Now all those dubious decision are biting back at enormous cost, not only in fiscal terms but also to the reputations of all concerned and to the UK itself.
Why, I ask, is there such relatively muted criticism of the banks, the former Chancellor and the FSA over the credit crunch?
We are all now learning of securitisation which, in basic terms, means that the banks have hidden extremely poorquality debt among other financial instruments to such an extent that the banks and others simply do not know what exposure they have to the poorer-quality debt contained within the investments they have bought from each other.
Why did the banks, the then Chancellor Gordon Brown and the FSA allow this irresponsible level of lending and process of hiding the debt to continue?
In the case of the banks, it can be summed up in one word – greed.
For Gordon Brown, it was to maintain his self-image of prudence and his supposed ability to keep the country’s finances in order. He could then continue to say that all was well with the economy over his 10 years as Chancellor.
It nevertheless defies belief that in the latest Budget, the new incumbent considered the economy of the UK to still be in good order, even though we are borrowing at greater levels than ever before.
Finally, we have the FSA, which has been roundly condemned by the Treasury select committee.
I would really like to know how they could allow vastly overstated income multiples to be used for mortgages, how they could allow securitisation to be designed and, worse still, bought and sold by institutions and how they could think they were protecting the public by doing nothing to stop these practices from starting, let alone continuing.
Has that really protected the general public, which is their principal remit?
While the FSA has been responsible for the regulation of advisers, banks and mortgages, it has done nothing to stop this catastrophe except to invent TCF and the RDR. It costs the financial services profession and other institutions millions of pounds each year to maintain the FSA but I have to ask why, when these errors and omissions can be allowed to happen.
The FSA is happy to fine others for their wrongdoing. Now it is time to put its house in order by someone completely independent of the Government, the FSA and the banks.
DPB Independent Financial Services