You’ve heard of locking the stable door when the horse has bolted. Well, the Financial Services Authority, has gone one better and promised to do its job properly only after it's been closed down. Yesterday, the boss of Britain’s financial watchdog, Lord Turner, grandly announced that the FSA was going to put an end to “liar loans”, 125% “suicide” mortgages and other scams from the great housing bubble. Bit late your Lordship. Last month, the Chancellor, George Osborne, announced that the FSA is to be scrapped and financial regulation returned to the Bank of England.
Perhaps if the FSA had done its job six or seven years ago, we wouldn’t be in the state we are in now. Ah, but that’s just being wise after the event isn’t it?” It’s easy to criticise with 20/20 hindsight. Wrong. As readers of this column will be aware, perhaps painfully so, I have been banging on about irresponsible mortgage lending for most of the last decade. In 2004 I warned that house prices were an unsustainable bubble. In 2005 I fulminated against the irresponsibility of lending five or six times income. IN 2006 I railed against Northern Rock’s “Together” mortgages where the bank loaned first time buyers 25% more than the value of their property, thus placing them in negative equity even before they got the keys. After Northern Rock collapsed in 2007, to demonstrate what was happening, I applied for and was offered a £200,000 mortgage after telling the broker I had a disposable income of only £18,000. Sheer madness.