Regulation failures 'made in Downing Street'

A National Audit Office inquiry into the handling ofNorthern Rock, which finds that the tripartite regulatory structure created byGordon Brown was seriously flawed, and that Treasury officials decided it wasnot a priority to fix it, has been seized on as further evidence that“culpability” for the financial crisis leads back to Downing Street.

SNP Treasury spokesperson, Stewart Hosie MP, highlighted a catalogue offailures by the prime minister in the lead up to the financial crisis,including: 

 
- Brown ignored Treasury tripartite warnings in 2004.
 

- PM’s obsession with light-touch regulatory regime.

- FSA evidence PM pushed watchdogs to ignore banks riskypractices.

- Key PM advisor sacked bank warning whistleblower.
 

- PM knew of problems with Icelandic banks months before butdid nothing.

Mr Hosie said: 

“Gordon Brown’s age of irresponsibility is catching up withhim, and all the evidence leads back to Downing Street.

“Not only does the NAO inquiry show that the UK Government was not prepared fora financial collapse, but that they ignored the warnings as early as 2004.

“It is clearer than ever that Gordon Brown was responsible for the failedfinancial regulatory regime.  A regime he wanted to limit and evenpondered whether regulation should be in place at all. 

“The evidence over who is responsible for the economic crisis, and theregulatory failures which contributed to it, all lead directly backto Downing Street. The failure of regulationwas ‘made in Downing Street’ – numbers 10 and11.

“Evidence from the FSA chairman, Lord Turner, suggested that Gordon Brownpressured City watchdogs into not questioning the banks' risky practices.

“We have also heard revelations that one of the prime ministers keyadvisors, Sir James Crosby, sacked a whistleblower who warned that bankswere heading for disaster. That followed revelations about how DowningStreet failed to take adequate action in time concerning Iceland's bankswhen he was given warnings months in advance.

“And if that was not enough, there are no shortage ofcommitments by the prime minister to put in place ‘limited regulation’, indeed,Gordon Brown even pondered whether there should be any regulation atall.  

"We cannot continue with a system that allowedobvious problems to pass unnoticed. The FSAs suggestions deserveconsideration and a thorough examination.”