UK financial supervision is still a mess

A few select quotes from today's treasury committee report on financial supervision:

By any measure the FSA has failed dreadfully in its supervision of the banking sector,...

We believe the reforms to the institutional structure of the Tripartite Committee announced in the Treasury’s recent White Paper to be largely cosmetic. Merely rebranding the Tripartite Standing Committee will do little in itself.

Substantial reforms to capital and liquidity regulations are now required. The Basel capitalrules did not work in preventing the financial crisis. Arguably they made things worse by distracting the attention of leading experts. We therefore support the introduction of a leverage ratio, to complement the more risk-sensitive minimum requirements under the Basel II capital accords. We also support an element of counter-cyclicality in capital regulation.

Clarity over existing (financial supervisory) responsibilities remains a problem, but no new responsibilities should be allocated until a decision is made about the precise tools needed for macroprudential supervision.