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MPs berate the banks for blaming FSA for crunch

MPs have attacked the banking sector for using the FSA as a scapegoat for the credit crunch.

Speaking at a Treasury select committee hearing this week, Labour MP for Leeds East George Mudie said that there was a “cosy consensus” among the big banks to put the full blame on the FSA.

After hearing evidence from British Bankers’ Association chief executive Angela Knight, Mudie said: “You are content with heaping this on to the FSA. The credit crunch is beyond Northern Rock and it was not the FSA that caused it, it was dodgy securities and for some considerable time people in your industry were very rich and now we are all feeling the pain.

“The only one to come before us with their hands in the air was the FSA and this has allowed your industry and the Bank of England to get away without answering any hard questions.”

Mudie criticised the Bank of England for not making it a condition of its £50bn liquidity package that banks should endeavour to keep borrowers in their homes.

Committee chairman John McFall said: “The public sees this as a one-way street. There is going to be a backlash if there is not a real concerted response from the industry. If repossessions really go up and we do not see any alternative proposals from the banks, it is going to cause a legal storm.”

Jon Moulton, managing partner of private equity firm Alchemy, told members of the select committee that it was “unrealistic to imagine the FSA could ever handle the complexities of some of these models and markets”, given that bank chiefs did not even understand them.

MPs and Moulton criticised the bonus culture in the City of London, claiming that it encouraged bankers to overlook issues of required due diligence.

Moulton called on the regulator to take remun- eration structures into account when assessing the risk rating of a bank.


Growing trend goes with the grain

From time to time, I am afforded the opportunity to share my views on what is happening in world markets with a wider audience through radio or TV. Last week provided just such an opportunity when news was thin on the ground and a wider trawling of the stories circulating on investment topics was necessary. The news that the Indian government was considering banning futures trading in agricultural commodities caught my eye and led to deeper research in the following days.

Default lines

A few weeks ago, pension and benefit consultants Watson Wyatt predicted that the at-retirement market could grow at around 20 per cent a year for the next five years that by 2012 this section of the financial services market would be worth 30bn.

Tax-free gains? That can’t be right, can it?

When he was Chancellor of the Exchequer, George Osborne made several changes to the way in which income is taxed. Personal allowances were increased significantly above the rate of inflation; a starting rate band was introduced for savings income and, with effect from 6 April 2015, this was assessed at 0 per cent. In addition, […]


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