Charge the Criminals, Not the Companies

Following the Libor Scandal Eamonn argues that individuals should be investigated not by public inquiries, but by the police and Serious Fraud Office. Fraudulent or incompetent behaviour undermines the whole market system and those culpable must be held to account. 

Read the article in full on The Wall Street Journal here. 

Summary

Dr Eamonn Butler argues that we need simpler rules and greater responsibility for those who break them in The Wall Street Journal Europe. 

Osborne’s City regulation plans make things worse

Daily Telegraph: Banks only need 'one referee', says Adam Smith Institute

City AM: Dr Eamonn Butler writes 'You won't get better banks if you split one bad regulator into three'

The Independent: Bankers will put blocks on sensible regulations rather than take a pay cut

Money Marketing: Adam Smith Institute calls for FCA to be scrapped

Summary

The Adam Smith Institute released a report on why splitting the FSA into three will not improve financial regulation and will most likely make things worse. It received both print and online coverage. 

Osborne’s City regulation plans make things worse

·     Proposed Financial Conduct Authority (FCA) should be abolished

·     Executives and auditors should be prosecuted for malpractice

·     Watchdogs should boost competition, not box-ticking

In a report today (Friday) the Adam Smith Institute says that George Osborne’s plans to replace the Financial Services Authority – discredited over its mishandling of the banking crisis – will make things even worse, increasing bureaucracy and cost on Britain’s key financial-services sector.
 
 
The FCA & PRA

Osborne’s Financial Conduct Authority (FCA) for consumer protection and Prudential Regulatory Authority (PRA) for supervision will overlap and conflict. They will do nothing to promote competition. And they seem likely to adopt the box-ticking culture instead of setting clear rules and punishing offenders.
 
The FCA is pointless and should go. The Financial Ombudsman Service (FOS) provides better consumer protection. The FOS can protect consumers perfectly well without another regulator second-guessing it.
 
The PRA is conflicted between saving troubled firms and ensuring the health of the market, where occasional failures are inevitable. It should be cut down and become merely the sniffer dog for Bank of England regulators.

 
Changes to regulation

Regulation would be stronger if made simpler and broader, with regulators setting broad rules and punishing transgressors. Punishing individual executives, rather than firms, would be more effective to guarantee honesty and compliance. Auditors too should be prosecuted when they fail to spot wrongdoing.
 
The Bank of England must resist regulatory creep from the EU. EU financial regulation must also be enforced equally, not gold-plated in the UK.
 
Dr Eamonn Butler, co-author of the report ‘Simple Rules for Complex Systems’ with Tim Ambler, says:

“The Financial Services Authority was so busy ticking boxes that it did not even see the 2007/8 bank crisis unfolding. Recently it was so busy ticking boxes that it did not see the LIBOR scandal brewing, despite clear warnings in the financial press. There is no evidence that George Osborne’s new regulators are going to be any different.
 
“In fact the new regulators will get under each other’s feet and make things worse. Our financial sector is vital, but Osborne’s plan will strangle it. We need more competition and transparency among banks and financial firms, not more bureaucratic regulation. We don’t need endless inquiries, we need clear rules and clear punishments when they are broken”

ENDS
 

Notes to editors

·    Simple Rules for Complex Systems: Streamlining the UK’s Financial Regulation Regime is a report released by the Adam Smith Institute, the UK’s leading libertarian think tank. You can read the full report at: http://www.adamsmith.org/sites/default/files/research/files/SimpleRulesComplexSystems_ASI.pdf

·    Tim Ambler is a senior fellow of the Adam Smith Institute, who co-authored the report with Dr Eamonn Butler, Director of the Adam Smith Institute.

Is £37k a year 'socially acceptable'?

Listen to the debate on BBC Radio 4 here. 

His comments were also included on BBC Online coverage here. 

Summary

Dr Eamonn Butler argues on Radio 4's Today Programme that the JRF's report arguing that a family with two children needs to earn £37,000 a year to be socially acceptable is meaningless. He questions the methodology of using focus groups and dismisses their report as mostly rubbish.

Eamonn on CNBC discussing financial regulation & the Libor inquiry

Dr Eamonn Butler argues on CNBC Squawkbox that an investigation by the Senior Fraud Office into the Libor Scandal is needed, rather than a parliamentary inquiry, because "we need to find out who is lying". 

Barclays should not be taking all the flak for the Libor-fixing scandal

Read the article in City AM here. 

Summary

Senior ASI fellow Tim Ambler writes in City AM that Barclays will not be the only culprit in the scandal and that the FSA has a lot to answer for. 

An internet filter would be counterproductive

She argues that there are a number of technical barriers to imposing a state-enforced porn block and that the market already provides a number of solutions to allow parents, and not government, to make decisions for their own families.

You can read the article on The Spectator here. 

Summary

Dominique Lazanski, senior fellow at the Adam Smith Institute, writes in the Spectator Coffee House blog on why Claire Perry's proposal of a default porn filter for users poses a real threat to our internet freedoms.

Why have an inquiry into the banks when the politicians are to blame?

He argues that there is no need for a Libor inquiry and argues this sort of excess and dishonesty is bred by the boom stage of the boom-bust cycle. He argues we would be much better off investigating and curbing the excess and dishonesty of poiticians who created an artificial and unsustainable boom.

Read the article in full on ConservativeHome here. 

Summary

Dr Eamonn Butler writes on ConservativeHome on why the corruption of our economy and financial system is down to politicians, not bankers. 

Failed Keynesianism caused the economic crisis

He argues that what went wrong during the financial crisis is perfect proof of why Keynesian demand management of the economy doesn't work. 

You can read the full article on Telegraph.co.uk here.

Summary

Tim Worstall writes on Telegraph.co.uk on why failed Keynesianism and its misreading of economics is to blame for the financial crisis. 

Is Ed Miliband right to propose restrictions to immigration to protect British workers?

Read the debate in full on City AM here. 

Summary

Dr Eamonn Butler argues that restricting immigration to protect British workers is not a good idea in City AM.