So the FSA is going to beef up on its staff in the oversight of the banks. As I see it, this approached is doomed before it even starts. The regulator, whether it is the FSA or any other, cannot match both the expertise and the innovativeness of the staff
in the banks. The reason for this is simple. The regulator cannot compete with the banks in terms of direct payments, like salaries, or other incentives like bonuses.
This gets the whole issue back to what got the financial industry into this mess in the first place.
Putting more overseers in to monitor what is going on is also of doubtful value. It is an approach that will only lead to lulling everybody back into a false sense of security (again). This will last only until the next crisis emerges.
The real solution lies with bank managements accepting, in all sincerity, that they do have a real obligation to abide by certain ethical standards (and bankers in their position of trust within the community should know all about this) and that profits
are not the only game in town.
If they can't get this right then no amount of new rules or new inspectors are going to make any difference.