Quarterly review – credit crisis, private equity and hedge funds

George Walker reviews the main developments that have taken place during the last regulatory quarter. Each of the main sets of problems and reforms adopted are considered and some of the continuing outstanding regulatory challenges involved referred to. This includes many of the key papers and initiatives at UK, European and international levels.

George Walker, Centre for Commercial Law Studies, London

The Financial Services Authority

The dominant events over the summer were concerned with the evolving credit crisis in international markets following the losses suffered in the US subprime mortgages sector and consequent tightening of credit on interbank markets, and then also the forced rescue of Northern Rock in the UK and associated Treasury support statements. The FSA had already been reviewing subprime mortgage practice market in the UK, although it has since had to defend its supervision of Northern Rock and the UK banking sector more generally, along with the nature and effectiveness of its operational relationship with the Bank of England and Treasury under the revised Memorandum of Understanding (MOU) on Financial Stability, entered into between them on 22 March 2006. The issues that arise are considered in further detail below.