Saturday, 28 January 2012

Osborne 'delusional' on City slicker regulation

From the Morning Star

John Millington

Left economists labelled Chancellor George Osborne "chronically delusional" today after he attempted to play the strong man by promising tough financial regulation.

There will be "no ambiguity about who is in charge" when taxpayers' money is at risk, Mr Osborne insisted in a keynote speech at the World Economic Forum in Davos.

The Chancellor unveiled new laws to boost the power of the Treasury during times of financial crisis.

The measure is part of a wide package of reforms which will scrap the Financial Services Authority and introduce a new regulatory framework made up of the Financial Policy Committee, Prudential Regulation Authority and Financial Conduct Authority.

The Financial Services Bill, published after nearly two years of consultation, gives the Chancellor the power to veto decisions made by the Bank of England when dealing with bank bailouts and other interventions, in an attempt to avoid a repeat of the Northern Rock collapse.

"I hope that we will never again see the paralysis and confusion that did so much damage when the latest crisis hit," he said.

The Bill means that in a crisis, when taxpayers' money is at risk, both the responsibility and the power to act will rest with the Chancellor of the day.

But LEAP co-ordinator Andrew Fisher was left unimpressed by Mr Osborne's gesturing.

"The reform of the finance sector is not a question of better oversight to ensure functioning competitive markets, but of democratic control to ensure markets are subordinated to social need,' he said.

"The failure despite ministerial begging to get even government-owned banks to lend, and the ineffective quantitative easing policy, are the desperate acts of those clinging to an outdated and failed ideology.

"We need public ownership of the banks and democratic control of credit issuance."

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