At a Demos fringe event at the conference, the Labour MP for Stalybridge and Hyde said the bankers had too much power and the regulator too little. He said: “The credit crunch was a power failure. The power was in the wrong place, the bankers had too much power, the regulators did not have enough and clearly in putting that right we need to make sure that the power is much more in the right place.
“In particular, when banks are taking systemic risks, they have to be regulated in a way that reflects that, either through the ability for banks to go out of business in a way that does not cause systemic risk or, if that is not possible, regulating the behaviour which causes that, which might include bonuses.”
Conservative MP for Havant David Willetts who was also at the meeting agreed but said the power failure was down to the regulatory regime.
Willetts said: “The power failure was in the regulatory regime, we did not have any proper management of systemic risk. We had neither the FSA nor the bank doing it and in theory we were supposed to have some kind of tripartite structure doing it which was not working so there was a power failure and that is the gap that needs to be plugged because that is a key part of the regulation of financial services.”