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the Treasury fear the banks have a supportive ear in Downing Street in the shape of Jeremy Heywood, No 10 permanent secretary and a former Morgan Stanley managing director,

The separation of high street banking and riskier investment banking operations is the centrepiece of the Vickers package.

Mr Osborne was giving evidence to MPs about the future shape of Britain’s financial architecture and specifically on the draft financial services bill, which will put the Bank of England in charge of spotting future crises.

had regulators focused on the big picture rather than box ticking they might have prevented the disastrous merger of Royal Bank of Scotland with ABN Amro.

There was no shortage of laws – there was a lack of judgment,

the creation of a Financial Policy Committee at the Bank to spot danger building in the system was breaking new ground; he also conceded that the regulators had to strike a trade-off between risk and economic growth. “We don’t want the financial stability of the graveyard,”

the government is considering calls for new governance safeguards at the Bank even as it gets new powers.

recommended replacing the Court of the Bank with a stronger supervisory body that could review interest rates and other decisions after the fact.

provided a stunning $1.2 trillion to large global financial institutions

The money has been repaid

sketchy collateral

surprisingly sketchy collatera

Royal Bank of Scotland received $84.5 billion, and Dexia, a Belgian lender, borrowed $58.5 billion from the Fed at its peak

provided this much assistance to the biggest institutions for so long, and then to have done in effect nothing for the homeowner, nothing for credit card relief.”

Mr. Todd also questioned the Fed’s decision to accept stock as collateral backing a loan to a bank. “If you make a loan in an emergency secured by equities, how is that different in substance from the Fed walking into the New York Stock Exchange and buying across the board tomorrow?”

espouses the principle that all men and women are equal under the law,” Mr. Kane said. “During the housing bubble and the economic meltdown that the bursting bubble brought about, the interests of domestic and foreign financial institutions were much better represented than the interests of society as a whole.”

THIS inequity must be eliminated

regulators who have a duty to protect taxpayers should require these institutions to provide them with true and comprehensive reports about their financial positions and the potential risks they involve.

The banks really feel entitled to hide their deteriorating positions until they require life support.

financial regulators are captured by the companies they oversee,

if we do nothing to protect taxpayers from the symbiotic relationship between the industry and their federal minders, we are in for many more episodes like the one we are still digging out of.

EVALUATING bailout programs like the Troubled Asset Relief Program and the facilities extended by the Fed against “the senseless standard of doing nothing at all,” Mr. Kane testified, government officials tell taxpayers that these actions were “necessary to save us from worldwide depression and made money for the taxpayer.” Both contentions are false, he said.

“Thanks to the vastly subsidized terms these programs offered, most institutions were eventually able to repay the formal obligations they incurred.” But taxpayers were inadequately compensated for the help they provided,

Government officials rewarded imprudent institutions with stupefying amounts of free money