The Independent Commission on Banking produced its interim report on 11th April. Solving the problems with the banking system remains one of the most important issues facing our nation. Rather than providing an over-long blog post on the report, I’ve decided to break my thoughts into smaller blog posts.
But, before I do that, it’s worth reminding ourselves of one of the architects of the banking crisis – one Gordon Brown. Last Saturday Gordon was speaking at an event organised by the Institute for New Economic Thinking in Bretton Woods, New Hampshire – you can watch his speech HERE. I don’t recommend it, as it will bring about a shoe throwing at your computer.
In his talk Gordon admitted, finally, mistakes in regulating the banks, neatly forgetting that it was he who removed banking regulation from the Bank of England, and handed it to a bunch of inexperienced regulators in the Financial Services Agency. See earlier comments HERE. Here’s the Press Association report on what Gordon said,
Mr Brown said that in the 1990s and the years up to 2007, when he was chancellor, he was under “relentless pressure” from the City not to over-regulate.
“We know in retrospect what we missed. We set up the Financial Services Authority believing that the problem would come from the failure of an individual institution,” he said.
Mr Brown said the economic problem had been seen in terms of inflation rather than financial stability. He went on: “So we created a monitoring system which was looking at individual institutions. That was the big mistake.
“We didn’t understand how risk was spread across the system, we didn’t understand the entanglements of different institutions with the other and we didn’t understand even though we talked about it just how global things were, including a shadow banking system as well as a banking system.
“That was our mistake but I’m afraid it was a mistake made by just about everybody who was in the regulatory business.”
Yeah, right Gordon. We remember when you said that the UK, and specifically you, led the world in solving the financial crisis. But now everyone else is to blame.