What everybody has been saying...

Well perhaps not everybody, - G.Brown and E.Balls its authors are still saying that our tri-partite banking regulation structure is among the best in the world. They are urging that parts, - the Treasury and the FSA should have even more power and be more intrusive!

This week the House of Lords Economic Affairs Committee concluded in a report that our system was "unable to fulfil one of its main purposes", that of maintaining stability during the present crisis. The report urges that important powers should be handed back to the Bank of England, rather than spread among the three regulating groups. A major problem with the system was the lack of clarity on the various roles, according to the Chairman, Lord Vallance.

The Centre for Policy Studies, also this week published a paper by Sir Martin Jacomb, a former Bank Director, which comes to a similar conclusion on this. He advocates that the FSA should become a subsidiary of the Bank, describing the present system as having been a disaster.

Sir Martin suggests that the tri-partite system was set up to retain ultimate control for the Treasury. It could be added that it was designed and implemented hurriedly by the two politicians, the then Chancellor and his adviser, and with insufficient consultation with people in the City who knew more than they did.

The two designers may possibly become Prime Minister and Chancellor in the next few days, a thought which does not do much to calm the fears of the City. Having got it disastrously wrong in the system which replaced a good one with long experience, it is difficult to see what confidence we can have.