Brown: Labour made ‘big mistake’ in bank regulation
Former prime minister Gordon Brown gave a speech last week at the Institute for New Economic Thinking in Bretton Woods, New Hampshire, where he admitted making mistakes in bank regulation:
“We know in retrospect what we missed. We set up the Financial Services Authority believing that the problem would come from the failure of an individual institution.
“So we created a monitoring system which was looking at individual institutions. That was the big mistake.
“We didn’t understand how risk was spread across the system, we didn’t understand the entanglements of different institutions with the other and we didn’t understand even though we talked about it just how global things were, including a shadow banking system as well as a banking system.
“That was our mistake but I’m afraid it was a mistake made by just about everybody who was in the regulatory business.”
