Again, I have been slow in writing recently. Apologies to those eagerly awaiting comment! In the past few days, a couple of items about the banking crisis have caught my eye. The first comes from the US. Financial regulators were, it appears, under pressure not to impose too many controls on Wall Street. Their great fear was that these controls would either cost money or limit the services on offer. This in turn might undermine Wall Street in its competition with London. So, as recently as 2007, cutting regulation was the priority.
In many ways, this is no surprise. Certainly the financial services industry in the UK has a strong voice in policy making. The Treasury listens to them and, from that, comes influence throughout Whitehall. And you only have to look at the numbers of senior City figures sitting on government bodies and commissions of various sorts, reviewing everything from economic policy to social assistance, to see the evidence.
The second piece of news was reported this morning on the BBC (http://news.bbc.co.uk/1/hi/business/7909274.stm) and suggests that a report will recommend Europe-wide regulation of the financial services industry. A year ago, this would have been unthinkable. Now, regulation and control (even to the extent of nationalisation) are being considered. It will be interesting to watch the response of the financial services industry in London to this suggestion. I don’t doubt they will resist any increase in regulation, and certainly any involving the EU, but the idea will certainly have an airing. After all, why should the behaviour of bankers in one or two countries have such widespread consequences without there being some debate about the interests of those affected in the oversight of their activities?