

David Guyatt

http://news.bbc.co.uk/1/hi/business/8104340.stm

Banking regulation 'not to blame'
Chancellor Alistair Darling does not plan fundamental reform of the structure of the system that regulates UK financial institutions.

Mr Darling has said that the current regulatory system is not to blame for the credit crunch, blaming instead the bosses of financial institutions.

He wants to improve the quality of the regulators and those who run banks.

There is currently a tripartite system, with the Treasury, Bank of England and Financial Services Authority (FSA).

The system has been widely criticised for failing to prevent excessive risk taking at banks.

The tripartite system was introduced by Prime Minister Gordon Brown when he was chancellor.

'More intrusive'

Mr Darling said that regulation overall still needed to be improved.

"It needs to be more intrusive and needs to ask harder questions," he told the BBC.

But he added that the real problems were in boardrooms.

"Too many people did not understand the risks to which they were being exposed," he said.

"You've got to make sure you've got the right people there to make the right judgements.

Interconnected firms

The US administration is due to unveil sweeping changes to the financial system.

“ Mr Darling does not believe that the tripartite model is to blame ”
Robert Peston, BBC business editor
On Wednesday, President Barack Obama's government will announce new powers for the central bank of the US, the Federal Reserve, to oversee the relationships between financial institutions.

In future, the Fed will require interconnected firms to hold more capital in case of a crisis, to help avoid a repetition of events last year when the collapse of investment bank Lehman Brothers threatened to undermine the financial system.

Mr Darling told the BBC that the US regulatory changes would be catching up with the reforms made in the UK 10 years ago.

'Huge price'

Mr Darling will give more details of his plans in his annual Mansion House speech later on Wednesday.

"Having stabilised the banking sector, we are faced with the challenge of building a stronger, more efficient and more resilient financial sector in the future," he will say.

"Anyone who thinks that we can carry on as if nothing has happened should think again. In every country we are paying a huge price for this crisis. Not just the financial cost but also a profound social and human cost," he will add.

But the boardroom is where the focus should be, he will argue.

"I strongly believe that the process of learning lessons has to start in the boardroom. Bank boards must have the right people, skills and experience to manage themselves effectively… their focus must be long-term wealth creation, not short-term profits."

Mr Darling also signalled a planned paper on reform of the banking industry will be much less forceful than the Treasury had originally suggested.

The paper, which is expected to be published in about a fortnight, will be a consultative green paper, rather than a policy-setting white paper.

[David Guyatt]

Ah, the true reason why Dear Darling won't tighten City regulation now becomes evident.

Faced with tougher regulation and oversight in the US, darling bankers will want a lax offshore banking haven in which to peddle their scams and crookery.

Enter the newly revitalized (by our money!) "service industry" American friendly, American owned, City of London (and the Isle of Dogs "Little America") -- spearhead of United Kingdom Plc.

http://news.bbc.co.uk/1/hi/business/8104700.stm

US to reveal banking reform plans

I expect Congress to work swiftly to get these laws into place
President Barack Obama
The US government is set to announce a major reform of banking regulation to prevent future financial crises.
President Barack Obama is due to set out plans requiring big banks to put more money aside against future losses and curb excessive risk taking.
The US central bank, the Federal Reserve, will be given the authority to monitor major financial institutions.
And consumers will get a special agency to protect their interests and regulate mortgages and credit cards.
The plan is the biggest shake-up of the US system of financial regulation since the 1930s.

KEY US BANKING REFORMS
Tougher capital requirements for big banks
Regulation of securitised assets
Consumer mortgage protection
Powers to take over failing banks
Global regulatory standards

Analysis: The obstacles to reform
Its aim is to deal with the weaknesses that the sub-prime crisis and the financial meltdown revealed in the fragmented US regulatory system.
"We have tried to identify the set of issues that are most crucial," Larry Summers, the top economic adviser to Mr Obama, told the Financial Times.
These include dealing with systemic risks that could bring down the whole financial system, raising capital requirements for banks, ensuring that the government can take over failing institutions, and protecting consumers and investors.
There will be more regulation of hedge funds, securitised debts and over-the-counter derivatives, all of which have been blamed for exacerbating the financial crisis.
It will also aim to give shareholders more power to question executive bonuses.
"We want to make sure we are getting the best possible system in place, so that we are not repeating the mistakes of the past," President Obama said on Tuesday.
The reforms will also fullfil the commitments made by the US at the G20 summit in London to join in the worldwide effort to toughen financial regulation.
New institutions

Bear Stearns' problems caused shockwaves in global financial markets
The reforms will enhance the power of the Federal Reserve to supervise and ultimately order the takeover of any financial institution in trouble.
It was the inability of the US government to take over Lehman Brothers that threw the financial markets into turmoil in September last year.
However, the Obama administration has backed away from earlier plans to create a single regulator, with the Fed sharing responsibility with the Federal Deposit Insurance Corporation, which regulates smaller community banks, and the Treasury.
But one regulator, the Office of Thrift Supervision, will be abolished.
Instead, there will be a new council of regulators, the Financial Services Oversight Council, which will co-ordinate the supervision of the banking system.
And the Fed will lose some of its powers to a new Consumer Financial Protection Agency which will regulate mortgages, credit cards, and savings products.
Fight in Congress
The proposals for regulatory reform could face significant opposition in Congress.
Mr Obama said he expected Congress to "work swiftly to get these laws into place", but warned that his plans would be a "heavy lift" because they faced opposition from "special interests".
The US Chambers of Commerce, a business lobbying group, has already said it opposes key parts of the reform.
And many Democrats are sceptical of giving more powers to the Fed, whose unelected chairman, Ben Bernanke, is a Republican appointed by President Bush.
The influential chairman of the Senate Banking Committee, Christopher Dodd, has favoured the creation of a new consolidated bank regulator to replace the Fed and other agencies.

[David Guyatt]

Bending over and being spanked by banks is the new labour favoured S&M position...

http://news.bbc.co.uk/1/hi/business/8106755.stm

King and Darling clash on banks
The Bank of England governor and the chancellor have clashed on what needs to be done to control banks and prevent a repeat of the financial crisis.

In his annual Mansion House speech to the City, Mervyn King called for more authority to intervene in the actions of banks seen to be behaving riskily.

But Alistair Darling told the same event he had no plans to fundamentally change the system of regulation.

The Liberal Democrats said Mr King's attack was "devastating".

The governor said that if a bank had been allowed to get so large that it was too big to fail, then it was too big.

And Lib Dem treasury spokesman Vince Cable said this meant that "if major banks are going to continue to rely on taxpayer guarantees, they must be broken up and their investment banking, gambling, operations split off from straight forward personal business banking".

Since the Mansion House speeches, Mr Darling has insisted that the government and the Bank were "committed" to making sure that the wider economy was "protected so we're not faced with a banking crisis like this in the future".

US reform

Meanwhile the chairman of the Treasury committee, John McFall, said he was surprised at Mr King's comments, given that the Bank governor had been given the opportunity to raise the issue at MP hearings into the banking crisis.

HOW THE SYSTEM WORKS NOW
FSA spots that a bank is failing
Bank of England decides what to do about it
Treasury provides public money and nationalises if necessary
But he added that he believed the governor had been "sending a message to banks and financial institutions that it was not business as usual".

The speeches came as the US government announced a major reform of banking regulation to prevent future financial crises.

The overhaul will require big banks to put more money aside against future losses to curb excessive risk-taking.

"This highlights the fact that the Americans are one step ahead in dealing with the risks associated with new derivative products which are traded outside regulated markets," Mr Cable said.

'Ignored sermons'

In the UK, oversight of the financial system is carried out jointly by the Treasury, Bank of England and the City watchdog, the Financial Services Authority.

The Bank has been given a role to analyse threats to financial stability - but cannot instruct a financial institution to act if it is perceived to have been behaving too riskily, or growing too fast.

Stephanie Flanders, BBC economics editor
There are three ways to fix the problem.

You can prevent banks from taking on too much risk, you can prevent them from getting too big or you can try to convince them that they will not get bailed out.

We will probably end up with a combination of all three. And even that won't be enough to prevent bank crises from happening again.

It is the FSA which is charged with reining in any bank that it is feared may be expanding too fast and be at risk of running into trouble.

Mr King added that the major lesson of the financial crisis was that these authorities lacked the means to take effective action to prevent excessive risk taking at banks.

"Warnings are unlikely to be effective when people are being asked to change behaviour which seems to them to be highly profitable," he said.

"If some banks are thought to be too big to fail, then, in the words of a distinguished American economist, they are too big," Mr King said.

He added that the Bank needed greater powers to allow it to fulfil its new role of promoting financial stability and could no longer act "like a church" whose congregation "ignores its sermons".

“ Today's banks are much less in awe of the Financial Services Authority than they were of the Bank of England 15 years ago, when the Bank had formal responsibility for supervising banks ”
Robert Peston, BBC business editor
"So it's not entirely clear how the Bank will be able to discharge its new statutory responsibility if we can do no more than issue sermons or organise burials."

"Blaming individuals is no substitute for acknowledging the failure of the system," the governor said.

'Right people'

The chancellor, on the other hand, did blame those at the heads of financial institutions.

And while he said there could be no return to "business as usual" for UK banks, he did not lay out plans for radical, structural change.

Instead, he called for "a change of culture" in which bank staff were "rewarded for long-term success, not for failure".

"You can't remove all risks, but you can understand where risks lie and make sure banks have in place proper plans to mitigate those risks and deal with the possibility of a failure," he said.

"Bank boards must have the right people of the right skills and the right experience to manage themselves more effectively," the chancellor said. "And they need to be equipped to ask the right questions.

"Their focus must be on long-term wealth creation and not short-term profits."

BBC business editor Robert Peston said the comments by Mr King were bound to be seen as an attack on the chancellor because "the Treasury has resisted significant changes to the allocation of regulatory responsibilities between the Financial Services Authority, the Treasury and Bank of England".

He added that the governor had, at one point, been opposed to the idea of the Bank becoming a super-regulator.

"Since then he - and quite a lot of others - have spotted that it's tricky for a central bank to deliver economic stability if it has no role in promoting financial stability," our business editor said.

[Magda Hassan]

Banking regulation 'not to blame' says Chancellor

Of course not. It was all those people who chose to borrow money and couldn't pay it back. They're solely to blame for this mess. The system is perfect and it is run by experts.

[Peter Lemkin]

Banking regulation 'not to blame' says Chancellor

Of course not. It was all those people who chose to borrow money and couldn't pay it back. They're solely to blame for this mess. The system is perfect and it is run by experts.

Expert crooks and liars! :adore: :vroam:
One can't expect a criminal to indict himself and his confederates in crime. Furthermore, for 'them' the system is 'perfect'!