Just when you think you have heard it all, Lord Turner-head of the FSA-comes along with the following outrageous admission:
Part of the story of the FSA at that time is that we did have, we never used the word, a somewhat light touch regulation in particular in those areas of wholesale conduct.
We were only to a small extent focused on the activities of investment banks. We only had about five people on Barclays and five people on RBS. At one stage we only had one person that was shared between Barclays and RBS.
Yes, that is right; there were times when the FSA had just one solitary official watching over two of the largest banks in Britain. One of the banks - RBS - subsequently failed, requiring a massive financial intervention from the government. The other - Barclays - has just been found guilty of manipulating its LIBOR submissions. Pre-crisis, the FSA simply didn't understand what was happening inside the UK financial system. They missed all the signs, because they couldn't be bothered to assign any staff to watch over these two behemoths.
UK government could announce today the immediate closure of the FSA and the end of financial regulation. It would not make a jot of difference to the likelihood of avoiding another financial crisis.
For all practical purposes, UK investment banks have been unregulated since the creation of the FSA. It begs the question, why start now?
Increasingly, I'm beginning to realise that the financial crisis wasn't the result of a few deviant bankers. In the ten years before the crash, this country created the infrastructure for a financial disaster. We had a central bank that claimed to be focused only on inflation and had no interest in asset prices. Yet, when house prices started to wobble in 2005, the monetary policy committee promptly cut interest rates, sending house prices skyrocketing northwards.
We had regulators who couldn't be bothered to actually staff teams to follow developments in the largest banks in the country. It is also a fair bet that the few solitary regulators assigned to look over the Barclays and RBS didn't have a clue what those banks were doing.
And we had, inside each bank, a crew of corrupt bankers, who would, proverbially speaking, sell their grandmother to a slave galley, if they thought the transaction would pay them a groat. Over in Westminister, our elected MPs were busy writing up falsified expenses, and paid no attention to the unfolding catastrophe that the financial sector that was cooking up the river.
What did the rest of us do? Those of us who owned property loved every minute of it. Those who did not were left out in the cold.
Now, five years after the crisis, the truth about our desperate situation is beginning to slowly emerge. The economy is a wreck. It is uncompetitive; starved of credit, and cannot grow. Our government cannot reconcile its revenues with its expenditures and it is running up, year after year, massive and unsustainable deficits. The Bank of England is printing money in order to buy government bonds from the banks. For their part, the banks are depositing the money back into the Bank of England. Across the Channel, the economies of our main trading partners have begun to implode.
Who is to blame? I'm beginning to think that it doesn't really matter any more. It's not as if anyone will be held to account, because we have collectively forgotten what it means to bear responsibility for our actions.