In case anyone needed reminding, Sir Howard Davies has pointed out that, following the events of last Autumn when the entire financial system came within hours of collapse and only survived through massive government intervention, the worlds of both banking and financial regulation need to be totally rethought.
Yet much of the political response we have so far had been poorly co-ordinated, kneejerk populist or short-term firefighting. The underlying philosophy has been “we must get the banks lending again” (i.e. a return to ‘business as usual’ is desirable, not just for bankers but for the country at large).
Well, in an op-ed piece for Project Syndicate, Davies, director of the London School of Economics and a former chairman of the Financial Services Authority, has called time on such lazy thinking. He said:
“Nothing will ever be the same again: the relationship between the state and the markets needs to be rethought. A new “social contract” between finance and the people, through their governments, is required.”
Unfortunately the chances of Alistair Darling and Gordon Brown delivering such a contract are limited. And I don’t have much confidence that David Cameron’s Tories would be capable of delivering it either. So who is going to do it? It’s a shame is that Davies wasn’t thinking along these lines when he led the FSA, at which time it was by all accounts fairly ineffective regulator.
This blog post was published on 14 December 2009
Everyone gets religion …eventually.
(‘specially after they’ve cashed-out).