On the bus home from the Compulsive Obsessive Disorder (COD) clinic recently, I re-read the business news and noticed that the UK banking regulator FSA (Financial Services Authority), had just slapped a fine of some 7 million pounds on Toronto Dominion (TD), the second largest bank in Canada.
Margaret Cole, the FSA director of enforcement and financial crime, thundered that: "This is one of our largest fines and it underlines the seriousness with which the FSA views repeat offences". Wow - go girl!
This fine, some C$12 million, which was the fourth largest ever by the FSA, follows an earlier fine of almost C$850,000 on TD for similar offences. The FSA really showed them that they mean business this time!
The FSA levied the fine because "Toronto Dominion failed to effectively use its existing systems and controls over what was a complex business dealing in sophisticated and often illiquid financial products. As a result, Toronto Dominion failed to price certain positions held by the Trader accurately and failed to prevent or detect these pricing issues in a timely manner."
Does that sound familiar?
Hint: Barings, AIB, NAB, Societe Generale, and etc. etc. etc. etc. (as a compulsive obsessive might say).
Obviously, FSA's stern action is working really well! Not!
To put the TD 'fine' in some sort of context: C$12 million is only one eighth of the C96 million that TD had to write-down when it detected the failure. And it is only 1% of the C$1 billion that TD reported for the latest quarter alone! No difficulty paying the fine out of petty cash, then?
[By the way, TD, and by extension the FSA, only found out about the problems when the trader involved was made redundant and someone else looked at his books! Nice work, Sherlock]
The litany of pitiful fines by the FSA just grows and grows, outstripped only by the increasing pride that the FSA takes in justifying such gnat bites.
Under the laughable 'home host' provisions of Basel II, the Canadian banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), should also be getting involved. So far, the OSFI has been noticeably quiet, as silent as sleeping, snow goose in a snowstorm. Can someone south of the border please wake them up?
As argued in an earlier case, the head of the FSA, Adair Turner, has no option but to resign since it is untenable to continue to threaten banks with sanctions and then fine them a pittance if they transgress. "Unless, of course, you want to encourage regulatory arbitrage to get more banks to settle in London?"
But Britain always does its own thing, its own way. On the subject of the differences between the UK and other countries, Marge Simpson sagely said, "Remember, in England, an elevator is called a lift, a mile is called a kilometer, and botulism is called steak and kidney pie." And, she might well have added, "Blancmange is called banking regulation"
