Darling partly outlines new saver protection

merlinthehappypig

Looks encouraging, also but looks like he might go back on his £100000 promise.

Sweeping powers to intervene in failing banks are to be given to the Financial Services Authority as part of a regulatory shake-up by Alistair Darling, chancellor of the Exchequer, to avoid a repeat of the Northern Rock crisis.
The new measures – which echo those in place in the US – would allow the FSA to seize and protect depositors’ cash when a bank gets into serious difficulty, heading off the risk of a run on the bank.

Mervyn King, governor of the Bank of England, believes a special insolvency regime for banks is vital because it would mean that a badly run bank could be allowed to fail without fear of a systemic crisis caused by a loss of public confidence.

The central bank has committed at least £25bn of taxpayer-backed loans to Northern Rock since savers began queuing around the block to withdraw their money last September.

Mr Darling, in an interview with the Financial Times, mapped out a wide-ranging response to the Northern Rock debacle, including measures that put the chancellor firmly in charge of dealing with any future banking crisis.
“I want to make sure our own legislation is up to the mark in dealing with problems when they arise in future,” he said. He will introduce legislation in May and will launch a consultation within the next few weeks.

Under the new banking insolvency regime, Mr Darling will propose a series of “triggers” – including a request from a bank for an emergency Bank of England loan – which could see the FSA step in if the institution was in danger.

Treasury officials said the deposits would be immediately secured and could then be repaid quickly or parcelled off to another bank, including to the original bank if it had been successfully restructured. The FSA would then oversee the future of the failed bank.

The model draws on elements of the US, Canadian and Belgian systems, but Mr Darling has decided to give the emergency role to the FSA rather than creating a new body like the US Federal Deposit Insurance Corporation.
Other measures would give “greater power” to the FSA to gain access to the information it needed in assessing a bank’s liquidity situation. It was Northern Rock’s inability to raise cash that led to its near collapse.

But Mr Darling conceded that a lack of powers was “not a major consideration” in why the FSA failed to spot the looming crisis at Northern Rock.

The chancellor will also outline a more generous deposit guarantee scheme – currently £35,000 of deposits are guaranteed by the Treasury – although this would become less important once the new insolvency regime was in place.
Banks – which would fund the scheme – argue that a figure of £50,000 would safeguard the interests of 98 per cent of savers.

Mr Darling accepted it should not be too high. “If you were going to guarantee 100 per cent of all retail depositors’ savings you would have go to a very high sum indeed.”

The chancellor is also proposing changes to the regulatory regime – the so-called tripartite system of Treasury, Bank of England and FSA – to counter accusations of dithering and delay last September because of disagreements between the three parties on how to handle the Northern Rock crisis.
He said a Cobra-style arrangement – based on the civil emergencies committee – had “a great deal of attraction”. Under his preferred system, the Bank of England and FSA would give their views but ultimately he would make decisions.

purch

It might help if the Government didn't have two agencies who use the same name : F.S.A.

How can you believe this Government is really serious about regulating the industry and protecting consumers when they can't even be bothered to give the agency a unique 'moniker'

The frightening thing is the Food Standards Agency probably has more power over it's Industry, and more teeth, than the Financial Services Authority will ever be given

Milarky

The chancellor will also outline a more generous deposit guarantee scheme – currently £35,000 of deposits are guaranteed by the Treasury – although this would become less important once the new insolvency regime was in place.
Banks – which would fund the scheme – argue that a figure of £50,000 would safeguard the interests of 98 per cent of savers.

The way I always heard what D. said was: "..more generous, like in the US, where 100,000 [USD] is covered"

In other words, he was thinking not of a 'number' but of a value for comparison purposes and 100,000 USD is (was) about £50K

purch,

This happens quite often and you can't surely be suggesting that in our over-regulated lives we need 'acronym' police as well? I can remember when "SEAC" (90s) was chosen both for the bovine-disease scientists and the secondary education authority. "NICE" (00s) was chosen to sound 'nice' - because it has a rotten job to do etc etc.

... and what was "NEDC" (60s) about when they started referring it to as "Neddie" in the news?

It's a bit like collectible number plates... the short ones are most in demand and anything with four letters or more look second class and low status

But remember the CSA? That's one they'd rather lose now - and associate with a more success ridden organisation instead. Any takers?

Remember, that when the FSA 'does a CSA' (and I'd say it's had several runs up at it already) and finally runs out of all excuses for its failings they are just going have to reinvent it under another name and probably employee the same insider-types to do the City's bidding in the name 'public interest' and 'market regulation'

C.O.R.R.U.P.T.