13th December 2011
Alternatively, should FSA chief executive Hector Sants fall on his sword or perhaps more accurately, simply not take up his post as head of the FSA's successor organisation the Prudential Regulatory Authority?
The PRA will be tasked with ensuring the stability of the financial system and systemically important institutions. It will sit within the Bank of England and Sants will also be a deputy Governor of the Bank of England.
Yesterday, the influential MP and Tory party vice chairman Michael Fallon, interviewed on the Today Programme questioned whether Sants should continue in regulation.
However, the chairman of the Financial Services Authority Adair Turner spent yesterday morning defending Sants as reported on trade newspaper Money Marketing.
"It is important to realise until July 2007 Hector was not in charge of the key retail division which was responsible for the supervision of RBS and the other major banks. If you read the report, you will see Hector becoming chief executive of the whole FSA is the point we began to do many of the things that needed to be done," Turner said.
And it is clear that it is the old regime that is most to blame.
The Daily Mail reports on digs at the departed bosses in the most recent report, notably former chairman Callum McCarthy and former chief executive John Tiner.
For example, Tiner takes flak for failing to force RBS to make non-executive directors readily available to be quizzed about Sir Fred Goodwin's management style.
But neither Tiner nor McCarthy are part of the regulatory apparatus anymore. Hector Sants is.
Alex Brummer on This is Money doesn't believe Turner's defence of Sants is watertight.
Brummer writes: "Sants has an alibi in the fact that at the time of the infamous takeover, RBS was regulated by the retail arm of the watchdog and he was in charge of wholesale markets. It is a good defence, but maybe not quite watertight. If there is one part of RBS-ABN Amro which gave rise to its implosion it was the investment banking arm, Global Banking & Markets."
Brummer notes that having become chief executive Sants began to demand that more capital was set aside by 2008, but he wonder whether if Sants has acted on instinct in 2007, he could have made a significant difference.
The question remains whether it would now make sense to get rid of Sants, given that he has been through the eye of the financial crisis storm and now has almost unique experience of dealing with a crisis.
Certainly, Sants nearly quit the FSA in 2010 when its breakup was announced, by the Chancellor George Osborne.
Last year, This is London suggested that keeping Sants was a big win for the Chancellor so perhaps, Fallon, for all his influence was a little off-piste with his remarks.
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