The FSA failed but can the Bank of England do any better?

The house price party is still on as far as I can see on the streets around where I live in south east london - guzumping, sealed bids etc etc. So will the Bof be calling time on low interest rates so we can deal with the aftermath of the bubble - I doubt they would have the stomach to deal with all those property speculators going bust.

Why use the American spelling of scepticism?

Anon1, house price party still going on but there are still very few attendees!! 25% of peak transactions in 2007.

Should soon be sorted with the supply of speculators dumping their properties onto the market. Think we all know the interest rates are gonna jump to 2% in autumn. Then 5% in 2011.

Possibly 8% by the end of 2011. Which will be good as savers will be properly rewarded for their prudence... BUT on the flipside inflation is going to be INSANE.

Unfortunately this will be inflation of everything except wages... The result of quantitative easing finally unleashed.

No it won't as the long as the whole culture of regulation as it stands still exists.

Regulation is now out of control and it seems we are in a culture of wanting to regulate anything that moves or does something.

Regulation is now a major part of the problem but is anyone really prepared to do something about it. The appointment of Sants leads me to believe we are in for more of the same not change.

The previous tri-partite system was a Gordon Brown farce which gave Treasury most power but no information, the Bank little power but probably most access to information and the FSA somewhere in between. The new system at least puts the power where there is most scope to get information. It should be better but there can be no guarantees. People may remember the Baring family’s utterances of anguished astonishment when their Bank went belly up. This illustrates the difficulty of keeping tabs on developments in the computer age.

Thank goodness for this! The FSA have added nothing but cost to the consumer.

House prices are a seperate issue, since the introduction of the present planning regulations after WW2, the current planning system has failed to deliver almost anything but housing developments on the flood plane!

Perhaps some financial whizz kid could tell me how the BoE is that much different in its relationship to Britain as is the Fed to the USA.

In American they have woken up to the fact that a private group of bankers have taken control of the issuing of money, the setting of interest rates and in effect the basic financial control of the US economy.

Led by Dr Paul they want to get, preferably, rid of the Fed and all its evil works and give back to the voters the ability to elect those, and make accountable those, who make the economic judgements. They want their own government to control the issuing of money.

Whilst the Americans are waking up to the economic deficit in their government, we seem to be allowing ourselves to be conned into accepting as best, the idea that a private group with vested interests and no democratic accountability should control our interest rates and now impose and control financial regulations.

Well I for one object most strongly. I want to be able to get rid of those responsible for interest rate and other decisions if they are detrimental to me or my country.

It seems to me that the politicians are just hiding behind the BoE and we are being brainwashed into believing that that is good for us.

For the Square mile, maybe, but that means it almost certainly won't do much for either me or mine.

I am perhaps a cynic, but we the peasants, like Baldrick, survive at the very bottom of the economic cesspit. Just there to pick up and pay for the mistakes of those too big, and too arrogant, and too greedy to fail.

How can one state that "regulation is now part of the problem"?

Even if there was any sign of recent regulation, which I doubt, insufficient time has passed for the effects to become apparant.

I see an opportunity here for electroncs or electrobiological industry to make a " Pig in a poke " detector for the financial industry , as Ben Bernanki said splitting debt up and selling it orf is normal practice . Sounds like a good one to me !

This article makes uncomfortable reading. My understanding is that the Bank of England's failure to prevent the BCCI scandal led to the belief that a new regulatory regime ought to be put in place.That was the tripartite system. However the FSA plainly failed to anticipate, recognize and prevent the truly awful lending that took place in the last decade. The fact that FSA officials enjoyed salaries that were, in part, set by reference to reports from those they were supposedly catching out in imprudence, was a monstrous stupidity.

Its sister, the Financial Ombudsman Service ("FOS") despite its trumpeted claims to "level the playing field" between bank and customer, always dealt with the banks in a way that encouraged them to believe that could get away with sharp dealing or even fraud. The worst that would happen would be a minimal redress that any trained lawyer would find amusing. No adverse public comment would be made and then it was on to the next. Matched to a chancellor (who then became prime minister) who believed that he had "conquered boom and bust" and believed in "light touch regulation" a recipe for disaster was set out.

The only thing that will solve this is to detach the retail banks from the casino element and let the latter fail when they are imprudent. If for some reason this is not possible, then punish white collar crime appropriately, and have the courage to label the wrongdoing appropriately. Consider the widespread churning of mortgage endowments and the sale of useless, inappropriate, payment protection policies. If a bank churns a mortgage endowment (defined by the FOS as "recommending the surrender of an existing, perfectly good policy, solely to earn a fresh commission on the replacement policy") this causes serious loss to the customer. Done solely for the commission to be earned it seems to fit the definition of fraud. However, despite the thousands of churns no-one has had the courage to argue properly that this is not simply a "breach of FSA rules" or "appalling advice" (though it is both) but fraud. Charge a couple of bank staffers (and the managers who permitted and probably encouraged it) with fraud and the problem would vanish.

Why not go back to the old system of having the Chairman and the CEO in for a 6th monthly chat over a cup of tea with all the current figures laid out before the Governor and his team of analysts to answer there and then about the state of their Bank Now. If they cannot answer the salient questions satisfactorily then the BANK will be forced to comply immediately with the B of E's demands including the removal of incompetent unqualified Bank senior management. A regime of "No prisoners" is the only way to control what has been going on.

Confidence would be restored in the system. I have reason to believe that Eddy George told Gordon Brown exactly that, but No Gordon knew best and created the Failed FSA.