Hank Paulson blames FSA for Lehman collapse
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Former US Treasury Secretary Hank Paulson has blamed the FSA for the collapse of Lehman Brothers in his new book On The Brink.
In extracts from the book, obtained by The Telegraph, Paulson was enraged by the FSA’s decision not to offer a guarantee which would have enabled Barclays to buy Lehmans.
“The British screwed us”, were his words on receiving the news.
However, other accounts of events suggest the Chancellor Alistair Darling did agree to waiving certain regulatory restrictions to allow a deal, so long as the US Treasury would share the risk.
Former Lehman trader Lawrence McDonald, quoted in The Telegraph, says: “I have been told that Darling was willing to do it 50:50 and that it was Paulson who said no.”
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Readers' comments (23)
Anonymous | 1 Feb 2010 10:35 am
I can sympathise with Hank but does he not know what the FSA stands for?
Financial Swinging Authority: Basically we all get screwed!!!!
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Anonymous | 1 Feb 2010 10:36 am
The government and the FSA between them should make sure that all investors in structured products backed by Lehmann's should be compensated, not through the indivdual complaints process, but as a matter of course.
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Peter Herd | 1 Feb 2010 10:39 am
If you ask me I think it was a cock up all round and that someone had to been seen to pay and that was Lehmans. It was also a message to the others that if you do not put your house in order you could be next !
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Incompetent Regulators Awards Team | 1 Feb 2010 10:54 am
When are the policymakers going to wake up? The FSA is the problem in all of these matters as they have helped no one but themselves. It's has self vested interest now as the regulatory machinery is so big politcicain are frightened of shutting these useless quangos (F-PAck) down for fear of unemployment! Not a good reason to keep bad quangos in business.
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Julian Stevens | 1 Feb 2010 11:08 am
And what about the collapse of With Profits, the steady destruction of all but the HNW end of the IFA sector and the near collapse of a number of major UK banks?
Is there anything at all about which the FSA can hold its head high and say We did a good job without it costing the industry a king's ransom?
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Lovemore Dandira | 1 Feb 2010 11:24 am
I totally disagree with Anonymous | 1 Feb 2010 10:36 am. Whenever someone buys an investment, they are warned of the risk of losing money thus the need to diversify across a wide range of 'strong' investments. Compensation should only be considered where the investor was mis sold. Like Warren Buffett always says, never invest in what you don't understand.
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Roy | 1 Feb 2010 11:29 am
mmm Government and a Bank doing a deal to by pass regulation...... I'm shocked!!!!!
This sort of thing just doesn't happen in our Great Regulatory Britain.
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You must be joking | 1 Feb 2010 11:37 am
I have to agree with Lovemore (great name by the way!).
Why should people be compensated if they are aware of the risks? (In the case of structured products the CP risk included).
Next we'll be calling for compensation when a horse doesn't come in.. "well you see Mr Ombudsman, I put £20 on "Threeleggeddonkey" in the National at 250/1 and it didn't come in, infact, it didn't even finish, so I'd like to claim my £20 back!".
Where will it end?
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michael brayne | 1 Feb 2010 11:40 am
Surely not! If it had been the fault of our beloved FSA they would not have awarded themselves with a £33 million bonus last year now would they?
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Mike Allan | 1 Feb 2010 11:42 am
A lot of these matters are "beyond my ken".
I take it that a flawed business model built upon sand, overpaid characters who gamble with other people' money had nothing to do with the collapse then??
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