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Friday, 19 October 2012

The way we are now

Sometimes the way we are governed, overseen, regulated etc leaves me in despair for the sheer illogicality of it all.  This morning we woke to reports that the FSA could have done better over RBS' acquisition of ABN.

Actually, it was a bit worse than that. The report by Parliament's Treasury Select Committee criticised the regulator for the part it played in RBS' near-collapse and subsequent £45.5bn bailout by taxpayers.

Or more precisely for the role that it didn't play, namely the FSA's failure to intervene in the "calamitous" deal - worth almost £50bn. MPs said banks needed a regulator with the self-confidence to intervene, even if it causes short-term destabilisation.

It isn't a question of self-confidence.  It is a simple matter of what the regulator should have been doing.  Before a bank goes and blows half of its Tier 1 capital it should at least have some idea of what it is buying,  which as we recall RBS did not because it was a hostile takeover.  And the regulator should have been all over the purchaser asking how the buyer knew the merged bank would be adequately capitalised (it didn't).

Instead of being wise after the event, and costing the tax payter £45 billion that it didn't want to spend, the regulator should have done its job.  At the very least the FSA should have realised why there are so few hostile takeovers in banking.  But they were too stupid.

Fast forward to this afternoon and we hear the announcement that the very same FSA has Bank of Scotland has been fined £4.2m for failing to keep accurate records of the mortgage payments of 250,000 Halifax customers.

Well fair enough you might say except that it is we the tax payer who owned Lloyds/H/BOS these days, so the regulator is effectively fining the tax payer, and the government is taking cash out of one pocket and putting it in another while the rest of the mugs in the country who don't nip off to Monaco, pay themselves through a Limited Company or do some Jimmy Car tax scheme are paying the salaries of these numpties.

But worst of all the sloppy bookkeeping dates back to 2004 when HBOS was under previous management and ownership.  So whose fault is it that this only being dealt with now and not hitting the bonuses of the BOS management of eight years ago?

The FSA of course.

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