It is a regulatory failure indeed but it's also a failure of moral compass. These people brought the entire system down through their fraud and greed. That's where the regulatory problem exists because there is still no punishment nor deterrent to excessive risk taking. Didn't Jeremy Hunt propose to remove the limits on banker bonuses only last year?
I suggest you watch the movie The Big Short if you think this is purely about regulatory oversight, it's also about actual criminal behaviour too and just remember that not a single one of these criminals went to prison. Their fraud caused the largest financial crash in living memory and some of the largest corporate collapses in living memory.
All of those people are now sunning it on handsome pensions and slush funds spending the money that you trusted them to keep safe and therefore money that our government had to give them to keep them afloat when it was lost.
I wonder if you are in favour of strict regulation of the city and financial sector, even if that restrains their growth?
It appears that your knowledge of the matter begins and ends with a a rather poor movie, although that still probably places you at an advantage to several others on here.
We have had extremely strict regulations placed upon the UK financial sector for close to 20 years, and this has undoubtedly restrained its growth. This is why Rachel Reeves is now proposing a reappraisal of ringfencing arrangements as part of her Leeds package of reforms, which I personally believe would be beneficial and it’s one area where I support her.
Ringfencing has proved extremely costly to implement, both in terms of capital requirements and managerial demands, as indeed has been the senior manager and certification regime. This is another area where the current government - a Labour government- is proposing a dilution of the rules.
Again, your suggestion that no deterrence exists to excessive risk taking simply doesn’t fit with the reality of the certification regime (are you even aware of its existence?), which places unusually high demands upon the behaviour both risk takers and the people they report to. It’s why many senior bankers typically seek to remove themselves of these managerial duties toward the end of their careers, or they simply choose to retire early, given the prospect of potentially severe sanctions being placed on them when they retire.
The bonus cap you referenced is one component of this certification regime, at least for material risk takers (MRT), and offers a clear example of accountability in relation to excessive risks or poor behaviour. The lifting of the cap for non-MRTs is not designed to increase renumeration overall, but rather to reduce the fixed costs for banks in the UK and reduce the disadvantage these banks face in relation to foreign competitors.
Similarly your claim that no one has gone to jail is misplaced, and you might want to look into how Tom Hayes in particular has been treated. I think his experiences challenge a good number of the points you make, but I hope you find the above useful nonetheless.
