Professor Alan Ahearne:

I do not think the regulator lacked the tools that were available which could have prevented the increase in loan-to-value ratios, for example, and could have been much more intrusive with the banks and limited the concentration of property lending. The regulator could have done all that stuff, but they had a certain interpretation of principle-based regulation which meant that they really just looked at whether the banks had certain governance systems in place, including having an audit committee. They put a lot of trust in the senior management of the banks. That is the very opposite of intrusive, proper regulation and so the implementation of regulation failed dismally.