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Alistair Darling Accuses Banks Of 'kamikaze' Attitude To Loans

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http://www.telegraph.co.uk/finance/finance...e-to-loans.html

The Chancellor made the remarks as he prepared to publish a new White Paper on financial regulation.

"We need to learn lessons from the financial crisis in which banks behaved in a kamikaze manner and the regulatory system failed," Mr Darling wrote in a newspaper article.

He promised that the paper would give the Bank of England and the Financial Services Authorities more power to try to prevent financial crises.

But he signalled that the widely-criticised existing structure of financial regulation, sharing responsibility between the Bank, the FSA and the Treasury, will remain in place.

He also suggested that only a culture change among bankers will ensure there is no repeat of the recent crisis.

In a Sky News interview, Mr Darling said that stability required both better regulation and a change in the way bankers behave and run their businesses.

He said: "We have got to toughen up the regulatory regime, both the Financial Services Authority and the Bank of England, we have got to make sure that we've got the right tools to do the job."

He added: "But we've also got to make sure that we go back to responsible behaviour where people have got their eyes very fixed on the long term success of institutions."

The banking paper has triggered unprecedented public disagreements between the Treasury and the Bank of England.

Mervyn King, the Bank governor, last moth surprised MPs when he admitted that he had not been shown a draft of the paper.

Government officials say that intervention delayed the publication of this week's paper, as Mr King had to be given more information about its plans.

The Conservatives are studying plans that could see the Bank of England given significant powers to oversee financial regulation.

Mr Darling yesterday signalled that he will reject such reforms and leave keep the "tripartite" arrangement where responsibility is split between three public bodies.

Critics say the division of responsibility contributed to the credit crisis as none of the three regulators took the lead in addressing individual loans that ultimately posed a systemic risk.

Labour created the tripartite structure in 1997, taking bank regulation away from the BoE.

The Chancellor said: "The Bank of England, the Governor does not want to go back to regulating banks. I have talked to him lots of times about this."

He also downplayed his dispute with Mr King over the document, insisting that had had discussed the paper with the Governor "many many times".

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Some of us actually bothered to write to the Treasury to express our concerns during the early part of the boom only to be smugly dismissed. Towards the end of the boom the dangers of the property bubble (and underlying credit bubble) had become so obvious even the average man in the street was beginning to suspect something was amiss.

Even with all the alarms flashing red you have to wonder how a corrupted government and inept regulator could ever be induced to act at all if they have been bought off and silenced by the enticements the bankers have laid out in front of them.

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He added: "But we've also got to make sure that we go back to responsible behaviour where people have got their eyes very fixed on the long term success of institutions."

Why is he not saying to his pal next door at number 10: "But we've also got to make sure that we go back to responsible behaviour where people have got their eyes very fixed on the long term success of the country"?

More words and no action.

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He promised that the paper would give the Bank of England and the Financial Services Authorities more power to try to prevent financial crises.

They already had the power to do this. They chose not to use it, and were instructed to lightly by the government in order not to rock the boat. It doesn't help when the FSA is composed of bankers who understand all about 'snouts in the trough', free invites to city dinners and overseas holidays at the bankers villa do not make for effective regulators.

But he signalled that the widely-criticised existing structure of financial regulation, sharing responsibility between the Bank, the FSA and the Treasury, will remain in place.

So that each can blame the other giving the classic run-around to anyone that calls 'foul'.

He also suggested that only a culture change among bankers will ensure there is no repeat of the recent crisis.

Which is like suggesting only a culture change amongst thieves will prevent housebreakings. They don't stop due to culture changes, they stop because they are caught and thrown into prison.

He said: "We have got to toughen up the regulatory regime, both the Financial Services Authority and the Bank of England, we have got to make sure that we've got the right tools to do the job."

They have the tools, they always did. The problem is they won't use them. They are too chummy with the bankers. What is needed is not a change in the bankers, but a change in the FSA. They need to understand they are policemen and not friends. The bankers should fear the FSA, the FSA should be investigating them and locking them up. It should not be collaboration but confrontation between FSA and bankers.

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Some of us actually bothered to write to the Treasury to express our concerns during the early part of the boom only to be smugly dismissed. Towards the end of the boom the dangers of the property bubble (and underlying credit bubble) had become so obvious even the average man in the street was beginning to suspect something was amiss.

Even with all the alarms flashing red you have to wonder how a corrupted government and inept regulator could ever be induced to act at all if they have been bought off and silenced by the enticements the bankers have laid out in front of them.

I recall contacting the FSA before the crash, only to be told by some arrogant twit that income multiples didn't matter much anymore as they weren't an accurate guide to affordability anymore (I was complaining about 8 and 10Xincome mortgages, etc.)

Edited by gruffydd

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Unadulterated scapegoatery - pure politics - despicable buck passing at a moment of national crisis.

I expect no more from the scum who got us into this mess. They will happy bankrupt and destroy this country so long as they win the current arguement in the minds of the people.

I spit on them.

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Kamikaze pilots didn't have feckless ministers using taxpayer's money to save them so they could try again.

If there is anything wrong with the banks now it is all the fault of those who bailed them out, otherwise the problem would have quickly gone away.

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The banks don't care about their loans going bad because the Government (claim to) guarantee bank deposits which means that people still use the bank even though they are already bankrupt. The Government will usually swap their toxic debt for shiny new Treasuries but even if they don't anyone that cares has "banked" their bonus in something tangible.

Actually allowing people (depositors) to lose their money would be more effective disapprobation for this behaviour than the stern admonishments of establishment figures.

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