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FRIDAY, NOVEMBER 27, 2009
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 ANALYSIS 
4

Thatcher's 'Big Bang' Free-for-All Led to Bust

Pioneers of British '80s deregulation dismayed at unforeseen 'side effects'

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(Newser) – The British regulatory reforms that changed the face of the financial industry in the '80s allowed banks to become bloated giants, two architects of the so-called "Big Bang" changes tell the Wall Street Journal. The deregulation let London's financial sector flourish, the men say, but also allowed banks to become too big for even their managers to properly regulate, setting the stage for today's crisis.

The former officials, both now members of Britain's House of Lords, are skeptical of G20 efforts to expand financial regulation to cover today's complex financial system. A more effective course, they say, would be to split banks into the separate business they used to be, and keep commercial, deposit-taking banking operations apart from the riskier business of securities trading.

Suited City workers walk over London Bridge at the end of their working day in London last week.
Suited City workers walk over London Bridge at the end of their working day in London last week.   (AP Photo/Sang Tan)
Office workers walk down a street in London last week.
Office workers walk down a street in London last week.   (AP Photo/Sang Tan)
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The notion that banks would get as big and as bloated as they did get—that was totally unexpected. - Nigel Lawson, Treasury chief under Prime Minister Margaret Thatcher

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4 comments
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Doctor_Zaius
Mar 31, 09 9:41 AM CDT
The Brits version of the repeal of Glass-Steagall. Reply
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SPH
Mar 31, 09 1:57 PM CDT
Let's hope they can get this accomplished... Reply
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IN RESPONSE:
Doctor_Zaius
Mar 31, 09 9:03 PM CDT
They will, what I'm worried about is will we get it done here.
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shonangreg
Apr 1, 09 9:00 AM CDT
I think Glass-Steagall like laws will be re-enacted and enforced in both the UK and the US -- and maybe ther'll be more international co-operation in regulation and a clamping down on tax havens and the like. The bigger problem is will the economy recover between now and then. Reply
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