The incredible admissions of Lord Turner of the FSA

I abstained from comment on the extraordinary appearance of Lord Adair Turner of the FSA on the Andrew Marr Show yesterday morning in fear that the BBC puppets of the non-elected Prime Minister Brown would doctor the record. Nevertheless it is now out and copied herewith, read it, be amazed and await further comment and developments on subsequent postings on this blog: On the amazing revelation that the FSA forecast the losses announce by Lloyds on Friday

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ANDREW MARR:

Would you accept that the Lloyds/HBOS conjuncture was a disaster?

LORD ADAIR TURNER:

The situation, I think we've got to deal with the situation as it is at the moment. The losses which are being…

ANDREW MARR:

(over) Disastrous.

LORD ADAIR TURNER:

…revealed this week, I would point out are not huge surprises to the FSA. Remember what we did last October was run stress tests which were considerably worse than what was then in the public domain in order to work out how big the capital subscription had to be. And the figures that came out - we're checking them, we're looking at them closely - are not order of magnitude different from what we thought was going to occur back in October.

ANDREW MARR:

So you predicted this. Were you actually consulted before this merger took place?

LORD ADAIR TURNER:

The FSA was not directly involved in the process of the merger, which was fundamentally driven by the parties concerned. I mean that was…

ANDREW MARR:

(over) But if the Treasury or somebody had come to you and said, "Look, this is going to happen. What do you think?"…

LORD ADAIR TURNER:

(over) Well let's, well let's be clear.

ANDREW MARR:

(over) Would you have warned them?

LORD ADAIR TURNER:

No, I mean I think to be fair, we were part of the debates at that time in general terms. And at that time - and again hindsight is a wonderful thing in this process - at that time that seemed to be a sensible way of buttressing HBOS, which was clearly by then a weak bank. There could have been a different way of directly supporting HBOS and keeping Lloyds separate…

ANDREW MARR:

(over) You knew what was going to happen, or you suspected what was going to happen?

LORD ADAIR TURNER:

Well, as it happens, I personally…it happened in the precise week before I joined, but the FSA, I won't deny it, the FSA was obviously involved in the discussions. Our concern was to make sure that there was a way of making sure that we did not have banks which actually went bankrupt, and when you are in those situations…

ANDREW MARR:

Okay.

LORD ADAIR TURNER:

…you have to make pragmatic decisions.

++++++ Then on the amazing cheek even disgusting gall that the employees of the FSA, who have overseen the destruction of so far roughly half of Britain's banking sector, will soon be receiving bonuses averaging 15 per cent. ++++++

ANDREW MARR:

Finally, this whole question of bonuses. As you know, there's huge public anger about it. Should they not simply cease for the time being across the banking sector but also in your own institution, which is going to pay bonuses at the moment?

LORD ADAIR TURNER:

Well we are going to pay bonuses and I want to explain why and I want to explain why and I want to also explain one important detail of it. The FSA has developed a process of having an element of variable pay. People have joined on that basis. They could have joined other institutions like the Treasury or the Bank, which have less variable pay but wider pensions. If you're saying we should now cut the bonuses, you're saying you should cut their pay by 15%. That's the scale of our business pool. And that's against the background where we're being told by Vince or David Cameron or others that we need better people. That's not the way to go. We think it is appropriate to pay bonuses to our people. But I will say one thing. Hector Sants, our Chief Executive…

ANDREW MARR:

Very briefly.

LORD ADAIR TURNER:

…told me on Friday that he personally does not want to take a bonus. That is the same approach which the Permanent Secretaries are using in the Government and I think that is the appropriate way forward.

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++++++ Would he, given his total avoidance of any blame , either on his own behalf or that of his employees say SORRY

ANDREW MARR:

You're relatively new running the FSA, as you pointed out, but do you…would you say sorry on behalf of the FSA to all those people who've lost huge amounts of their savings and are very, very angry and very worried now?

LORD ADAIR TURNER:

I'm certainly sorry that across the whole world, there was…

ANDREW MARR:

I'm talking about the FSA.

LORD ADAIR TURNER:

…there was a failure to focus on these systemic risks. And it was an intellectual failure. If you actually look…Let me give you, let me give you an example.

ANDREW MARR:

(over) Just before you do, can I just say you inserted "all around the world" there and I'm asking about the FSA.

LORD ADAIR TURNER:

(over) No, no, no, but…Well, I think actually it's really not for me to answer that question, given that I was not there at the time..... ++++++ Read the Wikipedia entry on this bastion of New Labour's British Establishment, from here.