Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

Britain’s native banking industry under intense competitive pressure, Tony Blair’s New Labour government set about further streamlining the City’s regulatory system.24 Nine specialist regulators were combined into a single agency, the Financial Services Authority (FSA). It set a new low bar for financial oversight. Tony Blair’s chancellor, Gordon Brown, boasted that the FSA offered “not only light but limited regulation.”25 The FSA was mandated to achieve its “goals in the most efficient and effective way.” “[N]ot damaging the competitive position of the United Kingdom” was its top priority.26 The FSA was required to apply cost benefit analysis to its own interventions and benchmark its operations against other countries.27 Perhaps not surprisingly, given this mandate, the FSA’s staff was a fraction of that of its US counterparts. As Howard Davies, the FSA’s first chair, put it in the libertarian language of the day: “The philosophy of the F.S.A. from when I set it up has been to say, ‘Consenting adults in private? That’s their problem.’ ”28 The sort of thing that you could do in London but not in New York is exemplified by “collateral rehypothecation.”