Abolishing the FSA: Questions for Osborne
So, at a time when the future of financial regulation at the European level is being debated does promising to abolish the FSA increase or decrease it’s negotiating power?
At a time when the FSA is looking at ways to implement the Turner Report, does threatening to abolish it increase or decrease its moral authority over the banks?
How many FSA staff will move over to the Bank of England – one thousand or so? Where will they go? They won’t fit in Threadneedle Street, will the sign outside the FSA’s office simply be changed to ‘BOE – Canary Wharf Branch’?
Will the Deputy Governor for Financial Stability, presumably now in charge of regulation, still sit on the MPC?
Will interest rates be set to meet an inflation target or a financial stability target or both?
There was one thing missing from George Osborne’s cosy Sunday morning chat with Andrew Marr on the BBC, and his subsequent View from Europe interview with George Parker, the FT’s political editor: evidence that this man quite has what it takes to be Britain’s next Chancellor of the Exchequer.
In fact, quite the opposite. Osborne’s headline-grabbing promise to scrap the FSA betrayed a breathtaking naivety. Does he really think we can just dismantle the infrastructure of Britain’s financial regulator — 10 years in the building — and then simply reconstruct it in some supposedly firm old hands in Threadneedle Street, and, hey presto, everything will be fixed?
This was clap-trap policy formation at its most dangerous.