Gray, Joanna --- "Financial Regulation Before and After Northern Rock" [2011] ELECD 614; in Gray, Joanna; Akseli, Orkun (eds), "Financial Regulation in Crisis?" (Edward Elgar Publishing, 2011)

Book Title: Financial Regulation in Crisis?

Editor(s): Gray, Joanna; Akseli, Orkun

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848445543

Section: Chapter 5

Section Title: Financial Regulation Before and After Northern Rock

Author(s): Gray, Joanna

Number of pages: 16

Extract:

5. Financial regulation before and
after Northern Rock
Joanna Gray

Just over three years ago queues of worried and panicking bank
depositors began to form in the streets outside the branches of the
UK's tenth largest bank and fifth largest mortgage lender in one of
the largest and most sophisticated financial economies in the world.1
Narratives and analyses of causes and responsibility for what was
the first run on a major UK bank since the late 19th Century can
be found in subsequent official reports2 and the academic literature
in law, economics and public policy and these will continue to be
developed and debated in years to come. However, one thing became
crystal clear in mid-September 2007 and that was that the institu-
tions and processes put in place for the maintenance of financial sta-
bility and the prevention of bank runs and panics by the last major
reform in UK financial regulation had not worked. That reform
first conceived in 1997 on the election of a Labour Government
transferred responsibility for the prudential supervision of deposit-
taking institutions from the Bank of England3 to the newly formed
Financial Services Authority established and empowered by the
Financial Services and Markets Act 2000.
As the crisis in the financial system has deepened and spread into
the real economy there has been much fundamental `back to basics'
rethinking around some of the assumptions made about the optimal
structures, institutions, objectives and substantive content of finan-
cial regulation both in ...