Monday, July 20, 2009

They can't do it

David Cameron would scrap FSA in biggest overhaul of City regulation since 1997, says The Daily Telegraph. The Financial Services Authority will be scrapped to make way for an all-powerful Bank of England as part of a radical overhaul of the financial system, the Conservatives government will effect if they are elected.

They want to get rid of the so-called "tripartite" regulatory system, comprising the government, the Bank of England and the FSA. Except that it isn't a tripartite system - it's a quadripartite system. The fourth player is the European Union, which makes the bulk of the law and has the superior enforcement powers.

Thus, as we explained earlier, the Tories can't do it. But then hope springs eternal, and there is no fool like a Tory fool when it comes to the EU. Osborne has announced the creation of a new Treasury minister for European financial regulation who "will spend as much time as necessary in Brussels to build alliances and defend Britain’s interests."

In time, if this post happens, the holder will become the minster for obeying European financial regulation. At least, when he goes to Brussels, he will be able to pick up his instructions directly from our government.