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“Fear and greed” are responsible for the present financial troubles says Hector Sants, chief executive of the FSA.
He also said that “the level of insider dealing is unacceptable” and called for the FSA to have more powers.
Banks and investors have forgotten the golden rule “don’t buy what you don’t understand” added Hants.
He said that the FSA are now “confident that all banks have the right plans in place” and that the credit crunch was moving into a third phase.
He criticised city bonuses, the level of insider dealing in the City and the fact that senior bank bosses did not understand the complex mortgage instruments that they were selling into the market.
For consumers he does not expect the very easy credit times to return for “years”, and suggested that 100 per cent (and more) loans to value ratio mortgages were “unhealthy.”
