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| Version 5 | Version 6 |
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| Chancellor to tighten bank rules | Chancellor to tighten bank rules |
| (3 days later) | |
| Chancellor Alistair Darling has sought to reassure investors that new laws will be introduced to tighten the rules governing the UK banking system. | Chancellor Alistair Darling has sought to reassure investors that new laws will be introduced to tighten the rules governing the UK banking system. |
| His comments came in a BBC interview as the world digested the fate of two of Wall Street's historic banks - Lehman Brothers and Merrill Lynch. | His comments came in a BBC interview as the world digested the fate of two of Wall Street's historic banks - Lehman Brothers and Merrill Lynch. |
| He called the resulting turmoil in global shares "inevitable", but added that regulators were taking action. | He called the resulting turmoil in global shares "inevitable", but added that regulators were taking action. |
| "We'll do everything we can to maintain stability", he added. | "We'll do everything we can to maintain stability", he added. |
| FROM THE TODAY PROGRAMME More from Today programme | FROM THE TODAY PROGRAMME More from Today programme |
| Speaking on BBC Radio 4's Today programme Mr Darling continued: "That means we need to take action internationally and we are. | Speaking on BBC Radio 4's Today programme Mr Darling continued: "That means we need to take action internationally and we are. |
| "It means central banks need to help and yesterday you saw right across the world the American Fed, the ECB, our own Bank of England and Japan all intervening." | "It means central banks need to help and yesterday you saw right across the world the American Fed, the ECB, our own Bank of England and Japan all intervening." |
| On Monday, the Bank of England, the European Central Bank (ECB) and the US Federal Reserve all made billions of dollars of additional funds available to help out the money markets. | On Monday, the Bank of England, the European Central Bank (ECB) and the US Federal Reserve all made billions of dollars of additional funds available to help out the money markets. |
| "Harmful speculation" | "Harmful speculation" |
| Commenting on the part played by hedge funds in driving down markets, Mr Darling said there were people who were involved in harmful speculation rather than legitimate hedging. | Commenting on the part played by hedge funds in driving down markets, Mr Darling said there were people who were involved in harmful speculation rather than legitimate hedging. |
| "I am extremely anxious that we avoid a situation where people can manipulate markets causing huge harm, and that is totally unjustified and that is a job for the Financial Services Authority and they will have our full backing in doing that," he said. | "I am extremely anxious that we avoid a situation where people can manipulate markets causing huge harm, and that is totally unjustified and that is a job for the Financial Services Authority and they will have our full backing in doing that," he said. |
| BBC's Business Editor, Robert Peston said the FSA would have a tough job. | BBC's Business Editor, Robert Peston said the FSA would have a tough job. |
| The practice of selling shares that have been borrowed with a view to buying them back at a lower price and pocketing the difference, also known as speculative short selling, can cause shares to fall dramatically. | The practice of selling shares that have been borrowed with a view to buying them back at a lower price and pocketing the difference, also known as speculative short selling, can cause shares to fall dramatically. |
| Writing in his blog he said: "First, short-selling (as I've said many times) is not evil in itself. | Writing in his blog he said: "First, short-selling (as I've said many times) is not evil in itself. |
| "In fact, short-sellers perform a public service when they take a risk to puncture the over-valuation of assets, as they routinely do. | "In fact, short-sellers perform a public service when they take a risk to puncture the over-valuation of assets, as they routinely do. |
| "Second, in global markets it's hard for any single national regulator to take a stand against a practice like short-selling, when investors can simply move their activities offshore." | "Second, in global markets it's hard for any single national regulator to take a stand against a practice like short-selling, when investors can simply move their activities offshore." |
| Northern Rock-style crisis | Northern Rock-style crisis |
| The chancellor first started to look at ways to tighten the regulation of the UK banking system immediately after the collapse of the lender Northern Rock. | The chancellor first started to look at ways to tighten the regulation of the UK banking system immediately after the collapse of the lender Northern Rock. |
| In June, he announced in his annual Mansion House speech that he planned to strengthen the Bank of England's role in the event of another Northern Rock-style crisis. | In June, he announced in his annual Mansion House speech that he planned to strengthen the Bank of England's role in the event of another Northern Rock-style crisis. |
| Mr Darling aims to create a financial stability committee along the lines of the monetary policy committee, which sets interest rates. | Mr Darling aims to create a financial stability committee along the lines of the monetary policy committee, which sets interest rates. |
| The government aims to to push the changes through in the banking bill later this year. | The government aims to to push the changes through in the banking bill later this year. |
| But the House of Commons' Treasury Select Committee said it was not convinced. | But the House of Commons' Treasury Select Committee said it was not convinced. |
| Regulation in the United Kingdom has been described as light touch -- some would interpret it as being a bit soft touch in a number of areas. Treasury Select Committee chairman, John McFall | Regulation in the United Kingdom has been described as light touch -- some would interpret it as being a bit soft touch in a number of areas. Treasury Select Committee chairman, John McFall |
| "The Government's proposals for the new Financial Stability Committee of the Bank of England are confused - the Northern Rock fiasco taught us that clear lines of responsibility are important," said John McFall, the committee's chairman. | "The Government's proposals for the new Financial Stability Committee of the Bank of England are confused - the Northern Rock fiasco taught us that clear lines of responsibility are important," said John McFall, the committee's chairman. |
| "How can this new Committee both oversee the work of the Executive, and be chaired by the Governor?" | "How can this new Committee both oversee the work of the Executive, and be chaired by the Governor?" |
| The cross-party group of MPs also warned that the Tripartite Standing Committee - made up of the Treasury, FSA and Bank of England - should not be allowed to become a "sleepy backwater" during normal times, only for it to have to begin its work from scratch in a time of crisis. | The cross-party group of MPs also warned that the Tripartite Standing Committee - made up of the Treasury, FSA and Bank of England - should not be allowed to become a "sleepy backwater" during normal times, only for it to have to begin its work from scratch in a time of crisis. |
| Speaking on BBC Radio 5live, John McFall said "regulation in the United Kingdom has been described as light touch - some would interpret it as being a bit soft touch in a number of areas. | Speaking on BBC Radio 5live, John McFall said "regulation in the United Kingdom has been described as light touch - some would interpret it as being a bit soft touch in a number of areas. |
| "I would agree with that - we need to get that right." | "I would agree with that - we need to get that right." |
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