Things to do in Davos
Apart from the possibility of finding that a night or two full board with lift pass, ski hire, flights and transfers to Davos may not be covered in full by the expenses allowance, FSA chairman Adair Turner has called for the creation of a new official body with powers to force banks to curb lending during financial bubbles reports Nicole Blackmore in last week's Money Marketing.
Turner says that he sees the new body, a macro prudential committee, sitting between the Bank of England and the FSA.
It would push up the cost of lending for banks to commercial property businesses by forcing banks to hold more capital relative to their property loans if prices increase too quickly. He went on to say that a similar approach would apply to the mortgage market if house prices were rising too quickly, where the committee could force banks to reduce the amount they can lend relative to the value of individual houses.
Now here is the conundrum. Why is it that those in control of regulation cry out for more regulation when in reality they may be trying to hide their own failings, in this case by way of creating yet another "official body" to exercise control over the banks? How many bodies do you need to regulate the banks, how many people do you need to employ on substantial six figure salaries to control the banks? Who pays for this macro prudential committee? Is this an admission from Turner that the FSA is not capable of regulating the banks?
I really do think that the time has come for a "common sense" timeout where the regulators and the regulated sit around a table and discuss what each side expects to see from regulation based upon reason, experience, culpability, liability and look at who should carry the blame when it went wrong last year and who pays to clear up the mess, perhaps creating a "third way".
Article last updated: Feb 2, 2010
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