Wall Street giant Goldman Sachs fined £20m by UK's FSA

Wall Street giant Goldman Sachs has been fined £20m ($31m) by the UK City regulator, the Financial Services Authority, the BBC has learned

The fine is for failing to tell the FSA it was under investigation for fraud by the US financial watchdog this summer.


In July, Goldman settled the fraud charge with the Securities and Exchange Commission by paying $550m (£356m).

The £20m is one of the heaviest fines ever imposed by the FSA, said the BBC's business editor Robert Peston.

Both the FSA and Goldman Sachs declined to comment on the fine.

Goldman agreed to pay the US fine to settle civil fraud charges of misleading investors.

The charges concerned the bank's marketing of complex mortgage investments, just as the US housing market faltered.

The FSA said Goldman also did not tell them that Fabrice Tourre, the trader who helped to create these mortgage derivatives, was under investigation.

This it said was particularly relevant as Mr Tourre moved from the US to London, and therefore came under the auspices of the UK regulator.

Goldman has admitted that it made a mistake, our correspondent added.

U.K. Panel Faces Big Test Next Week

By LAURENCE NORMAN sourced from Wall Street Journal


LONDON — When the U.K.'s brand-new fiscal council, the Office for Budget Responsibility, laid out its fiscal and economic forecasts a week ago Monday, it was widely praised for its careful, comprehensive work.

Yet the same office will face a bigger test Tuesday when Treasury chief George Osborne delivers his emergency budget statement and the OBR revises its forecasts in light of those plans.

That will force the OBR to give its judgment on the central question in U.K. politics for the last year, including the recent election campaign: whether stepped-up deficit reduction will lift the jobless rate and derail a still-fragile economic recovery.

The OBR was set up by Mr. Osborne last month to add credibility to government fiscal plans. The independent fiscal council was given the power to make the key growth and borrowing forecasts that underpin the budget plans, a power previously exercised by the Chancellor of the Exchequer.

In its debut act on Monday, the OBR lowered the growth forecasts the previous government had given in its March budget. The OBR surprised some by cutting borrowing forecasts for coming years but raised the estimate of the closely watched structural budget gap—the estimate for the size of the deficit once the economy returns to a rate of growth in line with its long-term trend.

Trichet Pegs Euro's Future to Tighter Fiscal Management

By TERENCE ROTH sourced from The Wall Street Journal

Amid concern in financial markets that the debt crisis could break apart the euro zone, European Central Bank President Jean-Claude Trichet warned of contagion dangers and called for more action by euro-zone governments to pool fiscal governance.

"We are now experiencing extreme tensions," Mr. Trichet said in an interview with Germany's Der Spiegel magazine. The ECB provided a transcript Saturday.

"In the market, there is always a danger of contagion—like the contagion we saw among the private institutions in 2008." Mr. Trichet said. Contagion can flare up quickly, he said, even in "half a day."

Financial markets sensed that danger over the past week, when the recent euro selling turned into a rout, despite the composition the previous weekend of a nearly $1 trillion safety net for problem governments. For many, the response to the Greek debt crisis didn't address longer-term concerns that the euro zone might have become unmanageable in its current form.

What's needed now, Mr. Trichet said, is "a quantum leap" in how Europe manages its fiscal economy, which he says in the most difficult situation since World War II.

"There needs to be major improvements to prevent bad behavior, to ensure effective implementation of the recommendations made by peers and to insure real and effective sanctions in case of breaches," he said.

Having thrown money at the problem and failed, the euro zone is coming to see centralized fiscal oversight as the only means of convincing investors that the Greek debt crisis won't recur. So far, nothing else seems to have convinced investors that the euro is durable.

Early proposals suggest the first steps to a kind of federal government that the euro's critics have said was needed from the inception of the currency project.

German Chancellor Angela Merkel has warned that the survival of the euro and even the European Union itself is at stake, adding calls for stricter fiscal governance that doesn't allow weaker countries to determine standards.