Personally I find this bazaar. It was government intervention that caused these problems. I assuming we are talking about Banks, and correct me if I?m wrong. I need to point out that all banks complied perfectly with all the masses of regulation the FSA threw at them, so perhaps regulation is not the answer. If 5 volumes of regulation didn?t have the slightest impact why would 7 volumes, or 10?

Rather I put it to you that the banks responded correctly to the massive injection of new money the government created by reducing the reserve requirement to just 4% (under Labour banks only need to keep 4p of every ? in the safe, the rest could be loaned out). Also Labour increased the money supply by increasing public spending though debt. All this extra money washing around the system lead to false signals to the market, leading to spirally assets prices in terms of house prices, and bided up the factors of production, public sector pay.

The banks were responding rationally to an inflated money supply, to an environment of no more boom and bust. Actually it was the governments fault for mishandling the money supply and encouraging mass debt.