The real problem isn't banks, it's investors

When Mark Zuckerberg announced on the Oprah Winfrey TV show that he was giving a $100m (£62m) grant to disadvantaged schools in Newark, New Jersey, he was accused of turning to charity to improve his image. His image, especially in the light of the Social Network film about his life, was the focus of attention.

There was little discussion of his meagre cash pile and how the donation would be in Facebook shares. Because while the 26-year-old internet tycoon is estimated to be worth $6.9bn, he is a paper billionaire.

The phenomenon that is Facebook is expected to float in 2012. Until that time Newark schools will need to sell the company's shares on the fast-growing market in private shares.

Some estimates put the buying and selling of unlisted privately held shares in the US at the same level as trading in listed shares. In other words, the highly regulated and taxed public markets on the New York Stock Exchange and Nasdaq are being superceded by largely unregulated and lightly taxed private markets.

It is a trend that makes some regulators nervous.

Charles Bean, the Bank of England deputy governor, is aware the next crisis could be triggered by these little understood but highly influential markets. Like a Met Office weather watcher staring at the Gulf of Mexico, he is keen to spot the next hurricane and measure its speed, direction and the potential damage it might cause.

In a speech last week to the Royal Statistical Society, he said there were clues. Instead of a weatherman, he likened himself and his colleagues in the government's new super financial regulator to seismologists. Not for them the easy business of staring at satellite images and tracking storms. Instead, when they take over from the Financial Services Authority in 2012, their job will be more akin to listening for tremors in the financial system. Listening for friction and potential quakes as tectonic plates moved and created explosions. Ultimately they might offer a view on the possible location and severity of a quake. They might even hint at the timing. However, it would all be rather vague. If there was one thing certain, or at least probable, it is the next crisis will come from an area previously unknown to the bank, or one considered a low potential risk, he said.


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