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Bank regulation failed – Lords Committee

Bank regulation failed – Lords Committee

Category: Economy

Updated: 02/06/2009
First Published: 02/06/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The House of Lords Economic Affairs Committee has said the current bank regulation system failed in its role of preventing a crisis or at least mitigating its effects.

Echoing the sentiments of the House of Commons Treasury Committee, which criticised the current system whereby the banks are supervised by the Bank of England, Financial Services Authority and the Treasury, it said the existing structure failed in its role.

The Committee recommended reform with the Bank of England to take the entire responsibility for the UK banking system.

The country's banks also came in for some stinging criticism as the Committee said that several large institutions had turned to the state for support while others had failed entirely.

The result of such actions was a dramatic impact on the British economy, the Committee stated, with a Government debt which is rising to levels previously unseen in peacetime.

The report continued: "After 15 years of sustained growth (in the UK economy), it is expected to shrink about four per cent this year. Unemployment is rising fast. There are concerns about the City's position as a leading financial centre.

"The effects are likely to persist for some time."

More powers for authorities to deal with foreign banks in the UK were also called for, while the Committee insisted that new regulatory regime would not stifle innovation.

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