Values: The chief financial regulator made a public apology in Edinburgh this week.

THE chief financial regulator made a public apology in Edinburgh this week. Hector Sants, chief executive of the Financial Services Authority (FSA), scrapped his prepared speech for Edinburgh Chamber of Commerce 48 hours after the humiliation of the capital's formerly proud banks, and uttered these words: "I want to take the opportunity to say we are sorry, for the fact our supervision did not achieve what it should have done with regard to these institutions."

He said the two banks "went into the crisis in the summer of 2007 with business models which were ill-equipped to survive a stress of the severity we have seen".

It was the job of management to run banks, but it was the responsibility of the FSA to identify and minimise the risks of such business models, which it had failed to do. These failures also applied to Northern Rock and Bradford & Bingley, he added.

Asked by a businessman whether "heads have rolled" in the organisation, Sants responded: "We have had significant changes in senior management over the last few months."

But the prime minister, who as chancellor set up the FSA in 1999 as an all-powerful, omniscient super-regulator, is happy to blame globalisation for everything.

Our economy, banks and stock market have all been beset by global forces, and our plummeting house prices, shares, retirement income, and now even savings deposits, are an unfortunate side-effect of the new world order of interdependence.

So, of course, savers with Icelandic banks are to be bailed out in full, regardless of the limits set by the UK compensation scheme. The FSA, by the way, must have approved such banks' business models, as it granted them a "passport" into the scheme.

But hang on, local authorities, charities and universities may be left to suffer huge losses - perhaps they took globalisation too far?

Anyone in a Bradford & Bingley offshore account has now had all their money guaranteed, despite their lack of any legal protection. But UK citizens who have moved abroad to work, and who are prevented from having a UK bank account by the money-laundering rules, stand to see their life savings wiped out - especially if they were unfortunate enough to have once trusted the Derbyshire building society.

By talking down the Irish economy and questioning Ireland's guarantee for savers, politicians have emboldened some financial pundits to advise avoiding the Irish banks or withdrawing cash. This is impossible for investors in the popular fixed rate bonds, and could also be careless talk.

The government desperately needs the existing shareholders in Royal Bank and HBOS, who thought they had blue-chip income-producing investments, to support the imminent rights issues and minimise the taxpayer injection.

But already discussions over a future thawing of the freeze on dividends have fallen foul of politics, with Alistair Darling saying banks cannot "get off the hook".

Labour MPs this week questioned why state-owned Northern Rock was restricting loans to customers, aggressively repossessing 32 homes a week, and using cash to repay the government, while Royal Bank and Lloyds-HBOS were being asked by the government "to return to 2007 lending levels".

Meanwhile, another group of investors has been lost in the political fog for seven years.

Despite the parliamentary ombudsman's overwhelming findings of maladministration on Equitable Life, and recommendations for compensation, the government has still not responded to a report it first received in February 2007.

In the Lords this week, a minister said the key point was that taxpayers' money was at stake, and that Equitable had been "the author of its own misfortunes".

Whereas the banks, of course, are merely straws in the global storm, and so are some - but not all - of their customers.