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Exclusive: How The Fsa Destroyed The Uk’S Building Societies Sector

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EXCLUSIVE: How the FSA destroyed the UK’s building societies sector.

The Financial Services Authority sat idly by while the UK’s building societies sector was allowed to destroy itself by gorging on Wall Street’s toxic crap, according to a leaked memo from a former FSA insider.

The letter, forwarded by Vince Cable MP to FSA chairman Lord Turner on April 15th 2009, provides an unprecdented insight, as well as a savage indictment of the multiple inadequacies of the FSA’s “light touch”, “we don’t give a damn” approach to financial regulation in the UK.

http://www.ianfraser.org/explosive-memo-lifts-lid-on-fsas-regulatory-failures/

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“In the run up to the crisis the FSA’s attitude to the mortgage industry ranged from indifference to willful ignorance. FSA management’s mantra then was “we don’t regulate business models”. Supervisors were told not to worry about building societies since if anything went wrong, Nationwide or another large building society would always be willing and able to take over a failing smaller one “for the good of the movement.”

So, you could imagine the only impediment to growth and monopoly position of the largest buiding societies was the existence of smaller ones. Knowing how lobbying works with government policy the next question which is begged in whose interst was it that these smaller building socieites blew themselves up - you could argue that intentionally allowing them to blow themselves up would be good business for some, those soem being the ones with most influence with the regulators no doubt.

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“In the run up to the crisis the FSA’s attitude to the mortgage industry ranged from indifference to willful ignorance. FSA management’s mantra then was “we don’t regulate business models”. Supervisors were told not to worry about building societies since if anything went wrong, Nationwide or another large building society would always be willing and able to take over a failing smaller one “for the good of the movement.”

So, you could imagine the only impediment to growth and monopoly position of the largest buiding societies was the existence of smaller ones. Knowing how lobbying works with government policy the next question which is begged in whose interst was it that these smaller building socieites blew themselves up - you could argue that intentionally allowing them to blow themselves up would be good business for some, those soem being the ones with most influence with the regulators no doubt.

The FSA behaved like a very narrowly focused bureaucracy. These "business models" (Ponzi) were obviously unsustainable only if you considered the credit bubble. But that was BoE's responsibility.

The BoE behaved like a very narrowly focused bureaucracy. They must have seen the credit bubble, but their "remit" was just to target inflation, and to obey the Treasury chosen index. And mortgage regulation was the FSA responsibility.

The treasury must have noticed the credit/HP bubble, but have chosen to ride it, all the way to Number 10. Brown switching the index in dec 2003 indicates that.

When the Ponzi collapsed, blame America, and the "bankers".

Did it work? Well Labour is already ahead in the polls. The Tories only chance will be to clear this mess and have some positive economic results in less than 4 years.

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Don't blame the regulators for this. Anyone at the FSA who tried to stop the lending bubble would have found their career in rapid tailspin, thanks to their political masters.

Government, government, government. THAT is where the buck stops.

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Don't blame the regulators for this. Anyone at the FSA who tried to stop the lending bubble would have found their career in rapid tailspin, thanks to their political masters.

Government, government, government. THAT is where the buck stops.

Didn't Blair step in at some point when the FSA wanted to do a bit of regulation?

Peter.

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Pretty much what ive been thinking for a fair while.

Some building socs indulged in risky lending, but were able to be bailed out (taken over) by other Building socs at no cost to the taxpayer.

They now have to contribute more to FSCS to compensate for the banks losses

Why didnt the govt ask the building socs for advice, instead of Krugman, Bernanke and those ex-bankers who caused this mess. We already have a proven banking system in Building socs, and could have transferred the good bits of the banks balance sheets to them, and put the bad bits in a TARP type bad bank, for either default or compensation, depending on the exact liability.

That the worst banks were all ex-building socs who put growth before long term existence (Halifraud, Bradford & Bingley, Abbey, Northern Rock) is no coincidence.

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Didn't Blair step in at some point when the FSA wanted to do a bit of regulation?

Peter.

I thought bliar aired concerned about the runaway housing market and Snot Gobbler slapped him down (and probably accused him of being a bigot) and said everything is fine.

Should have told him theres WMDs in those bank vaults, audit them now! He might of cared a bit more then.

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I thought bliar aired concerned about the runaway housing market and Snot Gobbler slapped him down (and probably accused him of being a bigot) and said everything is fine.

Should have told him theres WMDs in those bank vaults, audit them now! He might of cared a bit more then.

Yes, there was a letter from Blair to Brown, asking about the bubble. Was it from 2004? IIRC it was after Blair had read an article by Wolf, FT. This letter is on record. We had it posted in this forum some time ago. I can't do a search now, sorry.

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Yes, there was a letter from Blair to Brown, asking about the bubble. Was it from 2004? IIRC it was after Blair had read an article by Wolf, FT. This letter is on record. We had it posted in this forum some time ago. I can't do a search now, sorry.

thats the one i was thinking of. Probably just one, cant imagine it kept him awake at nihgt. B)

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'Competition' :lol: is the wrong model for banksters.

For the most part they ought to be public utility companies. That was blindingly obvious before the B/socs were floated and even more so today.

Where did bankstering competition get us?

Foreign banksters (US mainly) flooding UK economy/housing market with FED liquidity, housing bubble and crash, biggest recession in our and our parents lifetimes, massive wealth transfer from the bottom to the top, crowding out of small businesses in favour of globocorps and finally:-

The banksters have hoovered up all the asset. Lloyds, Barc, HSBC, Santander.

'Competition' :lol: failure.

Which was predicted and predictable the moment the b/socs tempted their members to cash in their chips.

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All praise Nationwide, good Tier 1 @12.5% , complained about having to pay more into the FSCS to bail out their failed rivals.

Want people to save and losing out to linked gilts and state banks.

No shareholders and now larger than any other building society in the world and still a mutual.

Just shows in the long term sticking to basics works, Bradford and Bingley, Halifax, Northern Rock have all done so well.

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'Competition' :lol: is the wrong model for banksters.

For the most part they ought to be public utility companies. That was blindingly obvious before the B/socs were floated and even more so today.

Agree 100%.

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'Competition' :lol: is the wrong model for banksters.

For the most part they ought to be public utility companies.

...............

'Competition' :lol: failure.

Absolutely

And ..........Competition = failure, as, by definition, in a perfect market companies should be failing all the time and being replaced with new ones.

And someone thought that the competitive model of banking would be a good one for the whole world's economic future to rest on...

There really are some geniuses out there aren't there?

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Absolutely

And ..........Competition = failure, as, by definition, in a perfect market companies should be failing all the time and being replaced with new ones.

And someone thought that the competitive model of banking would be a good one for the whole world's economic future to rest on...

There really are some geniuses out there aren't there?

Yup!

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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