Supervisor addresses failures

The pressure is on world governments and regulators to fully address the causes of the banking crisis and restore confidence in a sounder system. In a speech to The Economist’s inaugural lecture in January, Lord Turner looked at what the crisis means for the future of regulation. Banking reform is at the heart of Lord Turner’s comments but this extract provides important insight into the regulator’s current line of thinking and the potential for regulatory reform

Looking to the long-term, as we think about what is needed to avoid future crises, it is clear that better analysis of and response to macro prudential problems – problems which a lie at the interface between macroeconomic policy and financial system regulation – will be vital. The FSA has been more open than I think any institution involved in this crisis in admitting that it made mistakes in the institution specific supervision of Northern Rock. But I think the best judgement is that better institution specific supervision of Northern Rock would have made only a very small difference to the shape and impact of this global crisis.