The FSA and the Bank of England should ensure their warnings about under-priced risk and potential liquidity problems are property acknowledged, says the Treasury Select Committee.
The Committee’s latest report on financial stability has also warned credit rating agencies they face tighter regulation if they do not deal with problems in their business model. The report, published today, says the new 'originate and distribute model of banking' has merits, as it disperses risk through the financial system and increases the efficiency of the market. However, the Committee says the financial turbulence of mid-2007 has exposed weaknesses in the financial structure and, while it is unlikely the new banking model will be reversed, lessons must be learned from events sinc...
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