George Osborne moved to redress what he described as the spectacular regulatory failure of the City, announcing the abolition of the Financial Services Authority and a sweeping increase in the Bank of England’s powers.
George Osborne moved to redress what he described as the spectacular regulatory failure of the City, announcing the abolition of the Financial Services Authority and a sweeping increase in the Bank of England’s powers.
Mervyn King, the Bank’s governor, will become one of the most powerful central bankers in the world, with a new remit to prevent the build-up of risk in the financial system in addition to his monetary policy role.
Mr King told a City audience at Mansion House on Wednesday night that his new role in enforcing financial stability was to “turn down the music when the dancing gets a little too wild”.
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Mr Osborne confirmed his plan to split up the FSA – a creation of Gordon Brown in 1997 – which the chancellor largely blames for failing to spot the approaching financial hurricane and the weakness of banks like Northern Rock.
“The FSA became a narrow regulator, almost entirely focused on rules-based regulation,” Mr Osborne said in his first Mansion House address. “No one was controlling levels of debt and when the crunch came no one knew who was in charge.”
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