Still up at NAPF... Yesterday started with an interesting session - a speech by the former Governor of the Bank of England. Though it was politically diplomatic (he easily dodged some loaded questions) it was illuminating stuff. A few bits stuck in my mind. One was his admission that he didn't really understand how a lot of the new instruments (CDOs etc) that have caused so much damage lately actually worked. If he doesn't get it, that makes you worry. Leading on from that he said that no-one to his knowledge had predicted the type of problems we have faced, such as credit markets freezing up.
Most interesting for me were his comments about Northern Rock. Although he said the regulators needed to learn from the example, he was sceptical that the FSA could have stepped in earlier. He said that would suggest that the FSA was able to spot a future problem before the directors of the company could. And leading on he said the primary responsibility for the crisis therefore laid with the board of directors.
No doubt those that want to see the NR crisis as the fault of regulatory regime will read this him defending his old turf. I take the view that he was simply being straight up. People are not perfect and cannot know the future. Too much of the reaction to Northern Rock has involved people spotting what was 'obviously' wrong (and therefore could have been dealt with) with the enormous benefit of hindsight.