Did you know? Gordon Brown’s been talking about strong global regulation for years

Sally Chatterjee

Brown spent a decade ignoring warnings about the instability of the British economy and the unsustainable debt-policies followed by families, businesses and government alike.

Brown was also critical in blocking EU and global attempts to regulate, he was batting firmly in favour of the City and "light touch" regulation.

I don't think the media should let Brown get away with such bold claims. Brown appears to be in denial, if he can't face up to his mistakes then he's not fit to govern.

michael m

This is the man who right up until the crisis broke last October was wining and dining the bankers, having them as special advisers, praising them publicly and rewarding them with knighthoods. He was also very happy to tax the bonuses and spend the billions this brought in without a word about how this was earned. Now he has the nerve to turn on these people and take no blame himself for the calamity they inflicted on the taxpayer.

The Bellman

I *know* listening to this delusional, arrogant, lying thug is only going to irritate me. I know if I follow the link, I'll be assaulted and repelled by a barrage of platitudes, hectoring evasion, cliche, half-truth and outright lies.

And yet I click anyway. Is there some kind of medical condition that explains my plight?

Billericay Dave

He really is bonkers!! is it me or are labour the opposition and yesterdays speach was about what they would do if they got elected and right all the wrongs of the last 12 years ?????

Vulture

It's typical that his fellow Scottish Socialist Naughtie patted him questions as soft as tissue paper, and let Bruin burble on with his insane denials of reality without his usual continuous interruptions.

Naughtie is a disgrace to British broadcasting. He is a boring, pompous old fart at the best of times, who might have made a barely adequate assistant editor of the Aberdeen Advertiser in a lean year, but to have to endure his half-literate witterings day-in and day-out for more than a decade has been intolerable. Since he let slip on air that he was a Labour supporting troll I have found him not merely absurd, but positively poisonous. He is standing confirmation that the BBC is the Bruinite Bulls**t Corporation. Away with him.

Nicholas

"is it me or are labour the opposition and yesterdays speach was about what they would do if they got elected and right all the wrongs of the last 12 years ?????"

No, it's not just you. That is precisely how they are behaving. Quite ridiculous but even more ridiculous is the fact that the MSM let them get away with the nonsense.

The Bellman

You can hear him shoe-horning Blinky's talking points in there like he's a random phrase-generator. If it weren't so embarrassing it would sound like a mildly amusing undergraduate prank: see how many meaningless phrases you can include before you start giggling.

And how often can he say 'As I've said all along...' before the trauma of trying to believe that he really has always thought those things, many of which are antithetical, actually causes him to wet himself live on air?

"I always try to be as honest and open as possible... I don't parade my family... My father was a minister... I'm married, you know. To a lady. I even sleep with her."

And what genius told him and Mandelvort that calling themselves 'insurgents' was a good idea? They started it a few weeks ago then dropped it, and now it's been revived. It just amazes me: it's like they *want* to beaten.

Chuck Unsworth

So, what is this international body which has the power to regulate all banks and financial institutions world-wide?

Brown is utterly deluded if he believes that this is anything more than hot air. Worse, he designed and brought in the UK supervisory systems which he now says should be radically reformed.

What is his real-time horizon? A week? A day? An hour? Brown just makes it all up as he goes along. He's a playground bully and liar.

Philip Walker

Vulture: Complain to the BBC. Write a strongly-worded letter of complaint alleging political bias of the worst sort to todaycomplaints@bbc.co.uk. I just did, but there's nothing serious can be done unless large numbers of people start telling the BBC that they are not being representative.

Tiberius

The English language does not contain an adequate vocabulary to describe Brown (although Bellman comes close); he's just contemptiblissimo if you see what I mean.

Alan Phillips

You only have to look back to the 2005 "Tory cuts" campaign to see who were the more likely to put the country in a better place to weather this situation. That isn't saying that we wouldn't have been effected, but I do believe we would be dealing with the consequences now, rather than this "Buy now pay later" policy we have in our name at present.

Liz Brown

Gosh! no I didn't know that he had been warning us for years - boy! am I impressed with his foresight! and the measures he put in place! At last! I can sleep sound in my bed tonight! knowing that the great helmsman is in charge! Phew! I feel better already!

Any Colour but Brown

Hang on, wasn't it Brown that came out with the line that "no-one could have foreseen" the financial crisis of the sub-primes coming?

Moraymint

Yes, during the interview with Naughtie, Brown simply talked arrant nonsense. I find myself driving along listening to the radio and thinking, "What in God's name does this bloke take me for ...?"

Brown's situation really does go from appallingly bad to irrecoverably worse with each passing day.

T. Holmen

If you google a bit, you will see that GB has been talking about international regulation in past years, but this seems to be mainly about money-laundering and dealing with currency crises, not over-leveraging of banks or the type of problems that did for Northern Rock, B&B, HBOS or RBS.

GB made a statement to the IMF in April 2002, in which he basically urged the rest of the world to adopt the UK regulatory system, which Labour set up in 1997. GB clearly didn't think that there was any problem with the UK regulatory system, as he boasted:

"In 1997 we introduced a wholly new monetary and fiscal framework based on clear policy rules, well established procedures, and an openness and transparency not seen in the past. This new framework makes us far better placed than before to cope with the ups and downs of the economic cycle - one reason why in the last five years while other countries have suffered recessions the British economy has maintained economic growth."

El Sid

Lazy journalism, David. This was in response to the Asian crisis, in November 1998 :

http://news.bbc.co.uk/1/hi/business/the_economy/206409.stm

""We will not let high-risk hedge fund speculation by the few translate into a wider risk for the many and destabilise the financial system on which we all depend for prosperity," Gordon Brown said.

The Chancellor emphasised that problems in the banking systems of foreign countries could have serious "contagion" effects that could threaten banks in the UK"

The trouble is not in whether he can identify these problems, it's in his one-eyed (sic) approach to sorting them. He's so wrapped up in the rhetoric of "evil City" that the results of his deliberations were half-cocked nonsense like the FSA and Basel II, which directly contributed to the credit crunch. And of course in a rare deviation from his policy of throwing money at problems, he refused to staff the FSA with real bankers, preferring to pay peanuts and get monkeys. The monkeys didn't have a clue what was going on in the City, hence you got the likes of AIG Financial Products being essentially unregulated even while Brown was strutting on the world stage saying how Basel II was going to stop another Asian crisis. Instead, its rigid, authoritarian approach to risk encouraged people to do silly things around the edges, making the crunch much worse when it finally happened.

And it seems that we're going down exactly the same route now, it's really depressing. We don't need more regulation, we just need to rip up half of it and replace it with a similar amount of regulation that will actually work.

But if you hear Brown going on about the crunch being America's fault, remember AIG, Basel II and the FSA. An easy mnemonic is "A Blundering Fifer"....

El Sid

"beyond mooting the idea at the height of the Asian financial crisis"

Hmm, don't remember seeing that before.... But Brown did go beyond that, for instance in September 2000 :

http://archive.treasury.gov.uk/press/2000/p104_00.html

"when the next challenge confronts the global financial system, people will not ask who was at which meeting. People will ask whether we have learnt the lessons of Mexico, Korea, Russia and Brazil, and whether we have put in place measures - from early warning procedures to framework for crisis resolution - to create greater stability and economic growth.

"The founders of the Bretton Woods institutions knew that prosperity is indivisible. This is even more the case in today's world of instantaneous global markets. Today, instability anywhere has repercussions everywhere. The new world economy has brought greater risks of insecurity as well as opportunity. So it is the duty of the international community through economic co-operation to put in place measures to spot potential problems early, to prevent these problems where possible and where problems do occur, to minimise the disruption and real damage they can cause...

"There are many issues to cover, from reforms to strengthen the financial sector, including banking supervision...."

I'm not going to trawl Gordon's speeches for every year, but you get the idea. But it's no coincidence that I've picked out 1998-2000, as given the timescales of these things, _that_ was the time for "rhetoric" from politicians. Not that capital ratios are ever going to make the front page of The Sun (although journals with more serious pretensions dropped the ball here), but rhetoric only really matters in the early stages of the decade-long process of getting stuff like this to happen. After that it's time for the wonks to thrash things out behind the scenes. To give you some idea of what happened after the Asia crisis :

July 1997 - Asian bubble starts to collapse
November 1998 - Gordon notices and starts the rhetoric about preventing another such collapse
1999 - new measures proposed - the first draft of what became Basel II
2000 - Gordon continues to encourage international community to get involved
2000-4 - Consultation, arguments, modelling, new drafts of Basel II
2006 - Basel II adopted in the EU as the Capital Requirements Directives (CRD).
2007-8 - CRD come into force

So over a decade after the Asia crisis, we're only now just seeing the regulatory response coming into effect in industrialised countries (and Basel II probably won't be globally applied until 2015 or so). These things take time - in the normal run of things it would probably have taken another 5 years or so of seeing how the new system bedded in before the cycle of rhetoric started again. Like all these things there were some good things in Basel II - but there was a basic problem in that the ever-tightening of regulation of risk in banks encouraged them to outsource such risks to unregulated entities such as insurance companies - hence AIG. Meanwhile Brown wasn't content to leave it there - along with Eichel in 2002, he was one of the main proponents within EcoFin of applying the Lamfalussy framework to banking and insurance. Again not the sort of thing that hits the headlines, but a significant change to the systems of regulation within the EU. And of course there's all the stuff he did domestically - the twin disasters of the FSA and FSMA.

I won't dwell too much on the FSA, as the buck-passing caused by Brown's split of financial regulation has been well documented. It's summed up by Michael Fallon asking Mervyn King "Who is really in charge [of banking in the UK]?", and getting the response "What do you mean by ‘in charge’?" That confusion was a direct result of Gordon Brown's changes to banking regulation. The Basel process was another good example - the BoE and FSA were involved in Basel II, but the Treasury took the lead on the EU implementation as the CRD. Except the FSA didn't have anyone who really understood banking regulation, so they were effectively relegated to making coffee for the real bankers at the BoE.

On the other hand, I don't think the chattering classes quite understand what a disaster Brown introduced with the Financial Services and Markets Act 2000 - FSMA to its (few) friends. To be fair part of the problem were some Brussel directives that meant it was trying to implement different visions resulting from two very different financial cultures on the Continent and here. Even today if you ask 10 corporate lawyers, you'll get a dozen different opinions on what information companies should release under FSMA. But it was classic New Labour in many ways. In their haste to take down a system that they perceived as dominated by the wrong sort of person, they produced a rigid, bureaucratic system based on rules and box-ticking that still couldn't stop disasters such as the crunch. You should talk to compliance people in their late 30's and early 40's, the people who were on the front line during the implementation of FSMA - I know more than one who jacked in their job because they just couldn't face it any more. In particular, you can't help feeling that in the old days the explosion in the customer funding gap would have been stumied by the BoE having a quiet word, but that couldn't happen once the regulatory powers were in the hands of the FSA, who had neither the experience nor the freedom from political interference necessary to slow the housing bubble. And the FSA were happy to let things like CDOs go relatively unregulated, because there wasn't a box for them to tick. Which was why AIG came to Mayfair. You could also argue that since the markets need some kind of external "regulation" just to function, this misregulation by the FSA forced the CDO markets to depend so heavily on the ratings agencies, who claimed to be independent but weren't. In combination with the regulatory pressures of Basel II that encouraged dependence on the CDO markets, you had the genesis of the credit crunch.

So far from ignoring banking regulation, Gordon Brown spent the first half of his Chancellorship making vast changes to it - and as such was one of the architects of the global disaster a few years later. I just hope that modern politicians take some heed of history before knee-jerking responses to the cries of "Something Must Be Done".