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City watchdog accused of being 'asleep at the wheel' in run-up to financial crash becomes a SirHector Sants, who headed financial regulator for five years, knightedFSA so discredited during financial crisis it is to be scrapped next year
Mr Sants recently landed a 3 million job at scandal-hit Barclays
00:23 GMT, 29 December 2012
00:23 GMT, 29 December 2012
Honoured: Hector Sants, who spent five years as head of the FSA, has been given a knighthood despite widespread criticism of how the regulator failed during the financial crisis
A city regulator accused of being ‘asleep at the wheel’ in the run up to the financial crash is knighted in the honours list.
Hector Sants, who spent five years as head of the Financial Services Authority, receives the honour despite widespread criticism that the regulator had failed during the banking crisis.
Mr Sants, who recently landed a 3million job at scandal-hit Barclays, once warned the banks that they should ‘be frightened of the FSA’.
But the regulator was so discredited by its handling of the financial crisis that it is due to be scrapped next year.
Earlier this month even the Queen questioned whether the FSA had the ‘teeth’ to deal with the banking crisis.
Mr Sants joined the FSA in a senior position in 2004 and took over as chief executive in July 2007, just weeks before the run on Northern Rock that heralded the banking crisis.
MPs on the Commons Treasury committee accused him of being ‘asleep at the wheel’ as the crisis took hold, although he later insisted the run on the bank could have been prevented if ministers and the Bank of England had followed his advice.
Mr Sants also approved the Royal Bank of Scotland’s disastrous takeover of Dutch bank ABN Amro, which left the Scottish bank needing a 45billion bailout from the taxpayer in 2008.
He has since said he is ‘truly sorry’ for the failure of RBS, adding that the FSA did not have the power to block the deal but acknowledging that he ‘could have shouted louder’ about his concerns.
Big earner: Mr Sants recently secured a 3 million job at scandal-hit Barclays
The 56-year-old former investment banker was also in charge when HBOS was permitted to go on an extraordinary lending spree that saw it forced into a disastrous merger with Lloyds.
But while he was criticised for the FSA’s failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.
Mr Sants later laid the blame for the crisis at the door of the US and UK governments, saying authorities worldwide sought to ‘encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing’.
Mr Sants said yesterday that his knighthood was a ‘testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary’.
He had been lined up to head the FSA’s successor body before abruptly stepping down last summer. Next month he joins Barclays as head of compliance. The bank is still reeling from revelations about its role in the Libor interest rate fixing scandal.
Senior: Mr Sants joined the FSA in a senior
position in 2004 and took over as chief executive in July 2007, just
weeks before the run on Northern Rock that heralded the banking crisis
The FSA was accused by MPs of being ‘two years behind’ US regulators in dealing with the scandal, which involved manipulation of the rate at which banks lend to each other.
Meanwhile, economist Sir Alan Budd is given a second knighthood after agreeing to come out of retirement to found the Office for Budget Responsibility, which provides independent forecasts on the economy for the Treasury.
Sir Alan, a founder member of the Bank of England’s Monetary Policy Committee, is made a Knight Grand Cross.
Property tycoon Michael Heller leads a list of Tory donors honoured in the New Year list.
Mr Heller, who is reported to have given almost 120,000 to the Conservative Party, is awarded a knighthood for services to philanthropy.
Fellow Tory donor Terry Bramall is made a CBE, also for services to philanthropy. Businessman Mr Bramall has given 60,000 to the party in the past. Both men also have long track records in charitable giving.
Construction boss Tony Pidgley, who has also given modest sums to the Tories in the past, is also made a CBE. Mr Pidgley, a former Barnardo’s boy, is chairman and founder of housebuilder Berkeley Group and was honoured for services to housing and the community.