Thursday, 18 March 2010

the FSA "business plan"

Hector Sants has come up with a new business plan for the FSA;

Basically Sants seems to believe that by adding 460 new "high quality staff" to the FSA and increasing their budget overall by 9.9% that they'll magically be able to spot asset bubbles. One would imagine that the "high quality staff" that they intend to hire will be among those made redundant in the credit crunch.

The FSA has only recently found the ability to find and bring mildly punitive action to 3 cases of insider trading. Odd that its been said that approximately 1 in 5 m&a deals are thought to have been traded on before being publicly announced. 3 cases in 9 years, good job guys?

Does £455mm represent good value annually? especially as that money is going to come from consumers of financial services, ultimately the UK public. The UK treasury estimates that the governments assistance in the financial crisis cost ~£10bn, given this crisis was about 1 in 20yrs event then actually the cost of having the FSA is going to be equal to the cost of the crisis, except the Raven would imagine that the chance of the FSA stopping a crisis accurately without predicting 5 out of the last 1 recessions before hand to be rather low.

The Raven thinks that Buffet's maxim that the firm should be simple enough for an idiot to run because one day an idiot will run it should be applicable to a regulator, because clearly and idiot does run it already. Rules should be simple and easy to enforce and should aim to do less harm than good.

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