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from Margaret Doyle:

Insurers love the FSA

Britain's Financial Services Authority has taken a lot of brickbats. its failure to anticipate the crisis is one of the main reasons that George Osborne, the Conservative finance spokesman, now plans to abolish it, transfer most of its supervisory powers (including for insurance) to the Bank of England leaving a rump responsible for consumer protection.

The FSA is in a weak position to defend itself. Even its newish chairman, Lord (Adair) Turner has admitted that it did not foresee the looming problems at Northern Rock, since nationalised. Worse, the regulator was completely ill-equipped to understand the bigger, systemic problems that were looming. Like most other people in and around the markets, it was lulled into a false sense of security.

However, among the critics, one industry has been steadfast in support of the FSA: insurance. Again and again in my travels around the City, and especially EC3, the corner dominated by Lloyd's of London and various bits of the industry, I have heard nothing but praise for the FSA.

The appreciation is not a recent phenomenon, dating from the arrival of either Hector Sants, who is now taking a tough-guy approach to enforcement, nor that of Turner, a well-known big brain.

Kroes hits right note on EU bank aid

Neelie Kroes, the EU Competition Commissioner, is right to be taking a hard line on state aid to banks, which will distort competition if not repaid. However, she will have to fight member states like Britain and Germany, which are desperately encouraging banks to lend locally, nursing large losses on their capital injections or trying to avoid massive upheaval in their banking industries.

The reasons for her tough stance — laid out in guidelines she will unveil on Thursday, obtained by Reuters – are sensible. At their heart is the desire to maintain the imperfect European market in financial services that the Commission has done so much to foster. State aid risks distorting this market because of members’ differing ability and willingness to underwrite their banking sectors.

Polish EU vision breaks the mould

At last — a Polish vision of the future of the European Union that does not involve refighting
World War Two or dying in a ditch for outsized voting rights.

In a thoughtful report entitled “Europe can do better”, a group of eminent Poles, including two former foreign ministers and a former central banker, offer a blueprint for Poland to partner EU heavyweight Germany in advancing European integration.  Even if some of the proposals look unrealistic, Berlin would do well to grasp the outstretched hand from Warsaw and explore common ground.

Politics, economics collide over Opel

Political and economic logic are set to collide in the byzantine decision-making over the future of German carmaker Opel, the main European arm of fallen U.S. auto giant General Motors.
If politics prevail, as seems likely, the cost to German taxpayers will be higher and the chances of commercial success lower.

The aim of the Berlin government and four federal states, which are sustaining Opel with bridging finance, is to save as many German jobs and production sites as possible. That makes political sense ahead of September’s general election. But the business logic is that only a greatly slimmed-down Opel can survive in an industry with chronic overcapacity.
In theory, it is up to GM’s board to choose among the three offers it expected to receive on Monday from Canadian-Austrian car parts maker Magna <MGa.TO>, Belgian financial investor RHJ <RJHI.BR>, and, less plausibly, Chinese state-owned auto maker BAIC. But there are several other powerful players with a say. They include the trustees responsible for the company since GM entered U.S. bankruptcy in June, the German federal and state governments, Opel’s works council and, last but not least, the European Commission, which must approve the restructuring plan as a condition for authorising the state aid.

from Margaret Doyle:

Walker puts politics into banking

LONDON, July 16 (Reuters) – As befits a former senior civil servant, David Walker has produced a review of governance of British financial institutions that is acutely tuned to political sensitivities. His proposals would make banks more bureaucratic and more regulated, while bankers’ pay will be more open. In short, they will be treated more like the arms of the state that they have become.
Bankers will groan at the 39 draft recommendations for improving their performance, but they have received, one way and another, 1.3 trillion pounds of taxpayer support, or over 20,000 pounds for every man, woman and child in the land.
This alone justifies Walker’s proposals of a more intrusive and prescriptive approach to pay, even though he admits that pay was the least of the many causes of the financial crisis.
Less emotive, but more important, are his proposals on boards and shareholders, whom he clearly feels are the unspoken villains of the piece. Chairmen would become serious figures in financial institutions, responsible for holding dominant chief executives to account. With the enhanced scope of this role, it is unlikely they could do much else, even to chair another (non bank) company.
Non-executives, too, should expect the job to become part-time employment, with training, support and external advice. This would mean the end of the politically-correct drive towards diversity. Conveniently for him, Walker says he has no interest in such agendas. He prefers to push for proper risk committees, taking a view on the macroeconomic environment as described, for example, in Bank of England reports,.
Walker is scathing about shareholders, whom he views as complicit at best and responsible, at worst, for the excesses of the boom- as he asks, who demanded all those share buybacks? He wants fund managers to commit to “principles of stewardship”, with a requirement to “engage” with managers at the companies they own.
He’d also like to see a change in board culture, whatever that may mean. This, like his other proposals, sounds sensible, but is mostly wishful thinking. That there is something rotten in the way we do banking in the early 21st century is beyond doubt, but this report, however well-meaning, doesn’t take us any nearer to curing the disease.

Blair for EU president? Don’t hold your breath

The British government has chosen a strange time to announce its support for former Prime Minister Tony Blair for the not-yet-existent job of President of the European Council. French President Nicolas Sarkozy has publicly touted Blair as a good candidate, and his name is among a handful discussed among EU diplomats. But there was no obvious reason for Europe Minister Glynnis Kinnock to go public with a British candidacy now.

For one thing, the vacancy will only arise if Irish voters approve the Lisbon Treaty at the second time of asking on Oct. 2, and the Czech and Polish presidents then agree to sign it. Touting candidates now might seem to be taking the Irish for granted and may not go down well in Dublin.

No early bank exit for Britain

John Kingman has finally stated the obvious. After nine months of near-silence, the civil servant responsible for managing the UK government’s bank shareholdings has piped up to say Britain must be patient in recovering the 35 billion pounds it has so far injected into Royal Bank of Scotland and Lloyds Banking Group.

But Kingman has not gone far enough in stating his objectives. If British taxpayers are to fully recover the sums they have pledged to rescue their banks, they should hold onto their shares for a very long time.

from MediaFile:

Electronic health records in the land of Gotcha!

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There needs to be at least a hint of political scandal for serious public policy discussions to qualify as news these days. Which is why reports that patients in the UK's national healthcare system might be granted some some say in managing their personal health records after the next election gets largely lost in discussion of close ties between Google and Britain's Conservative Party. This is a shame, because public debate over the promises and perils of electronic health record technology are long overdue. ******The tempest concerns Steve Hilton, considered one of Tory party leader David Cameron's closest aides, who is married to Rachel Whetstone, Google's vice president of global communications. The suggestion in some reports is that these links will make it difficult for the party to include Google in any plan to give citizens the choice of storing their health records with private companies such as Microsoft or top UK private insurer Bupa. Google would have to get busy quick, as currently, its health records service is designed only for the United States. And it has had trouble gaining traction there. As an opposition party, the Conservatives' views on the subject are relevant because they currently enjoy a wide lead in polls over who might win the next national elections.******Electronic health records could offer broad benefits, if ever implemented.  But many issues must be resolved. The medical profession has long resisted adopting any plan that would help patients second-guess treatment decisions by their physicians. There remain vast problems with how to incorporate old medical records with any degree of accuracy into an electronic record. There are nagging questions about how to create common formats to share all the different types of information that might be included in a health record -- from scribbled prescription orders to faxes to database records to X-rays and so on. There are commercial issues over how to balance the interests of patients, medical providers and "payors," or insurers. Then there is the chicken and egg question of how to get these institutions involved and who will move first. Perhaps the most cripling issue is patient privacy and how to ensure that intitmate personal information is not released. ******In an April speech at the Conservative Party's spring conference, Cameron spoke of replacing the National Health Service's (NHS) centralized patient database with a distributed patient health record system that grants some powers to patients to manage their own information. He claims a private plan would "cost virtually noting to run", in contrast to the Labour government's £12.7 billion current upgrade of health information systems that does not include measures to give patients more control over their records.***

"People can store their health records securely online, they can show them to whichever doctor they want. They’re in control, not the state.***And when they’re in control of their own health records, they’re more interested in their health, so they might start living more healthily, saving the NHS (National Health Service) money.***But best of all in this age of austerity, a web-based version of the government’s bureaucratic scheme services like Google Health or Microsoft Health Vault cost virtually nothing to run."

***Paul Stevenson, a spokesman for the Conservative Party on health policy, confirmed his organisation has commissioned an independent report by the British Computer Society looking at issues involved in implementing a more decentralised approach to electronic patient records. He declined to comment on specifics of the party's plan, but said a response to the BCS report will be released in a few weeks time. "What the report does look at is how to move to a bottoms-up approach in NHS computing rather than a top-down approach," Stevenson said.******The public's attention span is never long for complex medical issues.  Note the relative inattention paid to public health preparations since the global swine flu panic of April. As we head into the silly season of late summer news, expect medical privacy scare stories to reach a fevered pitch.  The near-term prognosis is not good. ******(Images: TheInsider.com; Times Online; Google Health)

from MediaFile:

Digital Britain vision lacks political roadmap

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The UK government's grand reworking of digital policy, due out Tuesday, has something for every one to chatter about -- from funding for a further broadband buildout to reworking television licensing fees to how the country faces up to the issue of media piracy.

But final publication of the Digital Britain report on Tuesday follows the marked deterioration of the economic environment as well as the collapse of the political muscle needed to marshall the report' more ambitious changes through Parliament.

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