As its chairman, he oversees the examination of “the expenditure, administration and policy of HM Treasury, HM Revenue & Customs, and associated public bodies, including the Bank of England and the Financial Services Authority”.
Right now, he is at the head of the investigation into the Libor-fixing scandal and is probably the only person to come out of this whole ‘snafu’ with any credit.
He is absolutely right to criticise the role Mervyn King as Governor of the Bank of England and the FSA played in the resignation of Bob Diamond as chief executive of Barclays.
Chairman of the FSA Adair Turner (someone tipped as a future Bank of England Governor) is quoted as saying: “If Diamond had stayed on, given the extensiveness of the calls for his resignation from politicians and the press, I strongly suspect that would have been to the disadvantage of the shareholders.”
King used the same defence, arguing that he was acting in the interests of stability and shareholders.
But isn’t it up to the shareholders to decide the fate of any company’s Board members rather than politicians or the press? It is certainly not up to the FSA or the Bank of England.
Instead it is the FSA and the Bank of England’s role to ensure that Libor was not rigged in the first place.
Another London-listed bank in the firing line at the moment is HSBC, whose chief compliance officer David Bagley resigned in front of a US senate hearing into how it allowed billions of dollars of Mexican drug money to be laundered. Twice in the past decade HSBC has been told to restructure its money laundering processes and twice it has patently failed to do so robustly enough – this latest failure will cost at least $1bn in fines.
Remind me again who regulates the banks and is in charge of overseeing, for example, that their money laundering processes are in place and robust?
All the banks need to go back to their core business and focus on protecting the cash that is deposited with them and then lending against it, in a controlled way, to those companies and individuals who need it.
The FSA is on its last legs and in its new guise needs to go back to its own reason for being, make sure it understands what those companies it regulates does and then regulating them.
It’s not rocket science – thankfully, as you’d have to pity their regulators…
