The law will make criminals of us all, starting with colossal overregulation of financial services workers

Patslatt1

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The law will make criminals of us all, starting with colossal overregulation of financial services workers

See https://www.thetimes.co.uk/article/corbyn-strikes-a-chord-with-voters-on-the-financial-crisis-but-his-analysis-is-wrong-pxjzfs2sz (paywall)

The linked article argues that adding more regulations didn't protect the UK public from reckless casino bankers in the financial crisis, noting that the FSA's regulatory handbook has over a million paragraphs of regulation for financial services. This regulatory madness is being amplified by the EU's Mifid II which adds 1.4 mllion paragraphs of new rules eg timestamp trades to 100 millionths of a second and supply 65 data fields. Throwing new rules at bankers seems to be a substitute for setting up a system of competent regulators which can act swiftly to remove reckless bankers and if necessary prosecute them in court.

A major problem with the tsunami of regulations is that it likely will threaten the careers of many financial services workers who find it impossible to enforce them. As the writer Evelyn Waugh presciently wrote in the 1960s, "the law will make criminals of us all".
 
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Lumpy Talbot

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I wouldn't worry about it. Banks, government and regulators know it is there just for show.
 

Patslatt1

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I wouldn't worry about it. Banks, government and regulators know it is there just for show.
But many workers could unfairly be dismissed and lose their careers as politicians look for scapegoats.
 
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Lumpy Talbot

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But many workers could unfairly be dismissed and lose their careers as politicians looked for scapegoats.
and politicians are there to make sure that there are no consequences for boardrooms in financial services. Ask Charlie McCreevy who was in charge of banking regulation at European level in the years leading up to the last banking collapse.
 

Half Nelson

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The justice industry depends on the raw material of lawbreakers.
A key function of legislators is to constantly introduce new laws that ensure busy (and paid) lawyers, judges, police and prisons. The introduction of legislation is used as a meter of political efficiency.

That's our System.
 

Lumpy Talbot

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Interestingly Charlie McCreevy was also the fellow who introduced the performance related bonus in the early noughties for Secretary Generals and their Deputies.

Which in no small measure had the effect of suborning senior civil servants so that they effectively pretended not to notice IMF quarterly warnings about credit and housing bubbles in four European markets including Ireland up to and including 2006.
 

Patslatt1

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and politicians are there to make sure that there are no consequences for boardrooms in financial services. Ask Charlie McCreevy who was in charge of banking regulation at European level in the years leading up to the last banking collapse.
A tsunami of regulations didn't have consequences for UK boardrooms and senior managers in the banking crash.
 

Patslatt1

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Interestingly Charlie McCreevy was also the fellow who introduced the performance related bonus in the early noughties for Secretary Generals and their Deputies.

Which in no small measure had the effect of suborning senior civil servants so that they effectively pretended not to notice IMF quarterly warnings about credit and housing bubbles in four European markets including Ireland up to and including 2006.
So how do you explain the 10% stamp duty he slapped on commercial property sales and buy to lets to pop the bubble?
 
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Lumpy Talbot

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A tsunami of regulations didn't have consequences for UK boardrooms and senior managers in the banking crash.
That's what I'm saying.Regulation of financial services sectors in reality doesn't exist.
 

Lumpy Talbot

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So how do you explain the 10% stamp duty he slapped on commercial property sales and buy to lets to pop the bubble?
That was the rake-off for the bubble economy that he and Ahern created. McCreevy spent a couple of years lunching with bank boardrooms around Europe in conversation about how they'd like to be regulated. When the 'consultation period' was up he decided he'd go around again...
 

Lumpy Talbot

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The reason there is so much apparent regulation is because it is a snowstorm of fakery designed to make the public think the finance sector is regulated.
 

Hillmanhunter1

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See https://www.thetimes.co.uk/article/corbyn-strikes-a-chord-with-voters-on-the-financial-crisis-but-his-analysis-is-wrong-pxjzfs2sz (paywall)

The linked article argues that adding more regulations didn't protect the UK public from reckless casino bankers in the financial crisis, noting that the FSA's regulatory handbook has over a million paragraphs of regulation for financial services. This regulatory madness is being amplified by the EU's Mifid II which adds 1.4 mllion paragraphs of new rules eg timestamp trades to 100 millionths of a second and supply 65 data fields. Throwing new rules at bankers seems to be a substitute for setting up a system of competent regulators which can act swiftly to remove reckless bankers and if necessary prosecute them in court.

A major problem with the tsunami of regulations is that it likely will threaten the careers of many financial services workers who find it impossible to enforce them. As the writer Evelyn Waugh presciently wrote in the 1960s, "the law will make criminals of us all".
There is a lot of confusion in your post - things that might seem related and or relevant, but are not.

Firstly, while it is true that regulation didn't save consumers from the crisis that happened, it probably saved consumers from numerous other crises that didn't happen. That is why we have it, even if it isn't fool-proof.

Secondly, you are right that the FSA's handbook is ridiculous in it's length and complexity - so much for Brussels being in live with red tape! That is a British problem and they can fix it - it is not relevant to Brexit - we have implemented all of the relevant financial directives in a much more sensible manner.

Next we have MiFID II, which doesn't "amplify" anything, it is a much-needed overhaul of the investment management sector. It is complex and forbidding to the uninitiated, but I imagine so too is the operations manual for an Airbus A380, the fact that it is complex reflects the complexity of investment markets, where advanced trading programs trade in factions of a second in order to gain fractions of a cent. If the market operates in this way then so too must the consumer protection legislation.

If the alternative that you suggest (i.e. "competent regulators which can act swiftly to remove reckless bankers and if necessary prosecute them in court") worked then governments would have introduced it a long time ago. The fatal flaws with that system however are that in order to remove a banker from his/her position the regulator needs solid evidence (the banker will have the best lawyers in town), by which time the damage must in effect have been done. It is the equivalent to a policy of bolting the door after the horse has gone.

As for the tsunami of regulations I have no sympathy. Banks, investment managers and insurance companies can well afford to build and maintain the necessary compliance departments - there'll be some job opportunities there:D
 

Watcher2

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See https://www.thetimes.co.uk/article/corbyn-strikes-a-chord-with-voters-on-the-financial-crisis-but-his-analysis-is-wrong-pxjzfs2sz (paywall)

The linked article argues that adding more regulations didn't protect the UK public from reckless casino bankers in the financial crisis, noting that the FSA's regulatory handbook has over a million paragraphs of regulation for financial services. This regulatory madness is being amplified by the EU's Mifid II which adds 1.4 mllion paragraphs of new rules eg timestamp trades to 100 millionths of a second and supply 65 data fields. Throwing new rules at bankers seems to be a substitute for setting up a system of competent regulators which can act swiftly to remove reckless bankers and if necessary prosecute them in court.

A major problem with the tsunami of regulations is that it likely will threaten the careers of many financial services workers who find it impossible to enforce them. As the writer Evelyn Waugh presciently wrote in the 1960s, "the law will make criminals of us all".
Although very unpopular to agree or support anything uttered from the mouth of Sean Fitzpatrick, this is the message, rightly, he was trying to get across. It's not more regulation that's needed, it's better/smarter regulation.

There was a massive amount of regulation back in the day, as rightly pointed out in the OP. It didn't stop the calamity.
 

Watcher2

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The reason there is so much apparent regulation is because it is a snowstorm of fakery designed to make the public think the finance sector is regulated.
That's exactly what it is. Soon after the last crash, I got a letter from one of the banks I bank with asking me to resubmit my ID documentation. I rang them about it and they laid the line on me about the crash and new regulations. I asked them how ID requirements might help prevent a new crisis and they didn't know...surprise, surprise. But this was just someone doing their job so I was polite and we had a chuckle about it but told the person to make a note on my account of the conversation and that I said the bank already had my identity docs so I would not be providing them again.

I've heard no more about it.
 

Hillmanhunter1

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Although very unpopular to agree or support anything uttered from the mouth of Sean Fitzpatrick, this is the message, rightly, he was trying to get across. It's not more regulation that's needed, it's better/smarter regulation.

There was a massive amount of regulation back in the day, as rightly pointed out in the OP. It didn't stop the calamity.
Wrong, wrong, wrong!

What we had was light-touch, principles-based regulation. We found out too late that the bankers had no principles!
 

Ardillaun

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I'd like to see plea bargaining for complex conspiracies like criminal bankers and the Kinahans. Its mere existence would prompt competition to co-operate first and would provide witnesses to explain often incomprehensible crimes to juries at trial. Amend the Constitution if you have to. Ireland also needs more full-time salaried prosecutors like Spitzer, Fitzgerald and Giuliani. These guys were feared by organized crime of either type. You wouldn't be laughing at the regulators if you had to face Rudy's team in the courtroom. I'm not sure about a massive raft of new regulation. The public need to know that there are consequences for egregious white-collar crime and obviously there are some deficiencies in our legislation but we don't want to haul up people who are just trying to do their jobs. The last thing I'd like to see would be a shoal of of minor officials being convicted of relatively trivial crimes to make up for the whales that just got through the net.
 
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Patslatt1

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There is a lot of confusion in your post - things that might seem related and or relevant, but are not.

Firstly, while it is true that regulation didn't save consumers from the crisis that happened, it probably saved consumers from numerous other crises that didn't happen. That is why we have it, even if it isn't fool-proof.

Secondly, you are right that the FSA's handbook is ridiculous in it's length and complexity - so much for Brussels being in live with red tape! That is a British problem and they can fix it - it is not relevant to Brexit - we have implemented all of the relevant financial directives in a much more sensible manner.

Next we have MiFID II, which doesn't "amplify" anything, it is a much-needed overhaul of the investment management sector. It is complex and forbidding to the uninitiated, but I imagine so too is the operations manual for an Airbus A380, the fact that it is complex reflects the complexity of investment markets, where advanced trading programs trade in factions of a second in order to gain fractions of a cent. If the market operates in this way then so too must the consumer protection legislation.

If the alternative that you suggest (i.e. "competent regulators which can act swiftly to remove reckless bankers and if necessary prosecute them in court") worked then governments would have introduced it a long time ago. The fatal flaws with that system however are that in order to remove a banker from his/her position the regulator needs solid evidence (the banker will have the best lawyers in town), by which time the damage must in effect have been done. It is the equivalent to a policy of bolting the door after the horse has gone.

As for the tsunami of regulations I have no sympathy. Banks, investment managers and insurance companies can well afford to build and maintain the necessary compliance departments - there'll be some job opportunities there:D
On the latter point, bankers under onerous compliance will become timid like civil servants and choose to avoid risk as much as possible. That will deprive customers of credit.

The UK banking crisis can be blamed on the UK Labour government which let the financial bubble rip so the government could continue to spend recklessly,continuing the habit of previous Labour governments in the 60s and 70s.The UK needed to be more cautious than most countries because banking represented a disproportionately large share of the economy.

Trading of shares has become more liquid with computerised fast trading with the result that bid/ask spreads have become very narrow compared to a generation ago,benefiting customers.

Just because something is complicated, the regulation of it doesn't have to be complicated. Many complicated mnufacturing activities aren't burdened by complicated regulations.
 
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Patslatt1

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That's exactly what it is. Soon after the last crash, I got a letter from one of the banks I bank with asking me to resubmit my ID documentation. I rang them about it and they laid the line on me about the crash and new regulations. I asked them how ID requirements might help prevent a new crisis and they didn't know...surprise, surprise. But this was just someone doing their job so I was polite and we had a chuckle about it but told the person to make a note on my account of the conversation and that I said the bank already had my identity docs so I would not be providing them again.

I've heard no more about it.
That letter migh have bee an audit sample of a tiny fraction of accounts to prove that bogus accounts didn't exist.
 

Patslatt1

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That was the rake-off for the bubble economy that he and Ahern created. McCreevy spent a couple of years lunching with bank boardrooms around Europe in conversation about how they'd like to be regulated. When the 'consultation period' was up he decided he'd go around again...
The 10% stamp duty was so high, it could only be seen as a countercyclical measure designed to cool the construction boom. It was evidence that McCreevey recognised the bubble risks, which explains why Bertie packed him off to Brussels. Bertie needed the bubble and a massive giveaway on public sector pay to win an unprecedented third general election. As for the opposition parties, they were bonkers, baying for more procyclical spending at the height of the bubble, like throwing petrol on the fire. Power hungry aholes all.
 


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