I like and admire Lord Turner, chairman of the UK's Financial Services Authority. He is more than an acute analyst. He is also brave. He showed that in his struggle with Gordon Brown, then chancellor of the exchequer, over plans for pension reform published in 2005. He is showing that again today in the lively debate he has initiated on the future of financial regulation.
This financial crisis was no minor blip, to be forgotten as quickly as possible. On the contrary, the UK (and other significant countries, not least the US) have just received a monstrously expensive warning. That is why Lord Turner's willingness to raise unpalatable questions is both welcome and refreshing. His report for the FSA is among the best analyses of the crisis. Now, in a discussion for the British journal Prospect, he has taken the debate into even more controversial territory.
I will address five of the issues raised there: the case for moving the responsibilities of the FSA over banking into the Bank of England; the supposedly excessive size of the financial sector, particularly in the UK; the levels of capital required of banks, particularly on their trading activities; the possible role of taxes on financial transactions – the so-called “Tobin tax”; and, finally, the vexed question of bankers' pay.