Is bank regulation misguided?
My message is positive about the state of the banks and the financial system as long as we just stop panicking. But I am also saying “look, we have got to really make sure that we have good long-term economic policies”. If we make sure the economy works well for the long term, then the banks’ assets will be paid because people will have jobs, etc. Regulation is OK but all the bank regulation in the world is not going to make the wider economy work better. Also when you get close to the detail of the regulation you realise that there are very few quick fixes. It’s something that is going to take two or three years to bed down and is going to take time to prove successful. Yes, it will help to restore confidence but it’s going to take a while. What about toxic assets? The so-called toxic products were just a clever way of renting money at low cost. Banks thought it was safe to rent short-term money, as they could always sell these products to repay their debts. But once the panic started
