FSA chief admits bank regulation 'flawed' before crisis
The head of the UK's City watchdog has denied that regulators could have spotted bank rate-rigging before the financial crisis, but admitted regulation was "flawed" and "dangerous" in the lead-up to the credit crunch.
Lord Adair Turner, chairman of the Financial Services Authority (FSA), said regulators made "big mistakes" and would have to share responsibility with banks for restoring trust in the battered sector.
Lord Turner said that there was an ongoing debate on whether regulators "could have been more alert" to Libor fraud at the height of the crisis, but he added that they could not have stopped fixing of the inter-bank rate without "prohibitively expensive" supervision.
Yesterday's speech - his second in less than a week - is another strong attack on the pre-2008 regulatory system led by the FSA and the Bank of England.
He addressed a business audience in Manchester last week in what was seen as a clear pitch to put himself forward as the next governor of the Bank when Mervyn King stands down next year.
Lord Turner's public profile has been raised in recent weeks after MP hearings into rate-rigging at Barclays revealed he had privately taken the bank's bosses to task over its approach to City rules in the run-up to the Libor scandal.