At FSA’s conference on the Turner Review:
- the Chancellor looked back at the role of banks and regulators in the financial crisis and at how investor confidence is being rebuilt. He welcomed the Turner Review and said the Government would respond fully. In his speech, he touched on his desire for international agreement on capital and liquidity requirements, to regulate hedge funds and to control banking risk better. He supports an EU macro-prudential body in which BoE and FSA should play a key role;
- Paul Tucker of BoE also looked at causes of the crisis and lessons the international community could have learnt from previous crises. He then looked at the Turner proposals for microregulation and stressed the importance of good supervisors who are prepared to tell firms’ management what they should do. He then looked at macro-prudential issues, discussing capital, liquidity and the credit cycle. He discussed how the infrastructure had failed and how certain AAA rated institutions distorted credit supply and made the economy vulnerable to a down-grading in key ratings; and
- Lord Turner himself spoke on priorities from the Review. He singled out:
- capital, liquidity and published accounts, where he said international agreement is critical;
- the need for macro-prudential analysis and intellectual challenge;
- how to regulate large complex banks (and the limitations of a Glass-Steagall solution); and
- cross-border banks: he commented that neither “clean” solution – complete control to one European entity or total power for domestic regulators – would work.