Cable hints at the battle in the Coalition over the FSA

Vince Cable, British politician and former act...

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Vince Cable's candid interview in today's Guardian confirms that the decision to abolish the Financial Services Authority and split its role between a beefed-up Bank of England and a new Consumer Protection and Markets Agency was a matter some some contention within the newly-formed Coalition government.

The original agreement between the Conservatives and Liberal Democrats was silent on the matter and it looked as if the FSA had won a reprieve - certainly this is how quite a few of us read the agreement. That turned out to be a premature judgement as Chancellor George Osborne seized the initiative and announced to a dinner of City grandees at Mansion House in  the middle of June that the reform of financial services regulation was going to proceed largely along the lines set out in the Conservative manifesto. He added some clarity over the split in responsibilitry between the Bank of England and the new CPMA, especially by adding the oversight of markets to the new body's role, but it was a Tory policy through and through.

Now Vince Cable has confirmed that this was more or less how it happened, trying hard to relegate it as an issue behind what he sees as the more pressing problem of getting the banks lending again. His dismissal of the debate about "how you organise the furniture, the quangos and so on, is to my mind a secondary problem" isn't entirely convincing given his thorough going pre-election condemnation of the collective global failure of regulation to prevent the slide into crisis from the middle of the last decade onwards which was especially well articulated in his book, The Storm: the World Economic Crisis and What it Means. It was, he argued, a broader problem of tackling of systemic risk on a multi-national level, rather than shuffling and re-shuffling regulatory responsibilities on a national level.
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