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| Version 0 | Version 1 |
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| Banking regulation 'not to blame' | Banking regulation 'not to blame' |
| (about 4 hours later) | |
| Chancellor Alistair Darling is to announce later that he does not plan fundamental reform of the way UK financial institutions are regulated. | Chancellor Alistair Darling is to announce later that he does not plan fundamental reform of the way UK financial institutions are regulated. |
| Mr Darling will say the current regulatory system is not to blame for the credit crunch, according to speech extracts released by the Treasury. | Mr Darling will say the current regulatory system is not to blame for the credit crunch, according to speech extracts released by the Treasury. |
| Instead, he wants to focus on improving the quality of judgement of regulators. | Instead, he wants to focus on improving the quality of judgement of regulators. |
| The current system has been widely criticised for failing to prevent excessive risk taking at banks. | The current system has been widely criticised for failing to prevent excessive risk taking at banks. |
| The Tories, for example, are planning to announce wholesale changes to current regulations. | |
| The existing tripartite system, which was introduced by Prime Minister Gordon Brown when he was chancellor, relies on the Financial Services Authority, the Treasury and the Bank of England to regulate financial institutions. | |
| Interconnected firms | |
| Mr Darling's approach is in contrast to that being taken in the US, where the administration is due to unveil sweeping changes to the financial system. | |
| Mr Darling does not believe that the tripartite model is to blame Robert Peston, BBC Business Editor | |
| On Wednesday, President Barack Obama's government will announce new powers for America's central bank, the Federal Reserve, to oversee the relationships between financial institutions. | |
| In future, the reserve will require interconnected firms to hold more capital in case of a crisis, to help avoid a repetition of events last year when the collapse of investment bank Lehman Brothers threatened to undermine the financial system. | |
| Despite the criticism of the UK system, Mr Darling believes no fundamental shake-up is necessary. | |
| "Mr Darling does not believe that the tripartite model is to blame. He believes institutional reform is less important than improving the quality of the judgements of those who work at the FSA, Bank of England and Treasury," said BBC Business Editor Robert Peston. | "Mr Darling does not believe that the tripartite model is to blame. He believes institutional reform is less important than improving the quality of the judgements of those who work at the FSA, Bank of England and Treasury," said BBC Business Editor Robert Peston. |
| 'Huge price' | |
| The chancellor does, however, believe that some reforms are necessary. | The chancellor does, however, believe that some reforms are necessary. |
| "Having stabilised the banking sector, we are faced with the challenge of building a stronger, more efficient and more resilient financial sector in the future," he will say in his annual speech at Mansion House on Wednesday. | "Having stabilised the banking sector, we are faced with the challenge of building a stronger, more efficient and more resilient financial sector in the future," he will say in his annual speech at Mansion House on Wednesday. |
| The focus must be long-term wealth creation, not short-term profits Alistair Darling, Chancellor of the Exchequer | |
| "Anyone who thinks that we can carry on as if nothing has happened should think again. In every country we are paying a huge price for this crisis. Not just the financial cost but also a profound social and human cost," he will add. | "Anyone who thinks that we can carry on as if nothing has happened should think again. In every country we are paying a huge price for this crisis. Not just the financial cost but also a profound social and human cost," he will add. |
| But the boardroom is where the focus should be, he will argue. | But the boardroom is where the focus should be, he will argue. |
| "I strongly believe that the process of learning lessons has to start in the boardroom. Bank boards must have the right people, skills and experience to manage themselves effectively Their focus must be long-term wealth creation, not short-term profits." | "I strongly believe that the process of learning lessons has to start in the boardroom. Bank boards must have the right people, skills and experience to manage themselves effectively Their focus must be long-term wealth creation, not short-term profits." |
| Mr Darling also signalled a planned paper on reform of the banking industry will be much less forceful than the Treasury had originally suggested. | Mr Darling also signalled a planned paper on reform of the banking industry will be much less forceful than the Treasury had originally suggested. |
| The paper, which is expected to be published in about a fortnight, will be a consultative green paper, rather than a policy-setting white paper. | The paper, which is expected to be published in about a fortnight, will be a consultative green paper, rather than a policy-setting white paper. |