Lord Turner, Head of the Government owned, insurance broker subsidised UK financial services authority the FSA, has been busy espousing his thoughts on the current economic crisis and apparently the banks are not to blame for the banking crisis!
It’”s not the banks, its the Shadow banks who are to blame”, cries the Lord. These shadow banks are still out there doing damage’ said the Lord, and one can only suppose from his attack that their activities are outside the control of the current banking reforms, and his influence.
Shadow Banks? What on earth are they then me lawd?
Well according to his honourable lordship in last nights speech, “In autumn 2008 the developed world’s banking system suffered a severe crisis … but it’s striking that the crisis did not initially seem to be one of banks themselves, but rather of an apparently new phenomenon: shadow banking. So we need to ensure that our regulatory response appropriately covers shadow banking as well as banks.”
(Whooa! Hold on me lawd. What about the activites of RBS, Northern Rock, LLoyds etc etc etc. Insurance blog got sick of writing about the baknks in the autumn of 2008. Read our archives!)
Lord Turner then described shadow banking as activities including securitised lending, hedge funds active in credit markets, investment bank trading of credit securities, the issuance of asset-backed commercial paper and the repossession market.
Hmm, yes that covers just about everything that Banks and Insurance companies do with your money when they take your salary, insurance premiums and mortgage payments.
Which begs the question that those in the UK insurance sector have been asking about the FSA since its foundation in 2005. Just what regulatory powers can the FSA possibly have over the Global Free Market other than being a souped up consumer protection vehicle through the FSCS, beggars belief.
If it is aware of all the shadowplay, which is carried out by all the big groups, banks, insurance and assurance companies and holding companies that the FSA is supposed to be regulating, then just what can it do to avert a future scenario like we saw in 2008?
Insurance blog is still firmly of the opinion that the FSA is full of overpaid, bloated bureaucrats, funded by insurance fees, that is no better than an after the event vehicle and punishment body for money making in fines.
Face it Lord Turner, the FSA will never be able to tell the City how to do business only maybe how to conduct it!