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	Bankers Association report on future protection
	A report from the British Bankers Association calls for a worldwide review of financial regulations to help markets withstand the effects of the ongoing credit crunch. Without pointing the finger at any one party (and the BBA admits it's a complicated situation we find ourselves in) the report suggests that the three regulatory bodies responsible in the UK certainly have some questions to answer and the whole world needs to learn quickly from these worrying events so that the same does not happen again. The report outlines key areas for examination with cashflow and risk-assessment at the top it's list. One major factor that contributed to the Northern Rock situation was the banks attitude to risk profiling of its customers and the amount of securitised lending it was writing. Even though the Rock had limited levels of cash being generated from its savers, it continually went to the open markets to raise further cash to fund new mortgages. They did this to such an extent that securitised lending made up over 60% of their total mortgage book in 2006 - almost double the proportion seen in the next biggest company HBOS. HBOS is easily the biggest mortgage provider in the UK, lending around £219bn in 2006, but securitizing only 31% of that. We would expect the figures for 2007 to show a far more worrying situation developing at Northern Rock and one would have to question why the regulators did not notice this and act earlier to prevent the problem that eventually materialised.

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Bankers Association report on future protection

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