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Mervyn Will Let Banks Fail

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...wouldn't hold my breath.... :rolleyes:

King vows Bank regulation will be 'radical' for lenders

Last updated at 12:36 AM on 2nd March 2011

Mervyn King yesterday vowed to get tough with British banks when the Bank of England takes charge of regulation next year.

He said there will be a ' radically different approach' to supervising banks when the Financial Services Authority is broken up and powers are passed to the central bank.

But the Bank Governor told the Treasury Select Committee that the Government's decision to amend current regulations rather than write new ones was the 'second-best option'.

Mervyn King: The bank governor will be given new powers

Andrew Tyrie, chairman of the influential committee of MPs, said ministers risked making 'a pig's ear' of financial regulation, paving the way for the next crisis.

Mr King backed the Government's plans to dismantle the failed tripartite system of regulation created by Labour.

He said the main weaknesses of the FSA included its inability to confront powerful bank bosses and its tendency to miss the big picture.

'The big mistake is to think that the response to this crisis is to say that we should have twice as many regulators or twice as many rules,' Mr King told MPs. 'The answer is to have the right kind of person regulating.

'We need to build up a cadre of people who are willing and able, and suitably confident to confront banks and say, don't hit us with detail, give us the big picture.

'It makes no sense to second-guess management across the board. it makes sense to challenge management on big decisions.'

He also said banks should be allowed to fail rather than be propped up by the taxpayer.

'The objective of supervision is to recognise that banks will fail,' said Mr King. 'Our role is not to stop them failing, it is to make sure that if they fail, they do not contaminate the rest of the economic and financial sector.'

Deputy governor Paul Tucker said this could lead to large restructuring of the banks.

Conservative plans to beef up regulation include the abolition of the FSA and three new financial bodies - the Financial Stability Committee, the Prudential regulation Authority, and the Financial Conduct Authority.

But Mr King criticised the decision to amend the current legislation and said: 'It would have been better if we had got a new Act.'

Tyrie agreed but said it would be better to start afresh rather than amend the 'highly complex and ineffective legislation' that helped caused the crash.

'We have just had a colossal financial crisis and it sounds like we are creating the very conditions for another crisis,' he said.

Read more: http://www.dailymail.co.uk/money/article-1362005/King-vows-Bank-regulation-radical-lenders.html#ixzz1FSBOgjH4'>http://www.dailymail.co.uk/money/article-1362005/King-vows-Bank-regulation-radical-lenders.html#ixzz1FSBOgjH4

http://www.dailymail.co.uk/money/article-1362005/King-vows-Bank-regulation-radical-lenders.html

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...wouldn't hold my breath.... :rolleyes:

The Bank of England were fuming when the responsibility for regulating banks was given to the FSA. Rather than protest too much, they just stood back and let disaster unfold to show the fool who did this of his mistakes. Golden Gordon wasnt the sort to recognise his own mistakes though, so they had to wait until power was grasped from his grasp before making their move.

Now they are going to get the power back, and I expect that they are going to take is seriously. The first thing that they should be trying to do though is not let banks get into such a precarious state in the first place. In the case of HBOS that would have meant prosecuting the crooks inside it, withdrawing its banking licence, and taking it under direct control to purge it of its criminal bent.

Now whether they would do this in future remains to be seen. I have no doubt as to the BofE's resolve on this one. Lets not forget, that they did call the banking crisis as well as anyone.

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'The objective of supervision is to recognise that banks will fail,' said Mr King. 'Our role is not to stop them failing, it is to make sure that if they fail, they do not contaminate the rest of the economic and financial sector we give all their creditors 100 pence in the pound using other people's money.'

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Banks should be servants to the economy - not the masters of it.

That would be a start.

Here Here !!!

When the majority of the TV adverts are for banks rather than cars and things we manufacture, something has gone wrong !!!

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Well if they start hiking back to 4% they will fail. Provisions would jump , asset prices fall and default rates would rise likely accelerate.

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I think it was the UK treasury that did that.

And who gave the treasury the money? The BoE bought £200bn of Gilts when it quantitatively eased. Now the rest of us get to pay for it through inflation or tax.

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And who gave the treasury the money? The BoE bought £200bn of Gilts when it quantitatively eased. Now the rest of us get to pay for it through inflation or tax.

The Treasury raises money through taxes and borrowing.

You are correct in saying that the Bank or England supported the gilts market by buying £200 billion worth of treasuries, so some of the cost was paid be holders of pounds sterling who found themselves deflated. The rest though was out of the taxpayers pocket, both present and future taxpayers.

Small point, the Bank of England only did QE after asking permission from the Government. This is a far better system than the US one, where the Fed just does QE whenever it feels like it, and gives the money to Wall Street bankers. In the UK, I think we gave a lot of the money to bankers too, but at least they did ask for permisson from the government. If they do it again, I hope that they deal with the Treasury directly.

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The Treasury raises money through taxes and borrowing.

You are correct in saying that the Bank or England supported the gilts market by buying £200 billion worth of treasuries, so some of the cost was paid be holders of pounds sterling who found themselves deflated. The rest though was out of the taxpayers pocket, both present and future taxpayers.

Small point, the Bank of England only did QE after asking permission from the Government. This is a far better system than the US one, where the Fed just does QE whenever it feels like it, and gives the money to Wall Street bankers. In the UK, I think we gave a lot of the money to bankers too, but at least they did ask for permisson from the government. If they do it again, I hope that they deal with the Treasury directly.

Eh? You'll have to explain yourself on that one. Sterling strengthened (as it would do if the banks were prevented from going bust).

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Sterling strengthened (as it would do if the banks were prevented from going bust).

Against what? Other fiat currencies which are also being wiped out by their own central banks?

Compared to the cost of living, sterling is nosediving.

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Small point, the Bank of England only did QE after asking permission from the Government. This is a far better system than the US one, where the Fed just does QE whenever it feels like it, and gives the money to Wall Street bankers. In the UK, I think we gave a lot of the money to bankers too, but at least they did ask for permisson from the government. If they do it again, I hope that they deal with the Treasury directly.

If you say so, sounds to me like the various heads of Medusa asking each other for advice.

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If you say so, sounds to me like the various heads of Medusa asking each other for advice.

Did you mean the Hydra? I suppose Medusa would do if the Hydra was unavailable due to previous commitments...

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Did you mean the Hydra? I suppose Medusa would do if the Hydra was unavailable due to previous commitments...

I stand corrected!

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Guest sillybear2

There's only one way to find out...

Did you mean the Hydra? I suppose Medusa would do if the Hydra was unavailable due to previous commitments...

More like Tiresias, a blind prophet condemned to walk for eternity with his head twisted backwards. :lol:

Edited by sillybear2

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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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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