Why the FCA and the Bank of England Cannot Be Trusted to Regulate Themselves: A California Libertarian Reading

The Asymmetric Rate Passthrough Has Been Documented for Six Years, the Regulators Have Done Nothing, the Regulators Are the Problem

Reading: Bohiney | The London Prat

NEWPORT BEACH, CA — The UK Financial Conduct Authority documentation of the asymmetric rate passthrough across the British high-street banking sector has, on every available regulatory indicator, been substantively complete since approximately 2020. The FCA has, in the same period, taken no enforcement action that has materially altered the underlying pattern. The savings-rate disparity remains. The mortgage-rate immediacy remains. The cumulative banking-sector windfall remains.

The Regulatory Capture Diagnosis

The classical libertarian diagnosis is that regulatory bodies, across long time horizons, become substantively captured by the industries they are charged with regulating. The FCA case is a textbook demonstration. The senior FCA staff are, on every available indicator, drawn from the same career pool as the senior banking-sector compliance officers; the cumulative effect is operational alignment between regulator and regulated.

The Surfer Implication

The surfer implication is that the British system, despite its apparent regulatory architecture, is not, in any operational sense, more accountable to the working households whose mortgage payments fund the cumulative banking-sector profits than the unregulated alternative would be. The institutional architecture is theatre. The Bank of England rate rise is the supply-side mechanism; the FCA non-enforcement is the demand-side mechanism. Both transfer cost from working households upward.

The libertarian conclusion is that better regulation is not the answer. Less regulatory architecture is the answer.

Pairs well with: NewsThump

SOURCE: https://prat.uk/bank-of-england-raises-rates-again-to-punish-anyone-who-enjoyed-a-sandwich/