"All markets are not by definition self-correcting", Lord Turner, FSA's Chairman.

He then continued on the action to implement :"we must design our regulatory response. Much of what is needed is clear:- capital and liquidity regulation reforms to make the banking system a shock absorber rather than shock amplifier in the economy: more capital and more liquidity, and countercyclical capital built up in the good times and able to be drawn down in bad; - reforms to deal with large systemically important, potentially too-big-to-fail banks, with possible capital surcharges for the largest and most interconnected, and/or resolution procedures that would enable controlled wind-down; and - action to reduce interconnectedness in Over- the-Counter (OTC) derivative markets, migrating as many contracts as possible to central counterparty clearing systems, and ensuring adequate capital and collateral against the remaining bilateral contracts. Those elements of the agenda are already agreed and being pursued at both national and international levels. But I will concentrate today on two issues where appropriate policy is not yet clear, or where regulation alone might be insufficient:- first, the optimal level of capital in the banking system and of leverage across the economy; and - second, the optimal size of the wholesale financial services industry and in particular of trading activities."
Read Lord Turner's speech on FSA 's website