The problems in the economy were driven by the credit crunch which was caused on the whole by the banks right? Well the banks were regulated by the FSA in the UK so you could also point the finger at them. It is true to say that UK consumers were too indebted and should shoulder some of the burden for their lack of prudence but isn't the regulator there to protect consumers? Yes, even from themselves. So the banks and the FSA are to blame - we're all agreed. So why, nearly 4 (yes, FOUR) years after the onset of the credit crunch are we in a situation where the economy is still in the doldrums?
Have a look at these articles, one from a consumer group discussing lender margins and behaviour, the other from a recognised property trade body on similar lines but from a different angle...
Lenders squeezed so hard by the FSA to ensure their survival they are unable to lend to the LTV's needed for a cash strapped economy. Lenders only have limited funds so they are all chasing the 'low hanging fruit' (sorry). Irony is, there's not enough of this easy business for them all and very few seem to know what to do about it...
The FSA have been too harsh on the banks. They needed to be able to recapitalise over time NOT in the short term. A transition period would have helped enormously. After all, what was the urgency to recpaitalise? The Government has already guaranteed most of the banks by owning them.
Now we havet he Government saying that they mustn't interfere with the running of banks whilst simultaneously saying that they should lend more to small businesses and first time buyers... How does that work when the government appointed regulator is specifically NOT allowing lending with any real risk due to capital contraints? Until this mess gets sorted out at the top we're all on our knees...
As i say I am no professional but what is your verdict?
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