Tucked away on page six of The Guardian is a hugely important story that somehow everyone seems to have missed. Patrick Wintour writes that Terry Burns, the Perm Sec at the Treasury when Brown arrived, gave evidence this week to the Economic Affairs committee of the House of Lords and made clear that the flaws in the tripartite regulatory structure that Brown introduced had led to problems in the banking sector not being spotted.
“Burns said the tripartite structure covering the Bank of England, the Treasury and the Financial Services Authority, had not properly overlapped – with the result that failed business models in British banking were not spotted. He also said the system was insufficiently transparent and in the initial stages of the crisis led to uncertainty of responsibility. He said the tighter system of bank regulation in Spain had been far more effective in controlling dangerous expansion and regulating off balance sheet securities, the source of the much of the British banking crisis.”
This is a point that has been made repeatedly by old City hands but has yet to really enter into the public debate. The intervention of Burns, who had a fraught relationship with Brown and his people at the Treasury, however should help to bring this out into the open. The regulatory system that has failed so disastrously was the regulatory system that Brown himself had devised.