Glass-Steagall Faction in the U.K. Attacks City of London Boss
July 26, 2012 • 8:21AM

The editors of the Financial Times Wednesday attack the head of the Financial Services Authority (FSA), Lord Turner, because he opposes Glass-Steagall. In an unsigned editorial today (thus attributable to the editor-in-chief), the FT says that, regrettably, Lord Turner "showed little interest in the full-fledged separation of retail and investment banking that this newspaper has advocated."

The attack against the head of the City of London (FSA) helps in clarifying that the fight around the figure who should be replacing the outgoing Bank of England governor next year, is not a personality fight but related to the fight for Glass-Steagall. The City of London wants to have their man, Lord Turner, succeed Mervyn King as BOE governor, as the latter will acquire stronger regulatory power back from the FSA next year. In this fight, the City has used LIBOR-related charges instrumentally against King's chosen successor, Paul Tucker.

The FT editorial Wednesday frontally attacks Lord Turner, because in a recent speech which was seen as throwing his hat into the BOE succession race, he proposed changes which "were hardly revolutionary." After blasting him because he rejects full-fledged banking separation, the FT says, "On questions of culture and enforcement, it would have been good to hear Lord Turner call for a more muscular approach.... It is simply absurd that no one of any significance has been prosecuted for any of the scandals that have been uncovered since the crisis."