Life under the blanket

Money matters, it really does

This one?This one?

It is said that a large number of voters in the recent Irish referendum on the Lisbon Treaty voted yes because they felt more secure as part of the EU. What was haunting them where the bank problems seen in Iceland and the thought that this could happen to Irish banks and cause another meltdown. So the Irish pulled the security blanket over their heads and hoped the EU would continue to pay them to be Irish. Not much of a way to earn a living you may say, what about the horse trader's sixth sense of deal making, surely this will see them through as it has before? Ah, perhaps those days are long gone, anyway one 'lovable rogue' in the shape of Michael O'Leary is enough to be going on with for now! But if it's comfort you seek, then look out dear Hibernians, for regulating banks and looking after your 'own' money is not as simple as it was. And the reason for this is the very organisation whose coat tails you have sought to hide behind, is making it hard to regulate 'foreign' banks.

Gordon Brown would like us to know that the present financial crisis 'started in America'. He also wants us to have more banking regulation, but what sort of regulation? As much as it is said that Field Marshals always fight the last war, it seems that looking back to financial problems of the past is a habit of politicians. This will not do, as the next financial crisis could well be flagged up as the one that 'started in the EU'; for the EU has created a rat's nest of conflicting aims. On the one hand there is the open market philosophy but then there is Brown's desire for more regulation, these things collide when you read in the Telegraph that -

Or this one? Or this one? “European banks that set up a branch in London are regulated by their home authority, meaning the FSA has no power to oversee their activities”.

This is not much comfort to anyone hoping to be 'protected' by the EU, in reality we are exposed to the untested ideas of banking lightweights from countries with little international experience. So the problems stemming from the wayward Icelandic banks have not been fixed nor have they gone away. The FSA, we are told, has only 'discouraged' these errant bankers, is that good enough? What is the point of a Financial Services Authority that has no authority but can only do a little discouraging? Authority-lite should at least include arm-twisting otherwise we are wasting our time here. We are also told that the FSA - "has since found ways around its inability to stop European banks setting up branches."

Common sense suggests that in time this 'inability' will be spotted and the risky banks will be back, then what? As we have seen with Germany supporting the Opel takeover, EU law means different things to different people. Common sense here suggests that whatever fiddle the Germans have employed they will get away with it.

Gordon Brown, like so many other people, fails to understand the EU as does Lord Turner head of the FSA. Reported in the Telegraph - 'Lord Turner, the FSA's chairman called for stricter cross-border banking regulation led by national regulators with powers to override foreign rule-makers to prevent overseas failures damaging a host country's economy.'

Or this? Or this? The whole point of the EU is to override national law, that's the basis of the 'open market'. The only way to prevent a nation being damaged by others is to insist on retaining or enhancing national control in the face of supra-national efforts. So whose side is Turner on, what does he understand? The Tories have suggested that if they form the next government then the FSA can expect an overhaul; the past performance of the FSA would support this. In the mean time the FSA is to take over monitoring the retail banking sector via its new powers under 'The Banking Code'. This may not be the great leap forward it was cracked up to be by the present government. Writing in the Times, David Budworth describes the new system as - “fatally flawed” . Budworth also says - “under the new regime, the code will be replaced with three separate directives. I can’t be the only one to think that one into three sounds like a recipe for befuddlement. “

But the Tories are also cosying up to Lord Turner, what of him, what sort of advice can he offer? He is listed as a non-executive Director of Northern Foods. This company once had Christopher Haskins, like Turner a Baron, as Chairman. Orginally from Ireland, Haskins became a BBC stalwart and his favourite subject was the EU, he could be phoned by Radio 4 any time to talk on any subject as they knew eventually he would refer to the 'benefits' of our membership. And all this from a man born in Dublin! If Turner has absorbed any of the Haskins' way of working he will be useless.

So what to do? Well we can't all hide under the blanket so the incoming government had better act boldly to protect UK banking. As Mayor of London Boris Johnson is trying to prevent the EU wrecking what is left of London's reputation as a centre of excellence, will the incoming Prime Minister help or hinder?