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Gordon Brown admits big mistake over banking crisis Gordon Brown admits 'big mistake' over banking crisis
(about 4 hours later)
Gordon Brown has admitted he made a "big mistake" over the handling of financial regulation in the run-up to the UK's banking crisis of 2008. Gordon Brown has admitted he made a "big mistake" over the handling of financial regulation in the run-up to the banking crisis of 2008.
The former prime minister told a US conference he had not realised the "entanglements" of global institutions.The former prime minister told a US conference he had not realised the "entanglements" of global institutions.
He said: "We set up the FSA believing the problem would come from the failure of an individual institution. That was the big mistake. He said: "We set up the FSA [the City regulator] believing the problem would come from the failure of an individual institution. That was the big mistake.
"We didn't understand just how entangled things were.""We didn't understand just how entangled things were."
Mr Brown said he had to "accept my responsibility" but added he was not the only one who had made mistakes.Mr Brown said he had to "accept my responsibility" but added he was not the only one who had made mistakes.
'Global meltdown'
Conservative Party deputy chairman Michael Fallon said: "These are the first words of contrition Gordon Brown has uttered in his entire political career.
"But he hasn't apologised for doubling the debt, selling off the gold and leaving our children and grandchildren paying the bills for his mistakes."
He also called on Labour leader Ed Miliband and shadow chancellor Ed Balls to apologise.
Speaking to the BBC, Mr Balls said: "In Britain, our government, our central bank and our regulator, like in America, in Germany and across the world, we didn't get [bank regulation] right.
"But the actions we took to stop this becoming a global economic meltdown were right."
'Across the system''Across the system'
Mr Brown told the Institute for New Economic Thinking in Bretton Woods, New Hampshire, that he had been under "relentless pressure" from the City not to over-regulate.Mr Brown told the Institute for New Economic Thinking in Bretton Woods, New Hampshire, that he had been under "relentless pressure" from the City not to over-regulate.
"We know in retrospect what we missed. We set up the Financial Services Authority (FSA) believing that the problem would come from the failure of an individual institution," he said."We know in retrospect what we missed. We set up the Financial Services Authority (FSA) believing that the problem would come from the failure of an individual institution," he said.
"So we created a monitoring system which was looking at individual institutions. That was the big mistake."So we created a monitoring system which was looking at individual institutions. That was the big mistake.
"We didn't understand how risk was spread across the system, we didn't understand the entanglements of different institutions with the other and we didn't understand even though we talked about it just how global things were, including a shadow banking system as well as a banking system."We didn't understand how risk was spread across the system, we didn't understand the entanglements of different institutions with the other and we didn't understand even though we talked about it just how global things were, including a shadow banking system as well as a banking system.
"That was our mistake, but I'm afraid it was a mistake made by just about everybody who was in the regulatory business.""That was our mistake, but I'm afraid it was a mistake made by just about everybody who was in the regulatory business."
'Incomplete understanding''Incomplete understanding'
Mr Brown said the banking meltdown had forced a rethink of financial regulation "in its entirety".Mr Brown said the banking meltdown had forced a rethink of financial regulation "in its entirety".
"I have got to accept my responsibility and I do, and I have been very open about saying we made mistakes on that," he said."I have got to accept my responsibility and I do, and I have been very open about saying we made mistakes on that," he said.
"But in a world where the understanding of what global meant was incomplete, I think many writers as well as many regulators made exactly the same mistake.""But in a world where the understanding of what global meant was incomplete, I think many writers as well as many regulators made exactly the same mistake."
The FSA, which Mr Brown established on his first day as chancellor in 1997, was widely criticised for its part in the banking collapse.The FSA, which Mr Brown established on his first day as chancellor in 1997, was widely criticised for its part in the banking collapse.
The chancellor, George Osborne, has announced plans to break up the FSA and hand more regulatory power to the Bank of England.The chancellor, George Osborne, has announced plans to break up the FSA and hand more regulatory power to the Bank of England.