Now why would that be? The BBC protecting Ed Balls from scrutiny.

The BBC hide away on their Business Pages, with no link from the front news page, the news that:

'Timothy Geithner backs George Osborne's spending cuts'

Of course being the BBC, as well as not mentioning the news on the front page, they also run it as a very short story with no mention of some key facts. Thus this line:

'He said Mr Osborne had been handed "problems not created by this government".'

A fuller quotation would run:

'What he did was a very remarkable thing. At a time when it was easier to make tough choices quickly, because they were not problems created by this Government, he locked his coalition and the Government into a set of reforms that were very good.'

As The Telegraph report.

Likewise the BBC manage:

'...Mr Geithner said the "light-touch approach to financial regulation" which was "designed consciously to pull financial activity from New York, and from Frankfurt and Paris to London" was a "deeply costly strategy for financial regulation".'

Would the BBC care to explain who devised this 'light-touch regulation', who boasted of their 'light-touch regulation'?
Well here's Ed Balls from 2006, transcript on his website:

' In my first speech as City Minister at Bloomberg in London, I argued that London’s success has been based on three great strengths – the skills, expertise and flexibility of the workforce; a clear commitment to global, open and competitive markets; and light-touch principle-based regulation…

Most recently in this decade we have been determined to respond to events and new challenges and enhance London’s global standing and light touch regulation…

Today our system of light-touch and risk-based regulation is regularly cited – alongside the City’s internationalism and the skills of those who work here – as one of our chief attractions. It has provided us with a huge competitive advantage and is regarded as the best in the world…

The Government’s interest in this area is specific and clear: to safeguard the light touch and proportionate regulatory regime that has made London a magnet for international business…

We must ensure that all new regulations are implemented in a sensitive and light touch manner…

...

[The Labour government] will outlaw the imposition of any rules that might endanger the light touch, risk based regulatory regime that underpins London’s success.'

Would the BBC not like to inform its paying customers who was in proudly in favour of 'light touch regulations'?

Oddly bearing in mind the 2006 speech quoted from above, during Conference Season 2008 Martin Kettle in The Guardian still managed to report with a straight face that:

'He is also driving the dominant Brownite line of the week – that you have to be tough to tame the financial markets. But while Brown hesitates to abandon his own long familiar commitment to light-touch regulation, and Alistair Darling in his conference speech argued for neither light nor heavy but effective regulation, Balls was reliably reported to have told friends on Sunday night that "I have never believed in light touch regulation." It's a very significant shift of pitch, and it tells you the sort of stance that Balls might adopt in a contest with the – on this issue – more cautious Miliband.'

So if Martin Kettle is correct, then in 2008 Ed Balls was claiming "I have never believed in light touch regulation", whilst in 2006 he was stating his support for "a clear commitment... light-touch principle-based regulation". Which statement is true Ed Balls? Maybe George Osborne could ask him at the next Treasury Questions, I am sure Ed Balls will want to set the record straight.

'The Securities and Exchange Commission today issued a report cautioning credit rating agencies about deceptive ratings conduct...'

'The Securities and Exchange Commission today issued a report cautioning credit rating agencies about deceptive ratings conduct and the importance of sufficient internal controls over the policies, procedures, and methodologies the firms use to determine credit ratings.'

Read more at the SEC's site.

The worrying part, albeit written in the language beloved of 'regulators' worldwide and so sounding mild is this:

'According to the Report, an MIS analyst discovered in early 2007 that a computer coding error had upwardly impacted by 1.5 to 3.5 notches the model output used to determine MIS credit ratings for certain constant proportion debt obligation notes. Nevertheless, shortly thereafter during a meeting in Europe, an MIS rating committee voted against taking responsive rating action, in part because of concerns that doing so would negatively impact MIS's business reputation.

MIS applied in June 2007 to be registered with the Commission as an NRSRO. The Report notes that the European rating committee's self-serving consideration of non-credit related factors in support of the decision to maintain the credit ratings constituted conduct that was contrary to the MIS procedures used to determine credit ratings as described in the MIS application to the SEC.

In the Report of Investigation, the Commission makes clear that credit rating agencies registered with the SEC must implement and follow appropriate internal controls and procedures governing their determination of credit ratings, and must also take reasonable steps to ensure the accuracy of statements in applications or reports submitted to the SEC.

The Report cautions NRSROs that, when appropriate, the Commission will pursue antifraud enforcement actions against deceptive ratings conduct, including actions pursuant to the Dodd-Frank Act provisions regarding conduct that physically occurs outside the United States but involves significant steps or foreseeable effects within the U.S.

Under Section 21(a) of the Securities Exchange Act of 1934, the Commission may investigate violations of the federal securities laws and at its discretion "publish information concerning any such violations." David Frohlich, Margaret Cain, Roger Paszamant, and Dean Conway conducted the SEC's investigation. The Commission acknowledges the assistance and cooperation of foreign regulatory authorities in Europe in this investigation.'

In other words (those of Alex Masterley in fact:

'a Moody's analyst discovered in early 2007 that a computer coding error had upwardly impacted by 1.5 to 3.5 notches the model output used to determine Moody's credit ratings for certain constant proportion debt obligation notes. Nevertheless, shortly thereafter during a meeting in Europe, a Moody's rating committee voted against taking responsive rating action, in part because of concerns that doing so would negatively impact Moody's business reputation.

So that's alright, then. The markets can go hang because it might hurt Moody's to tell the truth, while some paper that is worth nothing more than a AA- has an uncorrected AAA label slapped on it. Meanwhile the SEC who issued this statement, say that they won't prosecute because the fraud took place in Europe - but hang on, Moody's is a US based group, and are you tellling me that Moody's senior management didn't read the minutes of their European rating committee?

Worse still are you telling me that there is no internal audit that might have picked up on the issue?

And do you really think that the investment banks running the particular issues weren't just a little surprised when their paper came back with a rating justifying a yield 50bp finer than they had expected? '

Credit rating agencies making mistakes and not reporting them, investment banks not picking up the mistakes made despite employing experts to spot such problems and finally a regulator incapable of regulating; reassuring isn't it?

Ben Bernanke disses Gordon Brown's tripartite regulatory system

"[O]ver the past few years the government of Britain removed from the Bank of England most of its supervisory authorities. When the crisis hit - for example when the Northern Rock bank came under stress - the Bank of England was completely in the dark and unable to deal effectively with what turned out to be a destructive run and a major problem for the British economy."

Can't see this quote anywhere on the BBC, how odd; it's almost as though they are trying to protect Gordon Brown and what's left of his reputation.

Gordon Brown has always been in favour of stronger bank regulation!

Well that's what he keeps claiming; the truth, of course, is somewhat at variance with his claims. Here's a couple of examples:

"Last year we set out radical proposals for changing the way we regulate: minimising the administrative burdens of regulation; and ensuring that the realities of regulation, as you experience them on the ground, are transformed -- by moving away from the old blanket approach, of 100 per cent form-filling and 100 per cent inspection that is inefficient and wasteful of your time, to a new approach based on risk… And I believe, too, we should consider how we can continue to extend our risk-based approach, applying the concept of risk not just to the enforcement of regulation, but also to the design and indeed to the decision as to whether to regulate at all… And we will take the fight on deregulation to Europe." - Gordon Brown's speech to the CBI on 5 June 2006

"...on regulation: I have announced measures - both for the City and beyond - to tackle unnecessary and wasteful bureaucracy and red tape:

*
all new FSA rules subject to scrutiny by our competition authorities;
*
the Office of Fair Trading now specifically examining the impact of the financial sector regulatory framework on competition;
*
and because 40 per cent of new regulation - and as much as three quarters of new financial sector regulation - comes from Europe I can tell this gathering that having won the battle for a Savings Directive against tax harmonisation, Britain has, having consulted widely with you, already insisted on improvements to the Prospectus Directive, the Transparency Directive, the Market Abuse Directive, the Occupational Pensions Directive and the Investment Services Directive - and we will continue to resist inflexible barriers being added into the Working Time Directive and the Agency Workers Directive.

And now that the UK Government has agreed with Ireland, the Netherlands and Luxembourg to put regulatory reform at the heart of our four EU Presidencies through to 2005, putting every costly and wasteful regulation to a competitiveness test, we must ensure that if other countries fail to implement EU Directives we will not be discriminated against and there will be a level playing field." Gordon Brown in his 2004 Mansion House speech

Not entirely straight with us over this subject, as with so many, is he?

The Great Repeal Bill

Douglas Carswell and Daniel Hannan have put together a Wiki to see what restrictive laws and regulation are believed to hamper individual freedom, civic society and business. Take a look here and contribute, this is the sort of thing that David Cameron's incoming Conservative government should do in the first 100 days. Turning around the economic mess that Gordon Brown has created will take a very long time and be painful and unpopular, this repeal bill would be very popular indeed.

I wonder why

The BBC loyally report that:

"Chancellor Alistair Darling is to announce later that he does not plan fundamental reform of the way UK financial institutions are regulated.

Mr Darling will say the current regulatory system is not to blame for the credit crunch, according to speech extracts released by the Treasury."

Now why might Alistair Darling say that?

"The existing tripartite system, which was introduced by Prime Minister Gordon Brown when he was chancellor, relies on the Financial Services Authority, the Treasury and the Bank of England to regulate financial institutions. "

Oh yes, that would explain it.

Say goodbye London and hello Frankfurt

The EU has long envied the City of London and now it seems that they may be about to get control of the City of London and so end its power.

"European leaders, including Gordon Brown, agreed yesterday that a new regime to tame the excesses of capitalism and regulate the markets should be based on the proposals of a former French central banker, ceding the European Central Bank some authority over the City of London for the first time.

...

Reflecting the views of the German and French leaders, Angela Merkel and Nicolas Sarkozy, the summit unanimously declared that the new regime be based on the recent recommendations of a group chaired by Jacques de Larosière, a former French central bank chief, which calls for a "European Systemic Risk Council" with ultimate authority over all financial markets in the EU."

Don't be fooled by Gordon Brown's whimper that "we also need to ensure that supervision is done at a national level". He has screwed the Country up completely and now seems to be set on ensuring that any incoming Conservative government has no chance to put matters right.

Remind me, who set up the City regulatory framework

Lord Turner, the head of the FSA has called for major changes to the way Banks operate. Giving the Economist lecture he said that parts of the regulatory system were "seriously deficient" and he recommended that banks should be forced to build up capital during good times, so they could more easily weather an economic downturn.

Sounds like good advice, it's certainly advice that Gordon Brown could usefully have followed by setting aside money during the recent engineered boom. Hold on haven't the Conservatives been making this point for some weeks now and been derided for it by Gordon Brown and the BBC?


One further point, if the FSA "failed to piece together the jigsaw puzzle" of risks which included a large UK current account deficit, rapid credit extension and house price rises, then shouldn't some of the blame lie at the feet of the man who designed the tripartite City regulatory system, Mr Gordon Brown. He swept away the old system that worked and replaced it with something modern and shiny and not fit for purpose.

Christmas is cancelled

I just found this on the Adam Smith Institute website, it's a explanation of all the laws Father Christmas would have to comply with in order to work, here's some extracts:

"Claus, of course, is just an alias. He's really Saint Nicholas, Bishop of Myra, on the southern cost of Turkey. The EU (foolishly) isn't admitting Turkey to the Union, so Claus needs a visa and a work permit to run his Christmas delivery service in the UK.

...

Claus would have to be vetted by the Criminal Records Bureau in order to work with young people. Since that can take up to three months, he's way too late for this year anyway.... And if the elves are paid, then they need to be registered under Pay as You Earn, and Claus would have to sign them on to the new Personal Accounts pension scheme and make sure that the right amount of National Insurance was paid, so he'd need a good accountant.

Because he drops presents (and himself) down chimneys, he is covered by the Working at Heights regulations. He would need training on how to use a ladder, or would have to hire a cherry-picker (with professionally qualified operator) or erect scaffolding. This might require road closures for health and safety reasons.

The fact that Claus uses reindeer to draw his sleigh would of course bring him under animal welfare regulations. The sleigh itself must qualify as an aircraft, and as such has to be licensed by and have a certificate of airworthiness from the Civil Aviation Authority. If the presents that Claus drops off have their origin outside he EU – Lapland, say – then VAT and customs forms have to be filled out, and some tariff duties may be payable."

I hope that even Gordon Brown and Peter Mandelson get the point of the Adam Smith's satire, not that they would ever act on it.

Another regulatory failure

What a surprise, the US Securities and Exchange Commission are reported to have received warnings about Bernard Madoff's activities as far back as 1999 but did not act appropriately. A failure of a banking regulatory authority, how surprising. The SEC and the FSA are overstaffed bureaucratic bodies without the expertise to properly regulate the investment companies that they are meant to police.

FSA to ban short-selling of financial stocks

It is being reported that the short-selling of financial stocks is to be banned in the United Kingdom from midnight tonight under new rules drawn up by the Financial Services Authority (FSA). The ban will prevent investors from creating or adding to short positions in all publicly quoted financial companies. The ban will remain in force until January 16 2009 when the FSA will publish a comprehensive review of short-selling rules.

Interesting, very interesting and not good news for hedge-funds or spread betting, I wonder what Mike Smithson will make of this development.

Blog censorship

This government has become worryingly authoritarian, their attitude seems to be that the public cannot be trusted to eat, drink, drive or smoke without warnings, fines and controls. Now their beady little eyes have alighted on an area where freedom of speech seems unfettered, the blogosphere. The government can exercise a degree of control over the traditional media whether that be via a Quango such as the Press Complaints Commission or Ofcom or via putting a party supporter in charge, such as at the BBC. The blogosphere can say whatever they want to say and blogs such as Guido Fawkes and Devils Kitchen are therefore hugely popular. These blogs, and others, are guilty of not following the "narrative" as set by the government and so must be regulated and restricted.

So the news that the House of Commons Culture, Media and Sport select committee was looking into setting up an "independent" internet watchdog, with responsibility for drawing up guidelines that social networking sites, the blogosphere, website owners and search engines would be expected to follow; did not exactly cause me to sit up in shock. You can read the whole report here.

The initial proposals would set-up a new internet watchdog which would operate in a similar way to other industry bodies such as the Press Complaints Commission, covering accuracy, discrimination and intrusion. The watchdog would not (at least initially) have any statutory powers to impose fines but would investigate complaints and most likely publish its decisions in instances when its guidelines have been breached. In time the "light-touch" regime will be deemed to have failed and so a Labour government would say that it was being forced to bring in legislation to regulate the dangerous blogosphere. This legislation would be justified as being for "the protection of children" and the "prevention of terrorism" and "hate speech". All blogs will need to be approved by the regulator, for which a fee would be paid. So the good and the investigative blogs that have uncovered the sleaze of this Labour government would be shut down, so keeping the glare of publicity off of the sleaze merchants. The Quango would be manned by the usual collection of left-wing supporters of anti-thought crime legislation who would positively get off on being able to further restrict real free-speech in this Country. Be of no doubt that this proposal is about control and censorship, job creation for like minded in the new regulatory body and of course raising money through registration fees.