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The Tripping Point
Oct. 11th, 2007 01:25 pmThe FSA certainly timed well its appearance before the Parliamentary committee investigating the Northern Rock fiasco -- the same day as the non-giveaway election non-budget that wasn't.
The FSA said that it had learned some lessons from the experience. Well woo-hoo. It also said that their had been some differences of opinion with the BoE over what should be done. Well, yes, that's because the BoE, until its stupid U-Turn, was right, and the wimps at the FSA, who are only there because no-one in the private sector would employ them, were wrong.
It was thus with some amusement that I received an e-mail this morning informing me that
This was so farcical that I thought it had to be the FSA's idea of a joke -- until I realized that it couldn't be, because I have yet to meet anyone at the FSA with a sense of humour.
The incredible thing about this is that the FSA's analysis only reveals them to be no wiser now than they were before the Northern Rock mess. Indeed, it looks like the lesssons they claim top have learnt are precisely the wrong lessons -- jack up solvency levels, introduce tougher capital requirements.
Those not completely au fait with the UK financial regulatory system might like to know that the FSA doesn't believe in "rules-based" legistlation, but "principles-based". This is also known as "cover-your-arse" legislation.
So, instead of following a system as simple and efficient as that of traffic lights, the FSA, if it was the Department of Transport, would introduce lights that faded gradually from red to green and back again. At what degree of "redness" you had to stop would be up to you. But if you have a crash, and there was only the merest tinge of red in the light, the FSA would bash you. Result, all drivers stop at the merest tinge of red, slowing up traffic horrifically.
Insurers were required to provide an "Individual Capital Assessment" -- the level of capital that insurers thought appropriate for their business. Now, British insurers are cautious chaps. They don't come up with silly numbers here. If anything, they are more conservative than they should be on the level of capital that they are likely to need.
Anyhoo, the FSA, nearly three years after asking the insurers for the ICAs, has completed the first round, yes,just the first round, of ICA reviews. It's produced its own "Individual Capital Guidance" (ICG). And how much bigger on average do you reckon this is than insurers' own ICAs? 114%. I nearly dropped my coffee at that number.
"On average the ICG (weighted by size of firm) was 114% higher than the ICA." wrote the FSA.
But then I read on. It said, just two sentences later, "Whilst over 50% of FSA assessments resulted in ICG being set at the same level as the firms' ICAs, in some instances the ICG was over 50% greater than the ICA."
Now, it doesn't take much mathematical skill to realize that these numbers don't add up.
Then I figured it out. The FSA meant that the ICG was on average 114% of the ICA, i.e., 14% higher, not 114% higher. (Indeed, the full paper uses the correct terminology).
So, we've got the major financial regulator, putting out a press release, that can't tell the difference between "114% of" and "114% higher".
God help us.
++++++++
I've got quite a few hand histories that I found interesting, but the current disastrous bathroom scenario (last night and this morning, no toilet. This morning, no hot water either, which was worrying) made it difficult to put anything together. Just to remind myself later tonight, they were
All 8-handed
A5s UTG+2,I raised first in to 3xBB.
AKo, I raised first in from MP1 to 3.5x BB I think.
66, I called a 4x BB raise from MP2 (2 EP limpers) while in the small blind
AA in the Big Blind, Raised in MP2 to 4x BB, reraised in MP3 to 13xBB. I have something like 70x BB in my stack.
22 on the button, two limpers round to me. I raise to 3xBB.
++++++++++
Three trips to the gym this week and three runs on the treadmill. Running may be hell, but it's definitely the holy grail when it comes to losing weight. It's two years since I've done much running, but after just two days, I got it bit back into the swing of it today, managing 3.2km before I dropped down, near death.
Right, I'm going to write a few more stories. With luck, I won't have to do anything tomorrow except listen to the plumbers and carpenters making horrific amounts of noise while not apparently getting anything done. Sigh.
The FSA said that it had learned some lessons from the experience. Well woo-hoo. It also said that their had been some differences of opinion with the BoE over what should be done. Well, yes, that's because the BoE, until its stupid U-Turn, was right, and the wimps at the FSA, who are only there because no-one in the private sector would employ them, were wrong.
It was thus with some amusement that I received an e-mail this morning informing me that
The Financial Services Authority (FSA) has today published a paper outlining the progress made by the industry in developing systems and modelling techniques to identify and measure risk.
This was so farcical that I thought it had to be the FSA's idea of a joke -- until I realized that it couldn't be, because I have yet to meet anyone at the FSA with a sense of humour.
The incredible thing about this is that the FSA's analysis only reveals them to be no wiser now than they were before the Northern Rock mess. Indeed, it looks like the lesssons they claim top have learnt are precisely the wrong lessons -- jack up solvency levels, introduce tougher capital requirements.
Those not completely au fait with the UK financial regulatory system might like to know that the FSA doesn't believe in "rules-based" legistlation, but "principles-based". This is also known as "cover-your-arse" legislation.
So, instead of following a system as simple and efficient as that of traffic lights, the FSA, if it was the Department of Transport, would introduce lights that faded gradually from red to green and back again. At what degree of "redness" you had to stop would be up to you. But if you have a crash, and there was only the merest tinge of red in the light, the FSA would bash you. Result, all drivers stop at the merest tinge of red, slowing up traffic horrifically.
Insurers were required to provide an "Individual Capital Assessment" -- the level of capital that insurers thought appropriate for their business. Now, British insurers are cautious chaps. They don't come up with silly numbers here. If anything, they are more conservative than they should be on the level of capital that they are likely to need.
Anyhoo, the FSA, nearly three years after asking the insurers for the ICAs, has completed the first round, yes,just the first round, of ICA reviews. It's produced its own "Individual Capital Guidance" (ICG). And how much bigger on average do you reckon this is than insurers' own ICAs? 114%. I nearly dropped my coffee at that number.
"On average the ICG (weighted by size of firm) was 114% higher than the ICA." wrote the FSA.
But then I read on. It said, just two sentences later, "Whilst over 50% of FSA assessments resulted in ICG being set at the same level as the firms' ICAs, in some instances the ICG was over 50% greater than the ICA."
Now, it doesn't take much mathematical skill to realize that these numbers don't add up.
Then I figured it out. The FSA meant that the ICG was on average 114% of the ICA, i.e., 14% higher, not 114% higher. (Indeed, the full paper uses the correct terminology).
So, we've got the major financial regulator, putting out a press release, that can't tell the difference between "114% of" and "114% higher".
God help us.
++++++++
I've got quite a few hand histories that I found interesting, but the current disastrous bathroom scenario (last night and this morning, no toilet. This morning, no hot water either, which was worrying) made it difficult to put anything together. Just to remind myself later tonight, they were
All 8-handed
A5s UTG+2,I raised first in to 3xBB.
AKo, I raised first in from MP1 to 3.5x BB I think.
66, I called a 4x BB raise from MP2 (2 EP limpers) while in the small blind
AA in the Big Blind, Raised in MP2 to 4x BB, reraised in MP3 to 13xBB. I have something like 70x BB in my stack.
22 on the button, two limpers round to me. I raise to 3xBB.
++++++++++
Three trips to the gym this week and three runs on the treadmill. Running may be hell, but it's definitely the holy grail when it comes to losing weight. It's two years since I've done much running, but after just two days, I got it bit back into the swing of it today, managing 3.2km before I dropped down, near death.
Right, I'm going to write a few more stories. With luck, I won't have to do anything tomorrow except listen to the plumbers and carpenters making horrific amounts of noise while not apparently getting anything done. Sigh.
