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30 Jan, 2008

Leah Milner
Date: 30-Jan-2008

Shadow 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 "systematic failure".

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 issue."

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 practices.

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