The FSA calling the city of London "socially useless". Pot, kettle, Cyclops.

According to FSA head Lord Turner, much of the activities of the City of London are "socially useless".

This from the FSA which has sat back and done bugger all on warnings leading up to the banking bailout. I shall come back to that later.**

As I have said before the FSA is a talking shop for ex-bankers/spivs and the inept who have jumped ship onto the quango bandwagon, an organisation incapable of regulating a bowel movement in a lavatory; yet alone overseeing the financial sector.

This little bit from Robert Peston will explain exactly how crap the FSA is.

My jaw was on the floor after the first 45 minutes of watching the chairman and chief executive of the Financial Services Authority give evidence to the Treasury Select Committee.

To say that Lord Turner and Hector Sants admitted there were shortcomings at the City watchdog in the years before they arrived would be a bit like saying Nelson Mandela oversaw a modest change in the constitution of South Africa.

They totally repudiated what they called the philosophy of the FSA prior to the near total collapse of our banking system in the autumn.

Lord Turner said that the FSA, as a matter of principle, did not question whether banks had appropriate strategies. It adhered, or so he said, to a free-market ideology - as preached principally by Alan Greenspan, at the time the world's most powerful central banker - which broadly said that banks would by definition behave rationally.

The only role for the FSA at the time - according to Turner - was to make sure that the structures, systems and processes of the banks were ticketyboo. So it verified stuff like whether there were a sufficient number of bodies in the risk-management department; or whether the right kind of management and risk information was being gathered and disseminated to the right people; and so on.

But it wasn't apparently proper for the FSA to challenge banks on whether they should be growing so fast in the mortgage market, or loading themselves up with collateralised debt obligations manufactured from toxic subprime loans, or funding themselves to an ever-increasing extent from the sale of mortgage-backed securities.

**The FSA was put together by one James Gordon Brown, who oversaw the FSA while he was Chancellor. An what a roaring success it was.

The authority’s chairman claimed the regulator was under political “pressure” not to be “heavy and intrusive” with banks such as HBOS and Northern Rock.

Instead, it was told to operate a “light touch” approach, which had now been proved to be “mistaken”, he told a Commons committee.

Gordonomics in action folks.

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