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‘Dual regulation caused Rock slide’

The Northern Rock debacle would not have happened under any other regulatory regime and can be blamed on the fudge created by dual regulation, according to a leading LibDem business voice.

Speaking at a fringe event at the LibDem Conference this week, Liberal Democrat business forum chairman Paul Marshall said the deal drawn up in 1997 to supervise the banks has created a regulatory landscape that has allowed these events to unfold.

Marshall, who jointly runs Marshall Wace, one of the UK’s biggest hedge fund busin-esses, said giving the Bank of England systemic responsibility for the stability of the banking system while giving the FSA responsibility for individual banks was a wrong move.

He said it has put the FSA in a difficult situation, making it harder to monitor the market and justify decisions to bail out or support a bank.

Marshall, who co-edited the LibDem’s famous orange book of economic policies, said in the US, regulators have been able to address individual firms’ problems associated with the current market turmoil much faster.

He said: “The way banks are supervised has created some very difficult issues. I believe this mess would not have happened under any other regulatory regime.”

Shadow vice-chancellor Vince Cable said the FSA, Bank of England and the Government have shown an underlying patronising attitude to the public in their statements regarding the Rock affair.

Speaking at a Citizens Advice fringe event, Cable said: “These people are not idiots who need to be told not to panic. Many are financially savvy. They can see for themselves there is a problem and have decided to act. If banks do not trust each other, why should the public trust them?”

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