Gordon Brown has confessed he made a “big mistake” over the handling of the Financial Services Authority in the lead up to the 2008 banking crisis.
Gordon Brown has confessed he made a “big mistake” over the handling of the FSA in the lead up to the 2008 banking crisis.
Created in 1997 on Browns first day as chancellor, the FSA has been extensively criticised for its part in the collapse. The former prime minister said the FSA was established on the assumption that problems would come from individual institutions. He said: “We did not understand just how entangled things were.
“We did not understand how risk was spread across the system, we did not understand the entanglements of different institutions and we did not understand, even though we talked about it, just how global things were.
“So we created a monitoring system which looked at individual institutions. That was the big mistake.”
Although accepting his part of responsibility, Brown added he was not entirely to blame and the crash had prompted a total re-think of the regulation of financial services. He said: “I think many writers as well as many regulators made exactly the same mistake.”
He also argued that he was under enormous pressure from the banks not to over regulate and that “..the actions we took to stop this becoming a global economic meltdown were right.”
The chancellor, George Osborne, has announced plans to fragment the FSA and give greater regulatory authority to the Bank of England.