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Margaret Thatcher's Deregulation Of The City A Myth, Says Thinktank

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http://www.theguardian.com/business/2015/may/25/margaret-thatcher-deregulated-city-london

The free-market thinktank that inspired many of Margaret Thatcher’s reforms has now turned critic of the Iron Lady’s shakeup of the City in the 1980s, suggesting it increased state regulation of the financial sector, making it too burdensome.

While the left has blamed the liberalisation of finance under Thatcher for the crisis that paralysed the banking system and led to the deepest UK recession of the post-war era, the Institute for Economic Affairs says the 1980s involved private regulation being replaced by less effective statutory regulation.

Philip Booth, the IEA’s editorial and programme director, says in a new pamphlet that Thatcher’s record was mixed – with deregulatory policies such as the abolition of exchange controls in 1979 and the opening up of the City in Big Bang reforms of 1986 accompanied by tougher state controls that have increased the cost of regulation 15-fold.

“The Thatcher government presided over a significant increase in the statutory regulation of financial services,” Booth says in Thatcher: myth of deregulation? “This involved a growth of regulatory bureaucracies, detailed financial regulation and the cost of regulation.”

London’s position as a global financial centre was reinforced by Big Bang, which ended fixed commissions for share trading, abolished the distinction between brokers and jobbers, and allowed foreign ownership of UK firms.

Over the next two decades, the UK financial sector grew in size but in the wake of the financial crisis of 2007-09 all parties agreed that regulation had been too lax. Since 2010, George Osborne has toughened up regulation and put the Bank of England in control of City supervision.

Anyone with any real knowledge over the changes and what they really meant?

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I guess its a lot like people saying brown added more regulation to business in 10 years than other chancellors did in the previous 100.

More or less regulation isnt the issue, its rather good or bad regulation...wasnt the original Glass steagall 12 pages long...the dodd frank incarnation they've managed to get upto 1200 pages or something...plenty of space to insert all manner of the usual government crap and clauses.

Its easy for the author to mislead should he want to...i certainly am not going to spend my day looking over it.

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Sounds highly political to me: special pleading by the giant vampire squid et al and sophistical revisionism by the 'its the socialists wot done it' brigade'.

Edited by pig

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My experience is that banks now report absolutely everything at transactional level, pleb level employees are monitored to within an inch of their jobs. But it's trebles all round and (fraudulent) business as usual for the con men higher up.

HUZZAH!

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The free-market thinktank that inspired many of Margaret Thatcher’s reforms

F*ck em.

Tiny Tory majority and all of a sudden all these people are crawling back out from under their rocks sensing an opportunity to wreak further havoc.

Its going to be a grim 5 years+ for anyone who aint a rentier.

Edited by R K

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http://www.theguardian.com/business/2015/may/25/margaret-thatcher-deregulated-city-london

Anyone with any real knowledge over the changes and what they really meant?

Pre Big Bang the City of London was a effectively closed shop dominated by stock jobbers, stock brokers and merchant banks trading mainly as partnerships.

This provided lots of invisible regulation particularly as the partnership structure meant that most of the members of the Stock Exchange were at least in part liable for any losses incurred by the firms. That prospect of losing all your money provided the type of financial discipline simply absent in todays City. The idea that big Foreign and Domestic Banks could control both the commission and execution of trades was unimaginable. In fact even Stock Exchange members who belonged to broking firms could not could not directly buy and sell shares which was the preserve of jobbers. Big Bang blew all those distinctions away and opened up the City to an invasion of foreign capital, big banks and limited liability. Even at the time the potential risks were understood and voiced by some of the older city traders. The introduction of state regulation was largely a sop to those concerns. In the pre Big Bang City those who got out of order were subject to an informal 'blackball' which meant that effectively they could no longer trade there openly. Post Big Bang the State was supposed to impose discipline. Sadly each and every entity that was set upto do that job was found wanting. Moreover, the state also ended up informally underwriting the risky lending and leverage practises of many of the participants in the market. The changes also had big impacts on things such as Building societies and the operation of the mortgage market which Hotairmail has outlined above

As always the Insttitute of Economic Affars with its endless vomit inducing special pleading for the City has got it ars* ways round. The cost of regulation since the 1980s has not been borne by the financial institutions but by the UK taxpayer and rest of British society. My suggestion is that if they want to roll the clock back to the 1970s then they should also take on the limitations of that era such as no bailouts to banks that got the market a bit wrong, no limited liability for participants in the market, the complete exclusion of retail banks and the complete separation of broking and trading activities. Doubt many in the City would fancy that solution.

Edited by stormymonday_2011

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The free-market thinktank that inspired many of Margaret Thatcher’s reforms has now turned critic of the Iron Lady’s shakeup of the City in the 1980s, suggesting it increased state regulation of the financial sector, making it too burdensome.

It's a rewriting of history.

There were a lot of changes during Thatcher's time to benefit the financial sector and to say that they were burdensome changes for the financial sector is just crazy. It's crazy but it's a UK thinktank and the UK economy so nothing new there. Freemarket thinktank :lol: - freemarket these days just means give the bankers everything.

Looking back it was the start of the changes to benefit the financial sector but NuLabour carried them on. Likely given half a chance the current government will do more of the same damage.

At any rate regulation is meaningless if they defraud and they get away with it and if they make a loss and it's always bailed out.

Edited by billybong

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...

The liberalising Building Societies' Act of 1986 was a direct result of this move because the banks suddenly had access to cheap money markts for funds and were encroaching on the traditional preserve of bsocs in the mortgage markets. Bsocs had to raise money via savings which was more expensive. That act also made it virtually certain that the mutuals would convert to plc status as that was the only way to increase access to the money markets beyond 30% of funds.

And here we are. And people don't understand that the BIG things they did then resulted in where we are now quite simply. Although I would add that the Labour and Tory t*ssers following on could have done something instead of making things even worse with btl mortgages, htb etc.

...

This. For example, January 1988 government raises building societies' wholesale funding limits from 20% to 40% so they can compete in the mortgage market. It's regulatory change. Is it deregulation? Surely, yes - a rule restricting sources of funding to customer deposits is watered down. Is it part of the Big Bang reforms? Absolutely not. Is informed by the same politically expedient neoliberal utopianism that underpinned the Big Bang reforms? Of course it is. How is it all working out for us?

...

As always the Insttitute of Economic Affars with its endless vomit inducing special pleading for the City has got it ars* ways round. The cost of regulation since the 1980s has not been borne by the financial institutions but by the UK taxpayer and rest of British society. My suggestion is that if they want to roll the clock back to the 1970s then they should also take on the limitations of that era such as no bailouts to banks that got the market a bit wrong, no limited liability for participants in the market, the complete exclusion of retail banks and the complete separation of broking and trading activities. Doubt many in the City would fancy that solution.

And this - beautifully put.

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This. For example, January 1988 government raises building societies' wholesale funding limits from 20% to 40% so they can compete in the mortgage market. It's regulatory change. Is it deregulation? Surely, yes - a rule restricting sources of funding to customer deposits is watered down. Is it part of the Big Bang reforms? Absolutely not. Is informed by the same politically expedient neoliberal utopianism that underpinned the Big Bang reforms? Of course it is. How is it all working out for us?

Let me just go and ask few of those de-muted BSes:

Halifax -blown up.

AbbeyNat - blown up.

B+B - blown up.

NR - blown up.

Nationwide - ?

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Let me just go and ask few of those de-muted BSes:

Halifax -blown up.

AbbeyNat - blown up.

B+B - blown up.

NR - blown up.

Nationwide - ?

Nationwide/Barclays?

Barclays is facing explosive allegations it engineered its computer systems to rig financial markets.

The bank was fined £1.5bn last week after rogue traders were caught manipulating foreign currency rates.

But this bill could spiral amid fears raised by US regulators that the abuse was systemic rather than the result of a few corrupt staff.

Barclays is among a host of global lenders being investigated by the New York banking regulator for tweaking computer programmes on its foreign exchange trading platform to rig markets.

The probe into Barclays and Germany’s Deutsche Bank has been going on since last year, with monitors installed by the New York Department of Financial Services (NYDFS) to gather evidence.

But the investigation has gathered momentum, and now includes a collection of the world’s biggest banks including Goldman Sachs, BNP Paribas, Credit Suisse, and Societe Generale.

Last night experts said the allegations would ‘beg even more serious questions’ about these giants if they are proved to be true.

Several employees at Barclays have been called in to give evidence to the New York watchdog as the investigation reaches an advanced stage.

Last night experts said if banks’ computer systems were set up to rig Forex rates this would implicate many more people in these organisations.

Professor Prem Sikka of the University of Essex Business School said: ‘It would definitely make the scandal even worse. It would beg serious questions of the oversight of executives, IT managers, external auditors – it would cast doubt on everything and everyone.’

He added: ‘There is something deeply wrong with a system in which people think it’s normal and OK to cheat customers and cheat the markets.’

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Errmmm. Are they ignoring the removal of capital controls soon after to coming power that has resulted in interest rates falling over the last 35 years as those who fail to trade in balance can simply recycle capital and obtain rents and assets?

The liberalising Building Societies' Act of 1986 was a direct result of this move because the banks suddenly had access to cheap money markts for funds and were encroaching on the traditional preserve of bsocs in the mortgage markets. Bsocs had to raise money via savings which was more expensive. That act also made it virtually certain that the mutuals would convert to plc status as that was the only way to increase access to the money markets beyond 30% of funds.

And here we are. And people don't understand that the BIG things they did then resulted in where we are now quite simply. Although I would add that the Labour and Tory t*ssers following on could have done something instead of making things even worse with btl mortgages, htb etc.

Very true - I remember almost no one being opposed to this change, and to the demutualisation and carpetbagging that happened as a result. Dozens of hundred year old organisations that had been safe, low key, and prudent wiped out for the sake of a quick buck and easier credit. I was involved on the edges of some of this, and even though I was just out of school remembered being very uneasy at the loss of a model which had demonstrably worked for so long. Maggie Thatcher was not a conservative in her haste to break down old societal models.....

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Let me just go and ask few of those de-muted BSes:

Halifax -blown up.

AbbeyNat - blown up.

B+B - blown up.

NR - blown up.

Nationwide - ?

As bad a survival rate as Japanese aircraft carriers at the Battle of Midway

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As bad a survival rate as Japanese aircraft carriers at the Battle of Midway

From the record of the adventurous youth of William Preston and Theodore Logan

DEATH: "

"

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There was little real opposition but there was some from within the Conservative ranks.

For instance Harold MacMillan and his remark about some stuff being like selling the family silver.

Hardly real opposition though.

Edited by billybong

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