Regulation of the City screwing up that is:
He focused on the Financial Services Authority (FSA), which he established in a surprise move on his first day as chancellor in 1997. It was widely criticised during the financial crisis for failing to predict and manage the turmoil.
Mr Brown said: “We set up the FSA believing the problem would come from the failure of an individual institution. That was the big mistake. We didn’t understand just how entangled things were.”
He added “I have to accept my responsibility.”
The crisis in 2008 saw the rapid spread of problems from one bank to another because of how interconnected the global financial system had become.
My take on this is that it wasn\’t the amount of regulation that was the problem, either too much or too little. Rather, who was doing the regulating and how they were doing it.
Pre- FSA regulation was through the Bank of England. And the institutional memory of a central bank will most certainly be looking at things like the \”interconnectedness of the system\”. Because that\’s what bankers worry about anyway. Runs and runs spreading. The BoE solved the secondary banking crisis of the early 70s for example: worrying about exactly that, that some fringe players going bust would then ripple through the system.
The FSA on the other hand was a bunch of box tickers. If you\’re following the rules (whatever those are) then you\’re fine.
No one was in fact looking at the whole system: and that\’s Brown\’s fault.