The fertility of Gordon Brown's imagination is impressive, one must admit. His virile capacity for delusion, and possible self-delusion, is beyond the comprehension of mere mortals. His smoke is thicker and his mirrors shinier than even Paul Daniels could envisage. With Mandelson back by his side there may be no limits to the extent of his dissembling to discombobulate may reach levels that only a Large Hadron Collider could measure, and with Campbell (Alasdair of that ilk) lurking in his shadow, there's no telling who'll be in the firing line next.
He has recently claimed that if the world had listened to him and created the proper international framework for regulating finance then the problems we've seen recently would never have occurred.
GORDON BROWN: To be fair to be me, I've been arguing that we have to have these global financial institutions that deal with global financial flows ever since what was called the Asian crisis in 1998 and I said then that we had to have the co-ordination that's necessary. You see you've got these big banks that are operating across frontiers and they're being regulated in one country, but they're not being supervised across continents.
(He also said that this was the first financial crisis of the new global economy - has he not been paying attention?)
Let's think about this. Gordon Brown is the man who took away the Bank of England's regulatory role, a role it had performed well for a long time, the kind of role a central bank should play, and replaced that low-key and efficient regulation with the monster that is the FSA. Not only does this new monster have bank regulation, it also has consumer protection and fighting fraud responsibilities - three different roles, each of which was previously conducted by specialists who knew the ins and outs of their speciality. His track record of designing effective domestic regulation is poor.
Instead of clear regulation, financial institutions here now have the FSA and the Bank of England looking at them with the bank's central banking powers very restricted. In addition, the Treasury has a locus - a meddling micro-management introduced by Brown which runs counter to the principle that the executive should be separate from the constabulary and the judiciary. in this instance the Treasury is all three.
The FSA was designed as a light-touch regulator, it's regulation risk-based rather than rules-based, an innovation which took financial business to London (hardly surprising that some of it turned out to be less than totally stable considering what the attraction was) - that light-touch was exactly why the FSA failed to spot the Northern Rock problems. It doesn't explain why Northern Rock didn't set off alarm bells all over the place.
There are, indeed, concerns that the FSA has a conflict of interests inherent in its make-up - it cannot protect both the consumer and the financier, those roles should be separate.
So how does this make Gordon Brown a liar? Well, way back in 1999 his political will was forcing the Treasury to lighten the regulation on the mortgage market to "balance the maintenance of a competitive and dynamic mortgage market with protection for the needs of the consumer" - welcome to sub-prime - his clunking fist destroyed sensible banking in favour of a rush for growth in the market.
That's not all - the international regulation that he claims to have wanted for years and would have had if only he'd been listened to? The international regulatory system is Gordon Brown's baby. He was pleased to trumpet it back in 1998 when he was chair of the G7 Finance Ministers and they 'acted' in the wake of the Asian and Russian crises.
That reform that Brown said would stop hedge-fund speculators destabilise the financial system was carried out, but Brown is now claiming everyone ignored his wishes when he wanted to introduce strong regulation.
In fact, here's an extract from the story in 1998:
The Chancellor emphasised that problems in the banking systems of foreign countries could have serious "contagion" effects that could threaten banks in the UK.
and here's an extract from the tale today about Brown and Sarkozy calling for reform:
"Nicolas and I will be talking about the global fund that the International Monetary Fund will have now to create to build on its own resources to help economies that are in difficulty to prevent contagion coming from their countries into our countries,"
Brown must have thought about improving regulation though?
Well, here's his Mansion House speech from 2006 where he says:
In 2003, just at the time of a previous Mansion House speech, the Worldcom accounting scandal broke. And I will be honest with you, many who advised me including not a few newspapers, favoured a regulatory crackdown.
I believe that we were right not to go down that road which in the United States led to Sarbannes-Oxley, and we were right to build upon our light touch system through the leadership of Sir Callum McCarthy - fair, proportionate, predictable and increasingly risk based. I know Sir Callum is committed to reducing regulatory administrative burdens and the National Audit Office will now look at the efficiency and value for money of our system.
Let me say I see no case for a European single regulator and will continue to reject such a proposal, just as we will resist the new and unnecessary proposals to harmonisation corporate taxation in Europe.
So he was still believing in a risk-based regulator in June 2006 and opposing an international regulator.
What about the same venue in 2007?
the things that we must do - and, just as important, things we should not do -
to maintain our competitiveness:
enhancing a risk based regulatory approach, as we did in resisting pressure for a British Sarbannes-Oxley after Enron and Worldcom,
Still with the risk-based regulation? What is the fixation? (Sarbannes-Oxley was the fix after Enron to ensure that US corporations actually kept their accounting records).
What about the speech he made to the Lord Mayor's Banquet in November 2007? An opportunity there, surely, to talk about the international regulator he claims to have been championing, considering that the topic of his speech was foreign policy priorities? Nope. One of the things he did say, though, was that he was:
resolute in my determination that we need fewer rather than more international bureaucracies
What about the regulator Gordon?
we should work for a concerted global strengthening of law enforcement, financial supervision and policing and intelligence cooperation
Is that a sideways reference to it?
Financial disruption in one country can now affect all countries. The IMF should be transformed with a renewed mandate that goes far beyond crisis management to crisis prevention - not only responsible in the manner of an independent central bank for the independent surveillance of the world economy but becoming its early warning system.
So not a regulator at all, then, just an observer.
Gordon Brown - your friendly neighbourhood havering skite.
His new-found commitment to an international regulator is guff. The action taken when he chaired the G7 Finance Ministers was part of the cause of the problems we have now - as was his very first action in Government against the Bank of England. Superman? Gie's a break.
No comments:
Post a Comment