30 Jan, 2008
Liberal Democrat chancellor Vince Cable has called for heads to
roll at the Financial Services Authority over Northern Rock.
Cable says the FSA should not be given greater powers given that
the Treasury Select Committee's report concluded it was guilty of
He says: "It is baffling that the chancellor now seems intent on
giving the FSA a bigger role, rather than the Bank of England.
"The government should be firing the chair of the FSA, not giving
this failed regulator more responsibility.
"Immediately after being reappointed as BoE governor, Mervyn King
is being undermined because powers are being shifted elsewhere."
Cable adds that Alistair Darling now seems focused on treating the
symptoms of banking failures, rather than addressing the causes.
He adds: "The head of markets at the Bank of England has been
advocating more active intervention to stop asset bubbles forming,
but there is no sign at all that the government has grasped this
Cable welcomes improved depositor protection, but warns that all
problems in the financial sector can be solved by regulation alone.
He is calling on ministers to make the whole banking sector more
competitive by breaking down the barriers that stop new and
innovative companies entering the market and by letting banks fail.
Cable says this will help drive down costs and improve business