Crosby Review

Chris Cummings - Director General - 31st July 2008 - 09:41

So Sir James Crosby has presented his Interim Report to the Chancellor. My day was full of TV, radio and press interviews and the analyses are pouring in thick and fast... There will be a great deal of analysis of his analyses of the mortgage market. Indeed, we are 'long' on analysis at the moment... It's easier to present a splendid review of the situation than to come up with cast iron proposals that solve the problem. Indeed the Crosby Report states that he reserves the right to suggest no solutions at all! To let the market go through its cycle and right itself on the basis that to interfere may actually delay a return to normality.

I have always been a great fan of chaos theory. I like the idea that the proverbial butterfly flapping its wings, just so, creates a hurricane in Tokyo. And I've done enough market research to grasp the principle that 'observation changes outcomes' that by asking questions and posing problems, different results may occur. These intellectual forays help me cope with the regulatory landscape and take the long view.

But I do not subscribe to the 'if you don't pick it, it will get better school of thought. Sometimes intervention is not only right but proper. It is no encouragement to the tiring swimmer to refuse a lifebelt in the expectation that, having swam this far out, he has shown the tendency to be able to swim back in!

I cannot argue for a return to the over-heated nature of the market seen a year ago but the money markets have been closed for almost a year now and show little sign of a swift return. This is not a 'problem for the City', but a severe and worsening crisis for borrowers and those who want to take the financial and emotional step onto the housing ladder - or maintain their increasingly fragile footing on it!

Crosby recognised the work of intermediaries as a force for good. He talked of the pressure we bring that helps competitiveness and improves the consumer deal. And he also recognised how tough the market is for us - and that some will go out of business. To avoid this pain, AMI is running Business Diversification Workshops around the country. We published the dates yesterday and I look forward to seeing as many members as possible at these free events.