Osborne says reforms would have eased banking crisis
http://news.bbc.co.uk/1/hi/business/10338178.stm
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| Quote: Such oversight would have seen RBS's disastrous takeover of ABN Amro more closely scrutinised, he added. "While this was going on, there was nobody has been looking at the big picture of whether this was a good idea," Mr Osborne said. "A central bank [as a regulator] has the capacity and authority to do that," he told BBC Radio 4's Today programme, saying that had this system been in place earlier, someone would have seen the build up of problems in the system. "Domestic regulators would have made sure that the British banks were less exposed to the world's banking crisis," he said. | |
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It would have had no such impact. It might have have stopped Northern Rock getting wiped out but the whole concept of regulation world wide was hands off. Unless the regulator has motivation to do so there is no guarantee that they would have stepped in and stopped any of these deals. The Bank of England did not query the RBS takeover of ABN Amro. The problem is that the current risk based models enable the banks to hide the true extent of their risks and carry on. What is needed are simple rules that are impossible to get around. Like maximum leverage rate, or minimum capital %age. Secondly as London has been the centre of banking for centuries it would not have worked if they had to limit their exposure to the rest of the worlds banks.
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| Quote: FSA chairman Adair Turner told the BBC that the changes would help to address the lack of co-ordination in the existing tripartite system - which sees the FSA, the Bank of England and the Treasury play different regulatory roles. "The overall philosophy across the world did not adequately recognise the importance of looking at the overall level of credit in the economy, how asset prices were going up, whether there was a credit bubble that was getting out of control," he said. "We were wrong, and to address that one needs a closer link between regulatory activity and central banking." | |
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Problem is that monetarists do not believe debt flow is a problem, and the Treasury and Bank of England are full of Monetarists so they will be no better detecting them when they are centralised.
