Posts Tagged ‘FSA’

High rolling risk and low rolling reality

March 8, 2010

Two important news stories, both of which were largely ignored:

» Hedge funds do not pose systemic risk, concludes FSA

» FSA plays down prop trading impact

Two well known villains of the finance world – hedge funds and prop traders – seem a lot less, well, villainous after the FSA did some investigation of them.

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Hector Sants to step down from top FSA post

February 9, 2010

» Hector Sants to step down from top FSA post

The FSA faced criticism that it failed to prevent the credit crisis by not restricting risk-taking at banks such as Northern Rock, which built up huge liabilities.

Mr Sants led the fightback and oversaw an overhaul of banking regulation, saying banks “should be very frightened” of the regulator.

I think it is only regulators who think that the regulated do not fear them. On the other hand, I fear a toddler wandering around with a automatic machine gun for a teddy bear, it doesn’t mean I am in awe of their judgement.

Regulators are basically a bunch of people trying to control a system they have never experienced and do not understand. Occasionally bankers all get together and complain about:

  1. The regulator never actually doing anything, seriously, if you follow regulation very carefully and studiously (and spend a lot of money on it) then you get really tetchy when other people don’t and seem to get away with it scot-free;
  2. Them never understanding anything;
  3. How much worse than the FSA all the European regulators are;
  4. The lack of firm decisions;
  5. How much data we submit which is blatantly ignored.

Except we don’t like to say anything because you never quite know how the regulator is going to respond. And, really, we’re very British in that we don’t like to say anything (but, tsk, do you see what they’re wearing). Besides, that teddy bear might go off.