John Kay

We do need to increase the scope for structured and independent inquiry outside government, but with the kind of authority that only official status can confer.

Teachers and doctors strongly resist the introduction of a bonus culture: not just because they resent measurement of performance and accountability for their activities – although they do, and with little justification – but because they oppose importing the culture of assembly lines.

The political and regulatory incentives are either to downplay risks or exaggerate them – or to do each at different times.

To learn from mistakes, you must first acknowledge them.

When the next crisis hits, and it will, the frustrated public is likely to turn, not just on politicians who have been negligently lavish with public funds, or on bankers, but on the market system. What is at stake now may not just be the future of finance, but the future of capitalism.

Markets are not a well oiled physical machine: they are a constantly changing, adaptive biological system. Pluralism is their motive force, their essence chaotic, their development inherently uncertain. If we could predict the evolution of markets, we would not need markets in the first place.

Regulation as supervision can be simultaneously extensive and intrusive, yet ineffective and prone to regulatory capture. History suggests that supervision is rarely a success.

If financial institutions are to survive, they must behave more like supermarkets

Government underwriting of deposits should be matched by assets of comparable quality. Otherwise the mismatch of risk provides an unjustifiable public subsidy to the banking sector.

The Reform of Banking Regulation
We should spend less time trying to ensure that our regulators can regulate financial behemoths with turnovers bigger than the GDP of many countries and more on trying to redesign the financial services industry so that regulation focuses on the interests of the public as consumers of financial services.
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