The financial crisis and the future of financial regulation

[Prof Beard]

I found this recent speech by Adair Turner, Chairman, FSA.

What I'd like to know is: To what extent do people agree with his analysis? I'm genuinely interested, especially in the views of the those who work in the financial sector. (I haven't formed a view yet myself)

What I DON'T want to know is: What you think of Adair Turner, the FSA, or the Govt!!!!! (PLEASE!)

http://www.fsa.gov.uk/pages/Library/Communication/...

[Tony*T3]

They're all c**ts

[Steve H]

Tony*T3 said:

They're all c**ts

Fellow insurance worker Tony???????

[s2art]

Prof Beard said:

I found this recent speech by Adair Turner, Chairman, FSA.

What I'd like to know is: To what extent do people agree with his analysis? I'm genuinely interested, especially in the views of the those who work in the financial sector. (I haven't formed a view yet myself)

What I DON'T want to know is: What you think of Adair Turner, the FSA, or the Govt!!!!! (PLEASE!)

http://www.fsa.gov.uk/pages/Library/Communication/...

Read this, he is being disengenuous. Guys like Jon Moulton were making precisely the same points a few years ago. Moulton even tried to warn the FSA, and there were plenty of others.
Basically the regulators were too thick to understand. So the real issue is appointing competent people to the crucial decision making positions.

[Steve H]

Agreed, the regulators failed to regulate................

[Steve H]

and I am not talking about Sheen, Estevez and Diamond-Phillips.....

Edited by Steve H on Monday 16th February 15:10

[Prof Beard]

s2art said:

Prof Beard said:

I found this recent speech by Adair Turner, Chairman, FSA.

What I'd like to know is: To what extent do people agree with his analysis? I'm genuinely interested, especially in the views of the those who work in the financial sector. (I haven't formed a view yet myself)

What I DON'T want to know is: What you think of Adair Turner, the FSA, or the Govt!!!!! (PLEASE!)

http://www.fsa.gov.uk/pages/Library/Communication/...

Read this, he is being disengenuous. Guys like Jon Moulton were making precisely the same points a few years ago. Moulton even tried to warn the FSA, and there were plenty of others.
Basically the regulators were too thick to understand. So the real issue is appointing competent people to the crucial decision making positions.

I don't disagree actually, but is his reasoning about what went wrong basically correct or not? (He does say that regulation failed/was inadequate). I note that "His career with BP started in 1979 and he worked for Chase Manhattan Bank from 1979-82. He became a director of McKinsey & Co in 1994 after joining in 1982. Turner became Director-General of the Confederation of British Industry (CBI) from 1995-9. From 2000-06 he was Vice-Chairman of Merrill Lynch Europe." How does one judge competence in these contexts?

[s2art]

Prof Beard said:

s2art said:

Prof Beard said:

I found this recent speech by Adair Turner, Chairman, FSA.

What I'd like to know is: To what extent do people agree with his analysis? I'm genuinely interested, especially in the views of the those who work in the financial sector. (I haven't formed a view yet myself)

What I DON'T want to know is: What you think of Adair Turner, the FSA, or the Govt!!!!! (PLEASE!)

http://www.fsa.gov.uk/pages/Library/Communication/...

Read this, he is being disengenuous. Guys like Jon Moulton were making precisely the same points a few years ago. Moulton even tried to warn the FSA, and there were plenty of others.
Basically the regulators were too thick to understand. So the real issue is appointing competent people to the crucial decision making positions.

I don't disagree actually, but is his reasoning about what went wrong basically correct or not? (He does say that regulation failed/was inadequate). I note that "His career with BP started in 1979 and he worked for Chase Manhattan Bank from 1979-82. He became a director of McKinsey & Co in 1994 after joining in 1982. Turner became Director-General of the Confederation of British Industry (CBI) from 1995-9. From 2000-06 he was Vice-Chairman of Merrill Lynch Europe." How does one judge competence in these contexts?

AFAICT he is basically correct, people such as Moulton & Buffet ('weapons of massive financial destruction') were saying this about credit derivatives and the like for years.
It also appears that, apart from the FSA, banks were ignoring their own risk analysts.
How does one judge competence? I guess you could compare their judgement to people of proven competence in these matters (such as Buffet). An IQ test might help. For all Turners alleged experience, what expertise did he have in risk analysis?

[MK4 Slowride]

I hate the FSA. For years I've had to stringently adhere to their policy or get severely buttfked and yet they allow all this to happen...

[Prof Beard]

s2art said:

Prof Beard said:

s2art said:

Prof Beard said:

I found this recent speech by Adair Turner, Chairman, FSA.

What I'd like to know is: To what extent do people agree with his analysis? I'm genuinely interested, especially in the views of the those who work in the financial sector. (I haven't formed a view yet myself)

What I DON'T want to know is: What you think of Adair Turner, the FSA, or the Govt!!!!! (PLEASE!)

http://www.fsa.gov.uk/pages/Library/Communication/...

Read this, he is being disengenuous. Guys like Jon Moulton were making precisely the same points a few years ago. Moulton even tried to warn the FSA, and there were plenty of others.
Basically the regulators were too thick to understand. So the real issue is appointing competent people to the crucial decision making positions.

I don't disagree actually, but is his reasoning about what went wrong basically correct or not? (He does say that regulation failed/was inadequate). I note that "His career with BP started in 1979 and he worked for Chase Manhattan Bank from 1979-82. He became a director of McKinsey & Co in 1994 after joining in 1982. Turner became Director-General of the Confederation of British Industry (CBI) from 1995-9. From 2000-06 he was Vice-Chairman of Merrill Lynch Europe." How does one judge competence in these contexts?

AFAICT he is basically correct, people such as Moulton & Buffet ('weapons of massive financial destruction') were saying this about credit derivatives and the like for years.
It also appears that, apart from the FSA, banks were ignoring their own risk analysts.
How does one judge competence? I guess you could compare their judgement to people of proven competence in these matters (such as Buffet). An IQ test might help. For all Turners alleged experience, what expertise did he have in risk analysis?

So why were the likes Moulton and Buffet ignored (on both sides of the Atlantic)? (I agree that Moulton certainly saw it all coming)

[NoelWatson]

Prof Beard said:

I found this recent speech by Adair Turner, Chairman, FSA.

What I'd like to know is: To what extent do people agree with his analysis? I'm genuinely interested, especially in the views of the those who work in the financial sector. (I haven't formed a view yet myself)

What I DON'T want to know is: What you think of Adair Turner, the FSA, or the Govt!!!!! (PLEASE!)

http://www.fsa.gov.uk/pages/Library/Communication/...

"So what happened? Why did this extreme crisis occur? I think with hindsight – and it is only with hindsight – a fairly compelling and broadly agreed explanation of what has occurred can be set out"

Why does he need hindsight to know that it was all going to end in tears?

[scotal]

MK4 Slowride said:

I hate the FSA. For years I've had to stringently adhere to their policy or get severely buttfked and yet they allow all this to happen...

The difference being that whereas Lloyds or Lehmans were taking them out to lunch alot on one hand, and presenting them with trades they didn't understand on the other (along with a PhD's opinion that everything would be tickety boo) and then playing on their relation ship to get things signed off. You as a little guy working in a dealership were threatened with all sorts to make sure you did the paperwork right.


Until the FSA is taken apart and then put back together again, with people who understnad the markets they regulate, they will never be in a position to comprehensively regulate any thing from mortgages to structured products.

[s2art]

Prof Beard said:

s2art said:

Prof Beard said:

s2art said:

Prof Beard said:

I found this recent speech by Adair Turner, Chairman, FSA.

What I'd like to know is: To what extent do people agree with his analysis? I'm genuinely interested, especially in the views of the those who work in the financial sector. (I haven't formed a view yet myself)

What I DON'T want to know is: What you think of Adair Turner, the FSA, or the Govt!!!!! (PLEASE!)

http://www.fsa.gov.uk/pages/Library/Communication/...

Read this, he is being disengenuous. Guys like Jon Moulton were making precisely the same points a few years ago. Moulton even tried to warn the FSA, and there were plenty of others.
Basically the regulators were too thick to understand. So the real issue is appointing competent people to the crucial decision making positions.

I don't disagree actually, but is his reasoning about what went wrong basically correct or not? (He does say that regulation failed/was inadequate). I note that "His career with BP started in 1979 and he worked for Chase Manhattan Bank from 1979-82. He became a director of McKinsey & Co in 1994 after joining in 1982. Turner became Director-General of the Confederation of British Industry (CBI) from 1995-9. From 2000-06 he was Vice-Chairman of Merrill Lynch Europe." How does one judge competence in these contexts?

AFAICT he is basically correct, people such as Moulton & Buffet ('weapons of massive financial destruction') were saying this about credit derivatives and the like for years.
It also appears that, apart from the FSA, banks were ignoring their own risk analysts.
How does one judge competence? I guess you could compare their judgement to people of proven competence in these matters (such as Buffet). An IQ test might help. For all Turners alleged experience, what expertise did he have in risk analysis?

So why were the likes Moulton and Buffet ignored (on both sides of the Atlantic)? (I agree that Moulton certainly saw it all coming)

I saw a programme where Moulton just said he couldnt seem to get through to the people in question (FSA, IIRC). They just didnt seem to understand what he was saying.
This indicates to me that said people lacked competence. If Moulton could see the risks, and once he had explained it didnt seem that difficult to understand, then why couldnt the FSA?
I suspect that it was partly an issue of no-one actually owning the problem (FSA? Chancellor? BoE?).

[scotal]

s2art said:

It also appears that, apart from the FSA, banks were ignoring their own risk analysts.

Risk analysts and credit people are easily ignored when the bank (or a particular desk if you want to drill down into it) are making money hand over fist.

Emerging markets in the late 90's, dotcoms, credit derivatives are all examples of that. Its times like those we are currently in that they are given any creedence.

[scotal]

s2art said:

I saw a programme where Moulton just said he couldnt seem to get through to the people in question (FSA, IIRC). They just didnt seem to understand what he was saying.
This indicates to me that said people lacked competence. If Moulton could see the risks, and once he had explained it didnt seem that difficult to understand, then why couldnt the FSA?
I suspect that it was partly an issue of no-one actually owning the problem (FSA? Chancellor? BoE?).

If you understood things that well would you be working at the FSa for £60k a year or working in a bank on 3 times that....... pay peanuts (yes i know £60k isn't peanuts) get monkeys.

[s2art]

scotal said:

s2art said:

I saw a programme where Moulton just said he couldnt seem to get through to the people in question (FSA, IIRC). They just didnt seem to understand what he was saying.
This indicates to me that said people lacked competence. If Moulton could see the risks, and once he had explained it didnt seem that difficult to understand, then why couldnt the FSA?
I suspect that it was partly an issue of no-one actually owning the problem (FSA? Chancellor? BoE?).

If you understood things that well would you be working at the FSa for £60k a year or working in a bank on 3 times that....... pay peanuts (yes i know £60k isn't peanuts) get monkeys.

Well, I did say AFTER someone else had explained it. Which you would think doesnt require brilliance.

[scotal]

s2art said:

Well, I did say AFTER someone else had explained it. Which you would think doesnt require brilliance.

but the explanation was coming form the banks who wanted to do the trade..... so they would pitch it as making sense.
The FSA people probably didn't understand the explanation, but due to professional pride (ie a banker saying "any ididot would see that this is a good trade") rubber stamped it.

Have you seen the latest round of awful Norwich Union Ads where "happy" is promising to give out their competitors prices on the website to any one who asks for a quote, and the two underlings he's having lunch with are looking at him blankly while nodding?

I suspect an awful lot of FSA people spent their time looking like them.

[NoelWatson]

scotal said:

s2art said:

I saw a programme where Moulton just said he couldnt seem to get through to the people in question (FSA, IIRC). They just didnt seem to understand what he was saying.
This indicates to me that said people lacked competence. If Moulton could see the risks, and once he had explained it didnt seem that difficult to understand, then why couldnt the FSA?
I suspect that it was partly an issue of no-one actually owning the problem (FSA? Chancellor? BoE?).

If you understood things that well would you be working at the FSa for £60k a year or working in a bank on 3 times that....... pay peanuts (yes i know £60k isn't peanuts) get monkeys.

I'm not sure how the FSA will solve this

How do they keep people trained in the latest products
How do they retain them
How do they get their employees to spend most of their time in the banks to keep up with new developments

[Bing o]

NoelWatson said:

I'm not sure how the FSA will solve this

How do they keep people trained in the latest products
How do they retain them
How do they get their employees to spend most of their time in the banks to keep up with new developments

I think that OTC trading will effectively cease, and all derivative trading will be done electronically, and within limited products.

(I do have some insight into this)

[Randy Winkman]

scotal said:

s2art said:

I saw a programme where Moulton just said he couldnt seem to get through to the people in question (FSA, IIRC). They just didnt seem to understand what he was saying.
This indicates to me that said people lacked competence. If Moulton could see the risks, and once he had explained it didnt seem that difficult to understand, then why couldnt the FSA?
I suspect that it was partly an issue of no-one actually owning the problem (FSA? Chancellor? BoE?).

If you understood things that well would you be working at the FSa for £60k a year or working in a bank on 3 times that....... pay peanuts (yes i know £60k isn't peanuts) get monkeys.

The people in charge of the banks were getting paid millions and they were hopeless too.

Edited for spelling

Edited by Randy Winkman on Monday 16th February 19:12