FSA is a legal company limited that regulates the financial services sector in the United Kingdom. Under its statute it has to act ensure the market confidence, overseeing the frauds and crimes in the market, securing and extending an appropriate degree of protection for the consumers of industry and promoting the public awareness of the industries various stratum (Financial Services Authority 2008). Being the center of criticism in various forms since its inception, the latest barrage of attacks came when it failed to move in alerting and foretelling the collapse of financial sector heralded by the US subprime mortgage burst.
There has also been allegations that it failed to act swiftly after the final showdown began, that has resulted in an enormous setback to the UK financial sector (Financial Services Authority 2008). The successive failure of Northern Rock and the once iconic Royal Bank of Scotland are the examples in sight. After the fall of Rock, the British Parliament has lamented incrimination that this was the result of “substantial failure of regulation” on part of the FSA. The financial watchdog claimed that there had been inadequate oversight and review of the brewing internal crisis.
For the past two decades, Americans ‘distracted, by the direction that its government showed, has been spending much more then they own or allowed by their means, which can be seen by a steady decline of their saving rates that stood at 11% in 80s to -1% today, the total debt owed by the public amounts to massive $2. 5 trillion without accounting the sub-prime fiasco, and secondly, consumption patterns, last decade saw an enormous increase in spending, bumped up by soaring housing prices, though this had been the era of shrinking real wages (World banks make emergency rate cuts, 2008).
Without the wage increases, riches were being made by selling homes without ever thinking that for how long this cycle would swing, as the point would ultimately reach when stalemate would occur, when people would be left with no money to buy expensive properties. Without such logical thinking, things went on moving so much so that the American home owners extracted nearly $5 trillion since 2001 in various forms like refinancing their mortgages (Stout, 2008), home equity and selling till the dooms day occurred, when whole system based on faltered assumption on the lines of Dot Com collapsed.
The reason it has been called ‘distraction, is the fact that the policies engineered by the government wrongly encouraged the public to tow the dangerous path of callous burning up of goods and services while giving birth to a banking system that fueled this trend, thus slowly and gradually the structure moved away from the production and sales, to the addiction of free goods and manipulation of debts. US is an economy that is run by banks and its derivative financial institutions, thus it’s the bankers economy.
This is the heartland of capitalism, the motherland of free economy and the greatest champion of demos-cracy. All this comes into being and blends up when we have a strong financial system making up its backbone. Banking industry spreading over a century has gradually formulated an environment where the resilience of economy rests on credit ‘the practice of lending’, thus making customers or more appropriately the consumers as being the second important tier of whole system.
Third comes the government that regulates, governs and looks after the regulatory fabric under whose auspices the system works. Fourth comes the wealthy foreign governments that lend their excesses to the US government, financial institutions and its people, acting as investors willing to quench unsubsiding thirst of the whole nation (Baker, 2008).