Oh, I say. This all sounds rather promising.
There must be profound changes in the banking system if a repeat of the current crisis is to be avoided, the Financial Services Authority has said.
Lord Turner, head of the City watchdog, said parts of the regulatory system were “seriously deficient”.
He said bankers, regulators, central banks, finance ministers and academics across the world shared the blame for failing to identify the risks which had been building in the financial system for a number of years.
“The changes which we need to make to create a sounder system for the future will be profound,” he said. “Central banks and regulators between them need to… identify the combination of measures which can take away the punchbowl before the party gets out of hand.”
Excellent. Splendid news. Ministerial endorsements all round.
How nice to know we now live in an era of close co-operation between Lord Adair’s newly vigilant Financial Services Authority, the Bank of England and Arrivederci’s Army.
A rift has opened up between the government and the financial authorities after a furious Alistair Darling was kept in the dark over the lifting of the ban on short-selling, which may have contributed to this week’s tumultuous crash in the value of banking shares.
The chancellor is thought to have been given just one hour’s notice by the Financial Services Authority that hedge funds would once again be able to place bets that bank shares would fall. Darling believes the ban will have to be reintroduced, given the fragility of the financial system.
Shares in high street banks have crashed since the ban was removed at the end of last week.
The short notice given to the chancellor about the announcement of the change in FSA policy two weeks ago demonstrates the ideological differences between the authorities involved in regulating the financial system. The problems were first highlighted during the Northern Rock collapse, when the so-called tripartite authorities – the FSA, the Treasury and the Bank of England – had difficulty agreeing a strategy for the lender.
While Darling has no authority to tell the FSA what to do, it is believed he strongly advised it not to lift the ban.
According to Treasury sources, when Darling inquired why he only been given 60 minutes’ notice, he was told it was an oversight.
Well done, everybody. Bravo! Take a bow.