Borrowing from the Government, underwritten by the FSA

Tomorrow, Lord Turner, Chairman of the FSA is due to announce a wide ranging package of changes for banking regulation following the near-collapse of the financial system.
According to recent leaks there will be proposals to limit how much banks and building societies can lend home buyers – restricting mortgages to just three times a buyer's annual salary and a suggested ban on 100% mortgages.
My head of mortgage underwriting at Saffron is outraged by these speculations, and quite rightly so in my opinion. Using the blunt tool of income multiple is an unreliable and quite frankly out dated method of assessment of someone’s ability to make mortgage repayments.
What of course must be taken into account is other financial commitments, as being human beings we do not all have the same circumstances.
One fairly well paid individual on say £60,000 a year could have no debts, a good chunk of savings behind them and limited other committed expenditure and it could be quite legitimate based on affordability to lend this person more than three times their annual salary. Another on the same income could have above average unsecured debt, maintenance from a previous relationship, an expensive car leasing premium and significant traveling costs to get to work all making affordability somewhat tighter.
There is a requirement on all lenders to be responsible, and using affordability calculators is just one way that we discharge that responsibility. I think the FSA should be ensuring that all lenders take their responsibility seriously rather than dictating the rules, which in my opinion does the opposite.
With a number of large mortgage lenders now in full or part government ownership and the regulator setting the rules for borrowing, we are in danger of losing the need to be responsible at all. We will all simply do as we are told and comply.
In my view a lot of the “bad loans” as often referred to by the media, were originated by specialist lenders with only one goal in mind, to sell the loans onto another party for a profit. It is this part of the market known by many as “create and trade” that has driven the problematic wedge through the banking sector, as the mortgage seller had no intention of having a long term relationship with the borrower and therefore relaxed criteria beyond common sense levels.
For the rest of us, who lend to people to buy their home, give them membership status of our societies, value their opinion and provide them the rights to have a say in how we run the business, it seem unreasonable that we will be forced to throw common sense, creativity and responsibility out of the window and simply do what the government or FSA says.
The worst affected as always will be the consumer. Yes we all want the financial services industry to do a better job, yes we want to be lent only what we can afford to repay, but if you stop and think for a moment, is one size fits all really what will do that?