Why Sir James Crosby resigned
Paul Moore, the former head of risk at HBOS, has won the big argument.
In 2003 and 2004, he warned HBOS's senior directors that they were expanding the bank's loan book too fast: HBOS was lending too much.
Guess what? He seems to have been right.
HBOS went to the brink of collapse because it financed its lending growth by raising funds on wholesale markets - and when wholesale funds became progressively harder to obtain after the summer of 2007, HBOS was careering toward the cliff edge.
It is alive today only because it was rescued by an injection of capital from taxpayers and by being taken over by Lloyds.
So no-one in their right mind would argue that Moore got it wrong in respect of the big issue - though Moore's critique was not that funding would dry up, but that borrowers would have difficulty repaying (which is an important nuance).
And since Sir James Crosby was chief executive of HBOS at the time Moore was making his complaints, history - or the closure of wholesale markets - has made Sir James look like a bit of a nit.
Which is why if Sir James had not resigned today as deputy chairman of the Financial Services Authority, the City watchdog, he would probably have been forced from office over the coming weeks and months by unforgiving public opinion.
But that does not mean that Sir James was wrong - in a legal or regulatory sense - to have asked Moore to leave HBOS or to have rejected some of Moore's concerns.
Moore's dossier of complaints that HBOS and Sir James were taking excessive risks was thoroughly investigated by KPMG, the accountancy firm.
And KPMG's conclusion - that HBOS had appropriate risk controls in place - was accepted by the Financial Services Authority.
My understanding is the FSA stands by that judgement.
Which is not to say that either the FSA or Sir James would have no regrets that HBOS did not check its lending growth.
But - amazing as it may now seem - HBOS and the FSA did not believe, in 2004 and 2005, that it was appropriate to assess the riskiness of its rate of growth on the basis that funds from wholesale sources could vanish.
What's the point? Well, it's that Sir James was not obliged to resign as the FSA's deputy chair because of evidence that he broke any law or regulation.
And the FSA put no pressure on him to resign.
Sir James chose to resign because he wanted to protect the FSA from incessant criticism by media and opposition politicians that its number two had made a chronically bad judgement as chief executive of HBOS.
So the lesson of hindsight is that Sir James made a disastrous judgement about HBOS's rate of expansion - but not that he committed a crime or a misdemeanour.
And some would say that it's right that he quit, because all of us are paying for his misjudgement with the massive financial support that taxpayers have been forced to give HBOS.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~12~RS~)
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The horse has already bolted. Tidying the stable won't bring it back.
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And there was me thinking that the reason the wholesale funding market dried up was because the wholesale market thought that borrowers would have difficulty repaying.
Yes your right Robert it is a nuance.
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Well - I am glad I dont work for KPMG they are obviously not very good!
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perhaps he has resigned from the FSA so that he will be free to talk about his time at HBOS and the FSA.
I sincerely hope so.
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This has been the biggest hyjacking of a financial institution in history. The execultives who were employed to safeguard the companies assets infiltrated the banks like a vius, poisoning the company with it bad dealings with a stupefying lack of altruism. The banking system is now rotten to the core and the thieve have made off into the night.
The question is not that bonuses should not be paid this year but how to get the bonuses back from previous years.
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ROBERT PESTON - BANKS EDITOR
WELL DON'T EXPECT ANY COMMENTS FROM HIM ABOUT BUSINESS!!!!!!!!!!!!
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During 2003 The Money Programme uncovered systemic mortgage fraud throughout HBOS. The Money Programme found that during the investigation brokers advised the undercover researchers to lie on applications for self-certified mortgages from, among others, The Bank of Scotland, The Mortgage Business and Birmingham Midshireshttp://www.bbc.co.uk/pressoffice/pressreleases/stories/2003/10_october/29/money_programme_mortgage.shtml
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Gradually the cards are starting to fall, unlike Watergate I doubt they will keep falling right to the top, as the Queen probably did not have a hand in any of it - does she have a credit card, they say she does not carry cash?
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I'm surprised at your assertion that "KPMG's conclusion - that HBOS had appropriate risk controls in place - was accepted by the Financial Services Authority." This morning's Guardian quotes the FSA as saying that HBOS was "overly sales-focused and gives inadequate priority to risk". Have you been spun?
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services to banking got him a knighthood... now that it transpires HBOS has cost the tax payer millions he should be stripped of his title and previous bonuses as they had been deceptively obtained.
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‘So no-one in their right mind would argue that Moore got it wrong in respect of the big issue’.........Hello Robert, here I am !
Why do apparently intelligent people appear to struggle over the distinction between two separate issues:
1.Did HBOS make ‘risky’ lending decisions
2.Did HBOS make a mistake in expanding using the wholesale money market
If 1. is correct, then LTSB has also made a mistake in acquiring them (and Eric Daniels still thinks he was prudent in his purchase)
If 2. is correct then the whole world was wrong and globalisation has no future, in banking at least.
It’s sad to see our human frailties exposed so clearly as we continue to toy with our wounded prey.
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Revenge is indeed a dish best served cold.
The FSA need to get their act together. Their 'soft touch' regulatory system has failed abysmally and absolutely. And will they be up to the mark when the Wall Street Kids come-up with another 'Originate & Distribute' scam?
The scammers (invesment consultants) must be fuming at the lack of profits and consequent lifestyle adjustments they are now 'suffering' as a result of the collapse of their sub-prime/cdo/ninja loan rackets.
Good quality, alert regulators will be needed more than ever as the WSK are sure to turn-up again, like a bad CDO squared.
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Raising any concerns should have meant an automatic processed kicked in.
The board, with staff, should have sat down, looked at the complaint, investigated the area, and any other associated risks.
Their response should have been 'Crivvens'
Appropriate action to preserve the future of the organisation over the long term should have been the next step.
This did not happen. Corners were cut, etc.
How many companies, large or small, can honestly say they have not acted in the same manner? My guess is not many.
This paints such a said state of business management functioning and ability. Our business organisations suffer from a complete lack of willingness and intent to ensure they function within the law and demonstrate a level of professionalism.
I've no doubt there are hordes of UK employees who could tell similar tales to Mr Moore.
Mr Moore seems to have held on to his health. Unfortunately, many of those paid to tell the bad news do not.
Shame of those bankers.
Mr Crosby, you choose the rope, and you then proceeded to wrap that rope around your own neck. Bet you regret that now!
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I wonder what Adair Turner, Chairman of the FSA might have to say about this....
From 2000-06 he was Vice-Chairman of Merrill Lynch Europe. That's the Merrill Lynch now swallowed up by Bank of America......
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Quite right - long overdue.
I don't much give a damn about the finer points of Moore's concerns - it is grotesque and manifestly absurd to have as second in command at the FSA a man who presided over such institutional irresponsibility and wrecklessness that this country will be paying for the consequences for a generation. How fitting that he is/was also a key advisor to this outrage of a government.
The man should be ashamed.
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We all need to recognise that bank bonuses WERE THE CAUSE of the collapse.
They are not some side issue.
"Bonus crazed" bankers, high on all sorts of dodgy substances, both here and in the USA.
It could be argued that all the executives were either asleep or chasing their own bonuses.
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No mention of KPMG then
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Robert you and the prime minister are correct KPMG did investigate Mr. Moore's claims and found them to be unwarranted.
Guess who audits HBOS's accounts, yes you guessed it KPMG !
Conflict of interest?
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What have I been saying for months now?
"Not one of the directors questioned yesterday had a SINGLE BANKING QUALIFICATION BETWEEN THEM"
Would you go to a doctor who had not previous medical experience?
Probably not, but worse still, would you put that same Doctor in charge of many other Doctors?
It would be madness surely.
Well that's how this system works, and don't be impressed by the harsh questions posed by ministers yesterday - they are all in the same incestuous loop, it just happens the spotlight has moved at the moment.
So now can the public believe that our system promotes fools to the top of the game whilst talent and real skill is left to waste on the floors of factories and low paid industry?
Why did the FSA employ the man who made the mess to advise the Government on how to clean it up?
Robert - get out there and start asking the awkward questions.
How about:
"Does the Government realise that for some time Capitalism has been replacing the diminishing profit by increasing debt levels of the consumer to 'create a market' and that if this continues the crashes will be bigger and more destructive and eventually the Economy will collapse?"
Replacing diminishing profit with debt will speed up the collapse of Capitalism - and I don't think that's what you're trying to do now is it?
Capitalism is a system based on greed and competition, eventually it will suffocate itself.
We had better start looking at another way quickly, or it will be too late!
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When HBOS share price dropped from £5 to £3.50 shorter were blamed.
Robert
If I remember correctly on this blog you reassured people "don't panic I have checked the accounts and there is nothing to worry about, HBOS is a well run bank" whilst at the time you reckoned that Northern Rock had a 100 billion black hole.
Now it has been confirmed that it was reliance on the wholesale market that was the reason that HBOS came a cropper. The same reason that caused Northern Rock to approach the BOE before you started a bank run and made a bad situation ten times worse.
Instead of doing the decent thing and admitting you were wrong and that the problems affecting Northern Rock were not of there own making. You have taken to writing three blogs a day with non speak to shift the blame.
e.g. of Pestonesque non speak:
Bailout - borrowing money from HMG at a penalty rate
Taxpayer - Investors in China and Middle East willing to lend as long as guarantees given by govt
Excessive risk - Any loan
Bonus - payment in shares that has taken a hammering
Black hole - Liabilities of a bank excluding assets
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WRONG
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From the FSA
How we evaluate our performance - the Outcomes Performance Report and developments in our approach since 2002
http://www.fsa.gov.uk/pubs/other/evaluate_OPR.pdf
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So KPMG - HBOS's auditors and raking in millions in fees as such, decided not to criticise HBOS. Shock, horror. Don't bite the hand that feeds you springs to mind.
And Crosby - well great so he's not a criminal...just fantastically incompetent.
Brown, the FSA and Crosby are all in this together, as are the other reckless idiots at the other banks who thought the sun would never set on their debt party.
Now we are all paying for it, whilst they can barely even say sorry. (or not even admit any mistakes at all in Brown's case)
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The whole financial system has been in denial for over a decade. Not just a few years.
I have been through my exchanges of letters and I find that I wrote about the problem of overinflated asset prices particularly in the UK Housing market on 31st August 1999 to The Prime Minister (Tony Blair). Their reply was received on 11th October 1999 from HM Treasury. The substance of which was that I was wrong and they were right. I had a similar exchange of letters with the Governor of the Bank of England around the same time.
In my letters I proposed ameliorating solutions to cool down the over exuberance of the market.
I am supplying this information in defence of the commercial bankers. It is not right to only blame them as everybody concerned was complicit - and that is why all must resign or be sacked as those concerned are unable to lead us out of the problem that they managed us into. (I want the regulators (FSA and Treasury) and Governor and the MPC to go.)
The problem goes further back than the last election as I recall similar exchanges of letters with the previous Tory administration - which I remind everyone was led by a fully qualified banker - John Major.
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Do you ever get the feeling you've been cheated? Crosby was responsible for the bad decisions made by HBOS which drove it to the taxpayer. Then not only was he appointed an advisor to Brown but he was also appointed as deputy chairman of the financial regulator.
Then both the Government and the FSA try to cover their backs by saying that KPMG investigated the whistleblower's complaints. But KPMG insist that they were only asked to do a narrow review and did not investigate the substance of the complaints.
Crosby, Brown and the FSA have all been found out. But only one of them has so far resigned.
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From:
http://en.wikipedia.org/wiki/Ignorantia_juris_non_excusat
"The rationale behind "Ignorantia juris non excusat" is that if ignorance were an excuse, persons charged with criminal offenses or the subject of civil lawsuits would merely claim they were unaware of the law in question to avoid liability, even if they know what the law in question is.
Thus, the law imputes knowledge of all laws to all persons within the jurisdiction no matter how transiently. Even though it would be impossible, even for someone with substantial legal training, to be aware of every law in operation in every aspect of a state's activities, this is the price paid to ensure that willful blindness cannot become the basis of exculpation.
Thus, it is well settled that persons engaged in any undertakings outside what is common for a normal person, such as running a nuclear power plant, will make themselves aware of the laws necessary to engage in that undertaking. If they do not, they cannot complain if they incur liability."
No lives have been lost only livelihoods. Is ignorance of sound Banking principles an acceptable defence? Failure to protect the interests of an Enterprise under Company Law must be a factor? These are the difficulties facing legislators on reckless banking/insurance activities.
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The central issue is that the government has had such a close relationship with Crosby they got him to release that report on the mortgage market - at a time when it was increasingly obvious that those in charge of the big banks during a relevant period, would be coming under scrutiny regarding their judgment.
It all highlights how clueless the government has and continues to be. The other lot are no better - just opportunists that will sieze on all this for political point-scoring.
What should be on the table is a blueprint for how to restore financial stability and credit markets. No-one, government included, appears to have any idea and frankly you get the impression they hope the Americans and China will pull us out of it.
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WRONG, WRONG, WRONG.
He went because when he fired Moore, he was a non-exec of the FSA as well as Chairman of RBS. That put him in an untenable conflict of interest, and he should have gone long since.
The fact you cannot see the immorality of running with the hare and hunting with the hounds means you should no longer blog, Bob.
On which count, I hope the female members of this blog have researched the hobbies of the new boss of RBS? Those of the political persuasion had better start running fast...
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As I understand it, this is exactly the same position as the Risk Director of Northern Rock and Adam Applegarth.
The Risk Director warned and was roundly undermined by the Exec.
I suppose the fact he was a Director was slightly different, but still - It demonstrates that the Exec find it too easy to sideline Risk in favour of profit and increased bonus to themselves!
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The public are learning that if people resign, it means they were, or about to be, pushed.
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Oh. The dead horse has been flogged once more, I see.
10 blogs on the bounce solely on the banks and / or bloomin bonuses.
Surely as business editor you have a slightly wider remit???
Go on, give us all a surprise for once!!!
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Robert
On this occasion your line of argument will not wash.
Read Paul Moore's evidence to the Select Committee.
http://news.bbc.co.uk/1/hi/uk_politics/7882581.stm
If it is accurate James Crosby has told porkies about the departure of Mr. Mooore and misrepresented the circumstances more generally.
They can't both be right. This matter needs INDEPENDENT (outside the FSA) investigation. Until we have such an examination, I know who I will believe.
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Come on mods, get a move on and approve the waiting list of comments, it's been over 45minutes since the 1st post.
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Surprisingly, little has been said about the impact of demutualisation by the Conservatives. Many of us benefitted and so didn't complain, but this was the beginning of the end of sensible mortgage lending (personified by the bad practices of HBOS) and created the conditions for the banking crisis. The Treasury Committee should look into this.
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It has become impossible to commit a crime under this Government. As a result, I'm going to name [Unsuitable/Broken URL removed by Moderator]and hope FlamingPat's happy.
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You may refer to the difference simply as a 'nuance' but, surely, without the extremely aggressive expansion plans embarked upon by HBOS the amount of funding thus required, via the wholesale money markets, would have been a whole lot less, and not of a magnitude that has now got LBG in the 'proverbial'.
Full marks to Paul Moore. Having worked in credit risk myself I fully understand how difficult it is to swim against the tide especially when being intensely pressured by senior execs.
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HOW TO BEAT THE CREDIT CRUNCH
Simple SImple SImple
Do not give menu to Institutions
The government should pay on our behalf
all or part of our DEBTS per family or individual-
Money goes to lenders BANKS
We have excess money left ---we spend
buy- Car- Fridge etc and money recycles
We are all happy and better off
Simple SImple
Tony
Edinburgh
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KPMG only checked that the correct boxes were being ticked in the HBOS formal procedure for assessing risk. Mr. Moore's assessment that HBOS was opento excessive risk was not within their remit.
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KPMG only checked that the correct boxes were being ticked in the HBOS formal procedure for assessing risk. Mr. Moore's assessment that HBOS was open to excessive risk was not within their remit.
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All of which begs the question, Mr Peston, of when the Golem who oversaw all this insanity as Chancellor of the Exchequer is going to resign from his new post as Prime Minister?
But, since the Golem has not one single shred of decency, honesty or integrity, we all know that he'll have to be dragged kicking and screaming from Downing Street.
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What are you talking about Robert? Crosby resigned 30 minutes before PM Questions. He was clearly pushed.
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KPMG and the FSA investigated HBOS and gave it a clean bill of health? Either HBOS went seriously awry in the years that followed, or the people at KPMG and the FSA had no idea of, well, anything at all.
Then again, Arthur Andersen went bust because they missed some fairly obvious fraud.
Accountants too cosy with the companies they are meant to be auditing?
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Of course Sir James Crosby had to quit for the simple reason his position had suddenly become untenable.
He had sacked a man who had pointed out a downside to the prevailing strategy of his business and replaced him with someone with a more emolient manner.
I congratulate Paul Moore for eating his revenge cold.
What has become quite apparent in the last few days is that there has been regular intercourse between the City and the government over a long period. How often and what the manner of that intercourse remains to be seen. I doubt if they went Dutch and so we will have to ask who has been paying that particular bill.
Given the apparent rewards of posh titles and consultancy roles there seems to be only one answer to that question and that is the same person who is now propping up the banks: the taxpayer.
I think this is going to turn into a major scandal of quite cosmic characteristics.
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‘Sir James chose to resign because he wanted to protect the FSA from incessant criticism’
Oh come on, it's more basic than that: the fundamental principle is that risk management must be truly independent, seen to be independent, and supported when it makes challenges: & that goes for regulators, too
He should never have been appointed in the first place - and that’s not hindsight.
Protecting Brown would be more like it.
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It would not necessarily have been within Mr.Moore's remit to judge the funding issue. In most banks it would be the Treasury Chief's concern to ensure that funding diversity and time spreads were somewhat more than prudent.
Other risk managers were fired for speaking up; most notably the Fannie Mae man in 2005.
Before too long I expect to see stories emerge of bank Treasurers who got fired for complaining about their funding positions. There must have been some old enough and experienced enough to be unable to sleep at night. I can deduce that the man at NR
was barely old enough to shave.
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Why don't we remove the FSA facade
Oh, please don't you rock the boat
I don't want my boat to be rocking no
Every little action, there is a reaction
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In my opinion this just highlights another completely useless set of "workers" in our corrupt and broken system. This set of people know the cost of everything and the value of nothing. They produce nothing and are just another set of parasites in the system. Guess we'll be finding corrupt lawyers soon. Who would have thunk it!
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So you are now PR for Crosby, this is getting hopeless, a whole bunch of money grabbing cronies led on by HMG bringing the country to its knees and the Beeb just trots out the party line.
Are you worried about the next round of licence fee discussions ?
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The very fact that he was appointed in the first place tells a story.
It seems like all roads lead back to Gordon Brown.
When will they realise that bankers are not the best people to change the banking system - the whole edifice is completely corrupt.
Now we have established that the bankers were either greedy, negligent or stupid we should move on the the FSA. How much were these guys getting paid and what were their qualifications?
Once we have dealt with the FSA we can move on to the BOE and the government itself.
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An apology from the bankers is welcomed if only just because at least, they have admitted in public that they are not so clever as they say they are. However, it is not enough. These people, as any other workers who acted with such a degree of irresponsibility should be brought to a tribunal to be judged. How can they even dream they deserve bonuses with public money!??
The damage they have caused is not only material) but physical and mental. We will soon have reports on an increase in a number of medical conditions closely related to the economic downturn provoked by the banks’ horrendous failures. The pressure on the health system will be enormous and costly. These costs should be added to the many billions these banks already owe to the population. Should the health professionals receive bonuses so that they can cope with the extra hard work, using scarce skills, as the bankers claim?
I also wonder if teachers and academics should receive big bonuses so that the government can really ensure that the best possible professionals are employed to EDUCATE the future REAL CLEVER (not only greedy) bankers, not only in maths, economics and management but in ethics ?
However, the major problem is that the government and its Agencies have allowed this to happen by idolising deregulation and failing in their auditing obligations.
Where is the hope??
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He was right to resign. The question that remains is how many more Sir Jamess' there are, working as "regulatory champions" that have actually benefited from the credit crisis! Aren't they the ones we wanted to throw in prison for leading us into this mess? It's about time, the names of board members for the last 5 years from major Financial institutions are brought into public domain and the positions they currently hold! I just wich there were more Pauls around to see this through...
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"Sir James chose to resign because he wanted to protect the FSA from incessant criticism by media and opposition politicians that its number two had made a chronically bad judgement as chief executive of HBOS."
A gentle tap on the shoulder to do the helpful thing, no doubt.
"So the lesson of hindsight is that Sir James made a disastrous judgement about HBOS's rate of expansion - but not that he committed a crime or a misdemeanour."
Let us not be too quick to pre-judge before all the facts are in.
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Paul Moore was appointed to an influential position in HBOS and was required to think the unthinkable. He did, and was sacked. Four years later...
In 1997, Frank Field was appointed to Blair's Cabinet and was told to think the unthinkable. He did, and was sacked, in large part because of the intervention of Gordon Brown. Twelve years later...
What a mess we're all in.
I'm afraid that our culture requires the implementation of short term fixes to attain perceived short-term advantages for those in positions of real power. Being objective and honest is, apparently, fatal for the individual concerned.
Or am I thinking the unthinkable?
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The FSA is a waste of space.
What financial scandals will come to light over the next few years during the FSA's watch?
We need a root and branch change to the financial regulation in this country.
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The FSA's support of Crosby is a disgrace.
FSA should be investigating why HBOS' compliance officer was summarily sacked for doing his job, as he clearly was.
Why would any compliance officer bother to stick their neck out if that's the regulators response?
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I see that a big firm of accountants gave a clean bill of health re the whistleblowers warnings- no doubt for a massive fee. They need to be called to account as well as all accountants who gave clean audit certificates in respect of the various banks who jolly well knew there was so much bad debt around.
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So what is the difference between Sir James Cosby ex HBOS and Applegarth of Northern Rock?
Could anyone possibly imagine Applegarth being given a job with the FSA or appointed as an advisor to Gordon Brown after Northern Rock went bust?
If this is only the tip of the iceberg what on earth is lurking in the murky depths still to uncover.
The tsunami is still heading in just wait to see what it uncovers when it starts to sweep back out.
Those poor politicians on the Treasury select committee are trying their best but most of what they are hearing is well beyond their understanding or what most of us would call sanity.
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Sir James chose to resign because he wanted to protect the FSA?
Robert, don't you think it sounds just a little contrived that he his resignation happened to be half an hour before PMQs?
Come on, who was he really trying to protect?
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This just makes you sick.
It drives home the fact that the FSA is pretty much a completely discredited organisation.
If Brown has any hope of a future, he needs to become one of 'us', not one of 'them', and fully "get" the extent of the revolution that is needed within the FSA to control these s****
It's probably worth quoting Paul Masons blog yet again to describe the situation succinctly:
"Both the Bank of England and the FSA have the statutory responsibility to maintain financial stability. They failed. The statutory responsibility was conferred on them by the Treasury. It, by implication failed.
There is a legitimate question: why? I will answer it with another question. Is it because the whole world of banking regulation and supervision is in fact a closed club populated by former bankers? Is it because the politicians were too starry eyed about the bankers? After all the rise of global finance delivered seemingly endless growth, and lots of tax revenue to plough back into the lower reaches of society in the form of tax credits and benefits. Was this apparently win-win situation allowed to cloud the judgement of the politicians and regulators?"
.... a closed club populated by former bankers...??
You bet!
Next move required please - get rid of any bankers who have worked for tax havens like Liechtenstein.
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It has been suggested
Our Lords take money to amend law
Our MPs bend the truth to claim 100s of thousands of pounds of expenses they have not spent
Our Hedge funds borrow billions to buy assetts only to cut wages and condtions of normal hard working people to sell on at a profit
Our Bankers gamble with billions and still take huge bonuses for mind blowing failiure
Our regulators are appointed to regulate practices they themselves have encouraged for years.
Its not difficult to see, enough is enough the whole system Stinks.
Lets get rid of them all and start again......
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SHAME on you Peston!
For the first time, I am starting to believe the hype that you are just the government's spin doctor.
SHAME on you. SHAME on you for this, your worst piece of writing ever.
You may need to resign too. SOON.
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Paving the way nicely for a court case against all those bankers and their massive bonuses.
Maybe Daniels did show his cards at the right time ...
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......."Moore's dossier of complaints that HBOS and Sir James were taking excessive risks was thoroughly investigated by KPMG, the accountancy firm.....
Is this the same KPMG that audited the countrywide the US biggest mortgage lender accounts before they were made bankrupt?
or the same KPMG cited here......
An independent report ordered by the US Department of Justice points the finger at auditor KPMG for either initiating accounting fraud at New Century Financial Corp, one of USA’s biggest providers of home loans to people with poor credit, or ‘standing idly by’ as the failed sub-prime mortgage lender committed fraud in 2005 and 2006.
Well done Mr Moore you deserve the knighthood!
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Another conclusion would be that KPMG said what their client wanted to hear and the FSA said what they thought their masters in government wanted to hear.
Why did funds from wholesale sources disappear? Could it be that this happened because those wholesale sources saw that people in the US were having difficulty repaying the loans and figured the same thing would happen in the UK.
He was right to identify people having difficulty paying as the problem. The wholesale funders just reacted to the problem faster than the UK banks - which in itself says something about the was UK banks were managed.
'Eyes wide shut' would describe the UK banks, UK regulators and UK government as long as the bonuses and tax money kept flowing. Lets not forget that a major perk of being an MP is a second home allowance so our representatives were hardly motivated to pop a UK house price bubble.
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So many small shareholders of HBOS had heard of James Crosby, and had been so trusting of him that even when he turned up with his report to Gordon Brown last July about the credit crunch in mortgage lending, we thought we were getting a truthful and objective report.
Indeed, you, Robert Peston, I think it was in the ensuing months, said on the radio that there was no way that HBOS could ever go down, because it simply was too big! And we all believed the same as you. It was too big, and there was no way it would be allowed to go down. Of course, things took a fatal turn in September, after the Lehman Brothers wave of the Global Financial crisis, and HBOS was given away to Lloyds TSB as the only way of saving it.
Now this revelation about James Crosby this week, whether the allegations of Paul Moore prove true or not, open up the scrutiny at last of the persons who were really in positions of influence when this era of Global Financial excess was indulged in: the era following 9/11/2001, whence a blind eye was turned to economic wisdom for the sake of keeping economies flowing.
Excellent. The Times Online shows where we are with this investigation of James Crosby's role. http://www.timesonline.co.uk/tol/news/politics/article5705212.ece
To quote from there, "the unmasking of Sir James, one of Gordon Brown’s top City advisers, for his culpability in Britain’s banking meltdown is long overdue. There is still amazement in the City at the miracle of timing that had Sir James step down from HBOS in July 2006 in favour of the much maligned Andy Hornby – a hospital pass if ever there was one. For it was the Yorkshireman Sir James – whose knighthood in 2006 is thought to have been on Mr Brown’s recommendation – who devised the business model that brought HBOS to his knees.
Furthermore, from the creation of HBOS in September 2001 from the merger of Halifax and Bank of Scotland, it was he who implemented that strategy until he stepped down."
Banquo's Ghost! I'm delighted to see intelligent minds are not only looking beyond their noses, at last, but adding such witty examinations of the failures of Corporate Governance.
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So far the involvement of the accountancy firms in the banking collapses has not been fully examined and it needs to be.
This statement is almost laughable ..."Moore's dossier of complaints that HBOS and Sir James were taking excessive risks was thoroughly investigated by KPMG, the accountancy firm." Has anyone seen one of the major firms finding against one of their clients in an audit the client asked for?
You just have to look at the Enron affair to see that the accountancy firms are completely bound to the major institutions. The galling things is that when we have one of these institutional failures we get laws like Sarbanes-Oxley which means that the accountants just rake more cash in.
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Paul Moore was the former Head of Risk at HBOS
We aren't talking here about a tea boy but the most important person next to the CEO.
The shoot the messenger policy adopted by Crosby has cost the taxpayers of this country billions of pounds.
Yet Gordon Brown appoints him as a close economic advisor during the worst financial crisis ever which Crosby helped to instigate. Yet another unknown titled advisor that has just sprung out of the woodwork.
Not only that he gets a plum job with the FSA.
I think I am not the only one who thinks he did a fast runner to limit the damage to Gordon Brown who I suspect has a lot to answer for himself.
This doesn't end here because now we need to back track on some of the worst decisions made over the last few months in the handling of this crisis and ask who was responsible and who is really running this country.
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well well well -- of course you are right that his resignation is not an admission that Moore was right -- but why are you trying to cool down the collective temperament? Are you, and those you talk to, worried that we may yet have a proper erruption of built-up frustration?
Btw, you say that Moore was worried that borrowers would not be able to repay the loans -- but is that not the same as the wholesale markets freezing up for HBOS?
HBOS could no longer access these markets because those who lent out the cash to banks could no longer believe that HBOS would be able to pay it back if its mortgagees defaulted. If Crosby et al. assumed that the wholesale markets were limitless, then that is unexcusably poor judgement. Many of the bankers are still in denial and blame the failure of their banks on 'abnormal' market conditions. 'The market' sorts the wheat from the chaff, when it comes to healthy and unhealthy companies -- there is no such thing as an 'abnormal' market. They should have considered the possibility that funding from the wholesale markets may one day diminish. So, I don't see the distinction you are trying to make between Moore's concern and what ultimately brought down HBOS.
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Is Sir James one of your friends Robert? since I find your comments rather lacking in objectivity.
Three reasons I suspect that Sir James has resigned:
1. Details of the private conversation he had with Vince Cable are now in the public domain and are most damnable (similar to Chuck Prince's infamous comments 'we're still dancing' at Citigroup).
2. His appointment by Commissar Brown is a huge embarassment and would draw more fire on Brown re judgment (catching MP's question time today Brown & Darling looked like they were on the bridge of The Titanic)
3. The FSA itself has come under increasing pressure to explain how it was comatose at the wheel regarding the financial fiasco which happened under its watch.
It would seem that we put a wolf in charge of the sheep-pen. Mmmmmm..
I was also amazed that Sir James wasn't sitting in front of the MPs committee yesterday rather than the poor Andy Hornby who was taking the flak on his behalf (though he made some coded comments).
The real obnoxious thing is that Sir James has taken home huge reward and pension entitlements when he should be giving them back.
Honourable - don't make me laugh.......
It's just lazy incompetent management ignoring any sign that didn't reinforce the chosen view - where I have heard that before.....?
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He seemed to go a bit too readily given that he'd been cleared of any wrongdoing by KPMG.
Is something more serious about to surface?
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Postscript to 55
Of course, I'm being naive: Moore and Field became irrelevant, the HBOS grandees became rich and even more powerful, Brown is still there, only as PM...
So it WORKS!
Only, the rest of us have to live in our broken society with its devastated economy, and pick up the tab.
NOW I get it.
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Yes, the FSA have got off far too lightly in all this, right since the beginning of the Northern Rock collapse. And now we see why - if Crosbie is anything to go by, the poachers were put in charge of the gamekeeping.
But it is not enough just to change the FSA faces at the top - it needs wholesale reform, along with the Bank of England. Neither have shown themselves fit for purpose.
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If it's acceptable that the FSA wasn't bothered about HBOS borrowing so much on the wholesale markets, then why (in the politicians' minds) is it acceptable that Northern Rock did the same ?
This really means that Northern Rock's management were no less complacent than HBOS's management. The only difference is that Northern Rock got caught out first - before the government bail-out scheme was created.
It seems strange how the FSA is continually avoiding any scrutiny or blame for what went on. It couldn't be that, as Gordon's baby, any criticism of the FSA might be too close to No.10 for comfort ?
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FSA procedure
1. Close the complaint
or
2. Outsource the work to Close the complaint
note:
2 is preferable to cover ones sub-prime rump
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There is an issue of lying - Moore's story is quite different from Crosby's on the sacking, and it is a joke to suggest KPMG's investigation was "independent".
However the major issues to come out of this are the lack of effectiveness of non-execs who basically are appointed through the network and because they can be relied upon not to rock the boat and just to collect their fees and freebies, and the lack of independence and competence of the FSA.
So when a CEO wants to get rid of somebody who is not toeing his line, it is very easy to do.
This does not just apply to banks but to all listed companies - consequently very little protection for the real shareholders from the misjudgements of one man - the CEO.
The fund managers of course who invest our money/pensions also want an easy life - after all it's not their money they are losing, and they do not suffer if they together all lose our money.
So we can't rely upon fund managers to seriously rock the boat - although they've got to make the odd controversial remark for appearances.
We have senior people from the FSA getting lucrative and up until recently, prestigious jobs in the banks and vice versa.
A recipe for turning a blind eye, and perhaps corruption.
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Ok, people in Government and the banks knew this crash was going to happen.
They were even sacked because they spoke about it.
There were people trying to warn the banks it was unsustainable.
The bankers are trying to say they seen nothing.
The Government are trying to say they seen nothing.
The regulators are trying to say they seen nothing.
Now they are either lying or stupid.
Considering the amount of people involved I doubt they could all be stupid.
Crosby was given a job in Gov. and they are covering his back with the story about resigning.
What would make them lie and almost wipe out the country?
There are as always the big three, Money, Sex, Power.
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the funding has repatriated back to U-S-A!
borrowers in default have entire loans called -
by outsourced solicitor and debt recovery firms
who love to place charging orders on properties
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Of course he had to resign but then so should all the FSA senior management.
They are the ultimate group of people getting paid for failure annually.
How can we expect anyone there who all got it so wrog to now get things right.
A complete clear out is what is required. I see that with one down thee are another 200 to go!!
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So KPMG didn't spot the obvious risk that house prices may fall - and therefore the money may dry up.
Also the FSA didn't spot it; in fact it stands by it's findings; where is Sir James working now????
Also the board of HBOS didn't spot it.
...but somebody did, and pointed it out to them...and they still didn't spot it.
Are we missing something here?
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Peston's article did not address the other key issue which is excessive lending to individuals whose houses are way over valued by historical standard.
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There are two rules in almost all organisations:
Rule 1: The boss is always right.
Rule 2: When the boss is wrong, when you know for absolute sure that he's wrong, then Rule 1 applies.
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So HBOS asked KPMG to investigate Moore's dossier of complaints.
Did you ask yourself Robert who HBOS's auditors were at the time? None other than KPMG.
Enough said. I think we can let readers form there own judgement on the thoroughness of the investigation.
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Halifax hardly had a problem when it was a Building Society. It lent money to good borrowers and at a reasonable multiple of income. Even now the government and Bank of England wants to get the economy moving again by encouraging yet more debt. Why ?? The government should create money itself in a controlled manner, not allow private banks to lend new money (money not covered by their deposits) into existence. My first small terraced house cost 1.5 times my low income in 1979, it was easy to buy, why do borrowers have to take on massive multiples of mortgage debt at say 5 or 6 times income ? We have run out of borrowers even at 0% interest rates, like the drug dealer has run out of addicts. Much better to put interest rates back to 5% so savers get some return and can spend and let house prices fall rapidly to 3 times income, say £ 75,000 for the average house, then the economy can move forward and grow again. Anyone with any sense would not borrow more than 3 times income to buy a house, and the same applies to the lender.
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It is all to do with the invisible molecular string?
Feeble UK accounting rules in need of massive over-haul.
Feeble tripartite goon show regulators and regulations.
Feeble sleaze museum made of two houses of sleaziment with fat cat politicians and peers taking bungs, giving peerages, passports from whoever/wherever they can get them and hiding them through favours and donations with intermediaries.
Feeble, incompetent government scared of the banksters because of bung taking.
Feeble egocentric banksters and bungsters running the banks.
Feeble UK tax rules full of loopholes for non dom vultures and bad banks.
No wonder Global Goodon Clown is afraid of sorting out the banks!
The problems are in a high level circle of banksters, political fat cats, tripartite regulating goon show, don dom oligarch tax dodging bribing vultures - all held togther by an invisible telepathic molecular string of favours, faces and sleaze around the City/Houses of Sleaziment - the whole system revolving around a small fraction of city GDP value which controls the corridors of power in the UK and translates into turned into knighthoods, passports, fudged political donations.
This is not a conspiracy theory - fats cats are clever but not that clever - it's the apex of greed, meglamania and UK sell out of millions of ordinary people in this country and it all needs turning on its head - we need an entire new political economy if Britain is not to continue it's momentous slide.
I am sure that there are plenty of bankers like Paul Moore who wanted to say something and simply kept quiet because they knew they would not be listened to - or worse! That's the culture of fear and repression.
Wake up - Britannia is still being taken for a ride!
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I suspect Robert Peston is wrong. The annual report of HBOS contains statements on risk and controls which appear to be untrue. I think that's crime. The HBOS auditors were also criminally negligent in their valuation of HBOS's assets. I hope for, but don't expect, prosecutions and long prison sentences.
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Yes LETS all GET RID OF and FORCE OUT THOSE WHO KNOW WHERE it all went WRONG!
THEIR experience is useless ????????
THAT WAY we can have a bunch of KNOW NOTHINGS running the show!
BACK to where IT all STARTED THEN!!!!!!
THIS resignationg HELPs NO bodY!
Mind you he may well advice for FREE now?
UNLIKELY!
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Dear Mr Peston [Robert]
I speak as an ex-MD of the IOM subsidiary of BOS (Isle of Man) Limited who left banking in 2006 after suffering a long illness of executive stress - I actually suffered quite badly from what is commonly known as a nervous breakdown. I am now retired and fit and well.
The principle and perhaps only reason that I was ill in 1996 was that the "Old Bank" had been "taken over by non-bankers - mainly accountants. Some of them had not been in banking before and were therefore inexperienced.
In my personal view this is why the British banking system has gome wrong and mainly due to the wrong influences from the USA.
I am English and found the Scots [with whom I got on well] very intense but honest plain vanilla bankers the same as myself. The problem is that banks since the mid nineties have not been run by boring old bankers but by accountants [at best] or ex Asda executives. The bottom line at all costs is the only maxim observed. Retail deposits were difficult [or rather more difficult] to acquire so most of the banks resorted to the wholesale market as the only conduit to funding. Borrowing short and lending long results in one thing - disaster. Not only that the banks at the behest of their accountancy driven policies then went into securitisation and derivatives. Why? Only one reason - bottom line results or greed. Instant profit at the risk of future stability. Please contact me anytime if you need to.
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On news earlier ...
The focus of the KPMG investigation and report was much narrower than than Moore's complaints.
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AS for PAUL MORE
Well if he'd been sooooo convinced then he could have tried harder.
OH maybe not
Clapperboard mad men on OXFORD st
Calling the END is neigh.
Oh I forgot
Common sense has never been worthy.
Especially with the appalling lack of thorough NEWS INFORMATION that we here in the UK seem to get FROM our PRESS.
Sound BITES no information or EDUCATION!
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Hmmm...I believe Paul Moore received an out-of-court settlement from HBOS, with a proviso that he keep his mouth shut.
(This proviso he has rightly ignored in the public interest)
This should tell us much about who was telling the truth in this instance.
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Knit hoods allowed the recipient doodlebugger types to go unchallenged in their evaluation of the burgeoning Von Brown racket science industry used to cover the medaevil fyling saucerry practiced by bankers .
In Crosbys favour, if evermore money was not pumped into the system thus pushing house prices up ,then those who were unable to pay would not have been able to reamortize and live to flight another day .
The Chief culbrits are Blair and Brown who recieved the corporation tax kickback[no questions asked] to finance their things can only get better delusion of granderr.
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Light touch regulation cannot possibly work where there are personal incentives, greed and human nature. This ignoral of a warning by someone brave enough to whistle-blow is not untypical in industry pervaded by groupthink and run by people getting fat and abusing power. What I think is needed is to let the banks go and have extension arms and branches to the BOE with firm rules about terms of borrowing and lending and a system that is robust and transparent and heavily regulated to attract borrowers. I for one will never trust private banks in their current form ever again. Brown is in cuckoo-land if he believes dropping rates and VAT will get me borrowing in this most uncertain of climates. And I am certainly not alone. Savers will be an unfortunate casualty but they also sought reward and that carried risk.
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Lest we forget, whistle blower Paul Moore reached an out-of-court settlement with HBOS and signed a gagging order. "Normal procedure" a cynic might say where banks are concerned, totally averse to any negative publicity, as let's face it, banks can never make mistakes and never admit to them.
Perhaps banks should be forced to publish details of all cases they're involved in with any regulatory, reputational or risk elements involved.
These cowboys have kicked off the largest financial avalanche the world has yet seen. They should pay, and with more than just a resignation.
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Robert,
Of course Paul Moore was right. I guess if you dig for more cases like this you will find plenty. You will also find the FSA has been very happy to go along with who ever is appointed in their place.
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'No crime committed'??? I am beginning to think my £60 fine for a '35 in a 30' was an act of such heinous barbarism i should top myself!
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I think you're missing the point completely - it's not about leagalities - for us, the public it's about the man's judgement and trust! If he got the BIG decisions wrong at HBOS why on earth should we trust him to make decisions at the FSA - he had to resign.
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I don't know much about James Crosby. Like most financiers, he looks OK, respectable, smartly dressed, looks intelligent and likeable. May be that is the problem. Presentation is jsut part of the spin.
To me, the most importantl question is why did James Crosby fired Paul Moor? Did Crosby played the man and not the ball? Get rid of the man and the ball will go away??
I read that James got his Sir, from his mate, for producing a couple of reports! Is this right?
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Send em all to Zimbabwe! They will all be able to earn TRILLIONS there.
Just a thought!
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This article is the start of the briefings against Moore.
Undermine the messenger, Brown was right, Crosby is the innocent party.
Nuances in what was written, lack of formal minutes, who can remember the exact words etc etc etc.
Crosby should not have passed the smell test.
Simple as that.
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and why were KPMG providing this "independent" review to the FSA when they were also HBOS' appointed auditors?! It would have appeared very odd for them to conclude anything other than that all was fine as it would have made ther audit results look weak. Not to mention the obvious conflict in that they have a vested interest in keeping HBOS as an audit client... Who appointed them in the first place, the FSA or Crosby?
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If ever proof was needed that Peston is nothing more than a government stooge its this article
This is the biggest scandal to emerge so far from the financial crisis, Gordon Brown is implicated, no caught red handed, at the scene of the crime no less, and not a mention
As for Crosby Peston lets him off with 'well he's not really guilty of anything serious'
Scandalous reporting of a scandalous sitiation
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No surprises that Peston reckons it was ok for Crosby to fire Paul Moore for doing his job. Is he really going to start laying into very rich and very connected people, not unless he wants to write his next blog from the South Pole.
The arroganace of the bankers is truly amazing but what have they got to lose, there certainly isn't any prospect of them paying back their millions which is what we really need, if the consequences of getting it wrong is financial ruin then maybe you wouldn't take excessive risk in the first place.
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getting a bit worried about unnecessary censorship on bbc blogs- I quote directly from a bbc 2003 press release and provide the link and it's "referred to the moderators".
"The Money Programme uncovers massive mortgage fraud
BBC TWO's The Money Programme has revealed a huge mortgage fraud with brokers from some of Britain's biggest estate agents and financial advice groups advising customers to break the law and lie about their incomes to get massively bigger mortgages.....
.....The Money Programme found that during the investigation brokers advised the undercover researchers to lie on applications for self-certified mortgages from, among others, The Bank of Scotland, The Mortgage Business and Birmingham Midshires.
All three are part of the Halifax Bank of Scotland Group – Britain's biggest mortgage lender.
http://www.bbc.co.uk/pressoffice/pressreleases/stories/2003/10_october/29/money_programme_mortgage.shtml
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Following the 80/20 rule bankers should remember that the general public have bailed out the banks not the bankers and bonuses R 4 ABOVE AND BEYOND THE NORMAL; not for what you are expected to deliver.
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I listened with interest to the 'four bankers of the Apocalypse' when they were interviewed by the treasury select committee. What everyone seems to be missing, is that these 4 horsemen held a fiduciary responsibility to there companies, shareholders and customers. For their blatant failure to discharge their duties as directors they should be struck off and banned from ever holding directorships in the future. Why is nobody talking about this. Is it just 'Oh they just made a mistake' and now their sorry so lets just leave it at that.Look at the value in their organisations that they destroyed. Its incompetence and borders on criminality. Can't you report on why no one is taking any action against 'the four bankers of the Apocalypse'?
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Robert.
"So the lesson of hindsight is that Sir James made a disastrous judgement about HBOS's rate of expansion - but not that he committed a crime or a misdemeanour."
You have to be an offender before you are expected to resign these days?
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I wonder what Mandy's up to these days?
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Yep, definitely not Labour - resigned immediately.
By the way isn’t it time to investigate whom banks are lending to? The same Barclays bosses may have couple of firms they own shares in. I do not think that it will be direct but by via some offshore trust or else.
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Yes okay he was legal. But that is not the point is it. If you drive along a country lane at 60 mph you are withing the national speed limit. However if the road is only suitable for 40mph you end up in the hedge whether you are legal or not. Events have proven that he was wrong. We do not need this type of operator in any industry let alone banking.
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85. At 6:46pm on 11 Feb 2009, happydayssoon wrote:
"So HBOS asked KPMG to investigate Moore's dossier of complaints.
Did you ask yourself Robert who HBOS's auditors were at the time? None other than KPMG.
Enough said. I think we can let readers form there own judgement on the thoroughness of the investigation."
+
KPMG are auditors for HMRC Government
but state there are no conflicts of interest
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WHAT A LOAD OF USED FISCAL PRUDENCE
LAVATORY PAPER.
HBOS EVEN IGNORE STATUTORY DEMANDS
IGNORE LEGAL CLAIMS IGNORE WINDING UP
PROCEEDINGS.
SO NO SURPRISE THEY IGNORE THEIR OWN
RISK MANAGER.
AS FOR KPMG?? JOKERS!!
HBOS HAVE HAD INSOLVENCY ISSUES SINCE
2002 CHECK THE ACCOUNTS (KPMG).
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We should appoint Paul Moore to run the FSA.
He has got balls and seems to know when the shit is about to hit the fan. Ideally qualified. Good luck to him.
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51. wykhamist
''It seems like all roads lead back to..''
Well I think it will work its way there in time. The masquerader is running out of masks and the situation is not due to suddenly improve.
It is not my field but I do not believe the fuzzy graphs coming out of the BoE. Another week in economics and another bit added to the downside. Then graphs appear with huge error bands pasted on them. Truely dubious, bit like sticking the tail on the donkey blindfolded. Why bother dont they realise how stupid they look. And the rebound looks to be based on previous but recent recessions. I dont think so. Major corporations are declaring losses and laying off like never before.
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My experience of financial consultant who are paid by the client is that you get the answer you want. They don't want to rock the gravy boat. Time and again we have evidence of this. What about major compensation for the whistlebowers... paid for by the individuals who had them removed.
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No doubt Sir James is the sort of person referred to as 'talent' in the bonus debate.
I am rapidly coming to the conclusion that banking 'talent' is a synonym for greed and incompetence.
The banking sector has a massive credibility problem right now. I think we are just seeing the tip of the iceberg as well.
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So what are the qualifications required to be a top banker then?, obviously none.
What are the qualifications to be a top regulator of bankers then?, have to wait and see if Mr Cosby would like to enlighten us all in front of the select commitee.
I do know some of the qualifications required to be a gangster. Suround yourself with scared yes men/women, be utterly ruthless, eliminate any one who gets in your way, ensure that those who uphold the law and or regulations are in your pocket or can not get anything on you, in the event you are caught make sure its only for tax evasion. Sounds familiar?.
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Would HBOS have been saved if Moore's allegations had been exposed at an employment tribunal?
It seems that his claim for unfair dismissal was settled before it got to a full tribunal when evidence would have been placed in the public domain. Presumably he made a claim for unfair dismissal on the basis that the dismissal was automatically unfair because he had made 'protected disclosures' to his employer within the meaning of the Public Interest Disclosure Act 1998 (PIDA) amending the Employment Rights Act. In other words he had been sacked for raising concerns about malpractice within HBOS - a failure to comply with a legal obligation - in this case a breach of FSA regulations.
The excellent Treasury Select Committee will surely flush out the full circumstances of the whistleblowing and the dismissal. They will in effect be conducting their own employment tribunal, as clearly there is a huge public interest in establishing the facts.
The irony is that the FSA is required to ensure appropriate whistleblowing policies are adopted within the firms it regulates within the financial services industry. It seems that Moore has been the victim of reprisals for raising concerns about malpractice the PIDA regime was specifically designed to prevent and remedy.
If Moore's allegations are borne out, the FSA in conjunction with HBOS have been culpable not only of ignoring the risks involved, but, just as seriously, of punishing those who spoke the truth. This represents a massive failure of the regulator's statutory objectives in maintaining confidence in the UK's financial system and protecting the consumer. The relationship between regulator and regulated was just too chummy: a catastrophic conflict of interest.
The FSA should be scrapped and banking regulation handed back to those competent to do so: ie the Bank of England.
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Crosby - after destroying HBOS - was appointed by an advisor to Brown on how to revive the mortgage market and how to improve public confidence in ID cards. And then he was appointed to the FSA which of course ensures banks don't take excessive risks.
It's a cliche but it's true: you really couldn't make this up.
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Ummm an interesting trend emerging here
Peston suddenly going soft on Banks and Government
and a similar pattern emerging on Nick Robinson's blog
Do I whiff a smell of Big brother doing
some leaning under instructions from their paymasters
Funny I thought after the Iraq issue that the BBC had fallen out of love with the socialists .
Then I remembered they put in their new management.
There are some big statues waiting to be toppled
lets get to it
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I am surprised that the bankers in their hour of need haven't made one blindingly obvious point... They were confident in their risk taking because boom and bust had been abolished. They could not have been in a boom because the then Chancellor told them that this was not possible. Therefore the favourable conditions were normal. And there was no chance of a bust beacuse, likewise... 'No more boom and bust.'... bust was a thing of the past.
So our friend GB created a myth that made misplaced confidence and risk taking normal. The bankers were only reacting rationally to what the now Prime Monister was telling them. The buck stops at number 10.
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at a Seminar on Risk Management two years ago this week, the first page of the presentation delivered by the FSA included the bullet point "brutally honest" under the title "Self Assessment". The presentation went on to explore the hypothetical scenario of a 40% reduction in property prices and to hightlight the importance of banks' Stress Testing. An unlikely scenario?
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Surley Paul Moore is the ideal man to replace James Crosby at the FSA. We need someone who can anticipate a crisis before it happens!
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I would agree that Sir James title should be removed....more importantly, what will his pension and pay off be now that he has ruined everyone else's finances
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The conclusion of KPMG - "that HBOS had appropriate risk controls in place" does not address Paul Moore's criticism in the slightest.
His criticism is that those controls were being ignored and overidden by senior management.
The "appropriate risk control" WAS Paul Moore - and we saw what happened to him.
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The argument is complex as to who is the most to blame. The conclusion is I feel simple.The politicians, the regulators, the banking executives, the accountants, the mortgage brokers and the public mostly have been brought up and been programmed to believe that nothing is as "safe as houses", "an englishman's home is his castle", that "renting is throwing money away" that simply by painting the front door or putting new decking down will add thousands to the value of their houses. Most of these people have not lived through real hardship and bad times.I am convinced that anyone that can remember the pre/ post war years and have learned from history know that "what goes up must come down" " not to live beyond your means" and that "money is the root of all evil". These lessons I feel are only truly learnt the hard way through experience. The hope is that we will eventually all be richer for the experience we are to live through during the next decade if not in our wallets then in the sense that we remember that the simple things in life are those that give us the most pleasure.
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I have gained access to copies of crucial correspondence ... here names have been CHANGED to preserve anonymity.
Dear David,
Splendid lunch last Friday!
I'm dreadfully sorry to inconvenience you. We have been commissioned to conduct an inquiry into risk control in your organisation.
Please will you complete form Risk1 attached and return to me.
Yours,
Fred
Risk1
Appropriate risk control measures are in place at ............... (fill in name of your organisation)
Please here circle ... Yes or No ... as appropriate.
Name ...... Signature ........
....................
AND THE REPLY
Dear Fred,
Thank-you for your letter.
I must say how much I enjoyed our visit to the ROH. Please pass on again my warmest thanks to your dear wife for organising such a splendid evening.
Yours,
David
PS I have asked my secretary to complete the form Risk1 and return it to you.
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Am I going mad?
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#26. Interesting that you mention Merrill Lynch, they were advising 'buy' Northern Rock shares in July of the same year that it all fell apart in August! I do not trust any of them, you need to read between the lines. These so called experts have not got all the answers. We got out of equities, commercial propety in early 2007 whilst experts were forecasting it was all still growing. IT did for a few months and then they put penalties in place to stop you getting your money out!
#90. You are so right, look at the board make up of los of companies that have had troubles in the last decade and you can see they had an inbalance on the board of people who actually understood the business and this is what is missing in a lot of areas.
What is so terrible is that none of these people want to pu their hands up and say 'I got it wrong', they are full of explainations. Arrogance, greed, and now we are all in need.
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what is it with these bankers that can leave one highly paid job and walk into another, crosby went from poacher to gamekeeper and brown and darling seem oblivious to any wrong doing on his part, how many millions does a bank have to loose before someone stands up and says it was actually their fault, because they still walk away with millons in pension.
this goverment the fsa and the boe all look tired and lost, they appear light weight, dour and lacking in confidence.
as crosby now joins the band we have yorkshire and scottish accents in abundance.
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This comment was removed because the moderators found it broke the House Rules.
Am I missing something here? (Not had time to read other comments or become completely absorbed by the subject unfortunately.) Is it the case that Crosby - given that he was appointed to the FSA in 2003(?) - two years before the Moore sacking, actually made a judgement call on himself? i.e. the FSA deemed HBOS' risk to be proportionate.
Was he really working for BOTH organisations in 2005 and if so did he indirectly oversee the assessment of a bank in dire straits?
Apologies if my absorbing of journalistic scraps has proved to be incorrect.
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This afternoon Tubby had the pleasure of serving Ally a double helping of pie and mash. Seems that he enjoyed Mother Brown having to tip toe through the tulips. Thanks to some business like work by a Tory back bencher alarm bells can be heard from Canary Wharf to Westminster. So who were the bad boys steering the former mutuals onto the rocks and possibly taking Mother Brown down with them. In the days to come more names may be in the frame making a mockery of the carefully crafted narrative that it was the Yanks wot done us. Mother Brown will disappear under the table but this one has legs and will run. Shame that Aunties brightest didn't do their homework and research this situation rather than provide a daily blah blah background. Still Tubby is an optimist by nature and he hopes that young Mr Pesto will get cracking and make up for lost time. We need all the names, strategies that went wrong and the size of the financial payoffs or as the tabloids say the rewards for failure. We need to know how many more of these former masters of the mutuals ended up in the Isle of Dogs? Another helping of sauce Mr Ally?
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When you guys get your big bonuses or huge salaries lets make sure you pay all your tax to UK and not to tax havens.
Please guys remember that on our estates there are young people who will now not get jobs because of your errors, they don't have shares or savings, please pay all of your tax, consider giving a proportion of your wealth to projects in our poor communities.
Remember that you were saved by our money, our kids working for Woolies were not, stop using taxpayers money to fill your bonuses and do the right thing!
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I just completely despair. Do hbos really think their side of the story makes any sense? It is blindingly obvious that Moore's point about being overstretched was right on the nail. Hbos trying to obfuscate about what actually punctured the balloon is irrelevant. Also, how on earth does anyone think that kpmg being paid to investigate their own audits was remotely reliable. We see that in one go 3 of the defenses against banking collapse had been completely corrupted. The FSA, by having someone it was overseeing on the board, the auditors and the internal risk assessment. The problem is that there is no defence against immoral ceos who are drunk with power and corrupt auditors except the state, and that failed as well.
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well for those of you didn't believe that Peston was a New Labour apologist, you now have your proof
so we are to believe that John Crosby walked the plank and went over the side of the good ship HMS METAPHOR just half an hour before today's PMQs?
sorry Robert, TITIAN MAY HAVE BEEN BORN YESTERDAY (according to some) BUT WE WEREN'T!
it is interesting to note that Robert had devoted the previous dozen stories on this blog to building up resentment against those awful bankers for wanting bonuses; he worked hard at it and contributed to the general stoking up of hatred for the bankers
but public outrage is no longer easy to manipulate and control; the fire has jumped the firebreak and suddenly we're after the regulators too; foolish uneducated oiks that we are, we don't appreciate the difference between today's banker and yesterday's banker turned regulator
we've noticed the systemic failure and the interconnections between the bankers, regulators, treasury, BoE and politicians; the SCAPEGOAT STRATEGY has failed and it's getting hot for Gordon
so quick man the pumps Peston! damp down all this moral outrage quick; lets have a few blogs underlining what honourable people the ex-banker regulators are; and tell us to wait for the report of the independent inquiry in 2010 while you're at it .........
I read and contribute to this blog for the comments and not for Robert's initial posts, but for those of you who also want to read economics blogs that are better researched and more insightful then you couldn't go wrong with Paul Mason and Stephanie Flanders, both clickable on this same BBC business page
so one of the most surprisingly rivetting days so far in the slump is slowly drawing to a close
Mervyn King has even noticed that we're in a deep recession; Now could someone remind me please..... when was Titian born?
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If I have been trying to grow flowers after a hurricane it does not help if someone keeps lifting the poor plants out of their roots and taking samples AND CHOPPING THEM UP, OVER AND OVER AND OVER AGAIN.......ENOUGH OF THIS DESTRUCTIVE NAVEL-GAZING.....
O FELLOW BRITONS,
O MPs .... and
O ROBERT!
We need to make these blogs a forum for new ideas and economic recovery, not a wrist-slashing desperado tragedy.
WE NEED TO BREAK FREE FROM THE PSEUDO CONSENSUS THAT HAS KEPT UK IN A WEAK POSITION VIS-A VIS THE REST OF THE WORLD.
HAVE WE ALL IN BRITAIN NOT BEEN JUST A TAD TOO CONCILIATORY WITH THE REST OF THE WORLD? AND A BIT TOO DOWN ON OURSELVES?
OUR ECONOMY COULD HAVE QUITE SAFELY BEEN ALLOWED TO GROW AT 6% A YEAR...IT DID NOT NEED TO BE REIGNED IN AT 2%...IT WAS ARTIFICIALLY AND STUPIDLY CONSTRAINED.
When our economy was stronger than Europe's and AMERICA'S, WE SHOULD HAVE HAD LOWER NOT HIGHER INTEREST RATES THAN THEM.
The property bubble in Britain could be more accurately defined as a realignment of demand reflecting the success of the economy and the attractiveness of the properties......if everyone does their house up to the nines and the value increases ....is that property inflation or is it value being added......it is too simplistic to regard a house as a basic unchanged commodity when all around the obsession of doing up houses must have been adding value and changing those basic commodities into something more valuable.
And if a whole area becomes more shi-shi is that property inflation or is it not property improvement?
Looked at that way maybe it wasn't so much a bubble as a grand restoration of the housing stock.
IF WE KEEP LOOKING AT OUR SUCCESS AS THE CAUSE FOR OUR FAILURE WE OVERLOOK THE OBVIOUS FACT THAT IT IS FEAR THAT IS KEEPING US IN THE DEPTHS OF GLOOM.
THE ORTHODOXY OF USING HIGH INTEREST RATES TO GENTLY DEFLATE PROPERTY BUBBLES SHOULD BE EXPOSED AS THE ROOT CAUSE FOR THE CREDIT CRUNCH AS IT NEEDLESSLY MADE IT MORE DIFFICULT FOR EXISTING BORROWERS TO MEET THEIR COMMITMENTS RESULTING IN THE HIGH DEFAULT RATE THAT ENSUED.
THIS PHOBIA OF SUCCESS THAT THE BANK OF ENGLAND DISPLAYED WAS ACCOMPANIED BY A NAIVE TENDENCY TO SEE SUCCESS AS A SIGN OF INFLATION.
IT WAS ALSO NAIIVE TO REGARD THE INCREASE IN WORLD COMMODITY PRICES AS A SIGN OF DOMESTIC INFLATION AND DELAY THE REDUCTION IN INTEREST RATES WHICH SHOULD HAVE OCCURRED IN AUGUST 2007.
I think the Government had a need to show POLITICALLY that it was being tough on banks , and the Opposition had a need to show,politically that the banking situation was dire, but in so doing this has been very damaging ECONOMICALLY to the recovery of those banks....remember that their share price fell 95%
SO WE ALL KNOW HOW BAD IT GOT....
No-one needs to be reminded of how bad things were, especially not over and over again...
this must stop!
It is time to move on to other pastures!
For instance.........
How could UK go back to being a reserve currency of choice?
Look at how US has been able to inflate its way out of this mess with impunity as the greenback rides 30%over its recent trough.
How can we do this?
How can we attract capital back to UK.....
WHY IS ATTENTION NOT BEING PAID TO THE NEED TO GUARANTEE 100% OF ALL UK DEPOSITS, IN ORDER TO GET THE CASH BACK IN?
COULD UK NOT BECOME A SUPERSIZED OFFSHORE FUND?
COULD THE UK MAKE A UNILATERAL DECLARATION OF FINANCIAL INDEPENDENCE, WHERE EVERYBODY'S MONEY WAS MOST WELCOME?
We lost our Empire so we have to suck up to the new big boys?
The Euros, the Yanks, The Chinese?
Do we not need to show a bit more self-respect, and stop blaming everyoneand stop blaming ourselves for being who we are!
The reason we are crunching is because we were the best....but we can and we will bounce back.
LOST SOME DOSH IN THE BANKS.....
BUY MORE SHARES NOW THEY ARE CHEAP.
LOST YOUR JOB?
DO SOMETHING YOU LOVE.
Do we not need a bit of HAUTEUR....LIKE THE CHINESE, LIKE THE RUSSIANS, THE ARABS, THE GERMANS , THE FRENCH ?
A BIT OF A SWAGGER?
IS IT ALL FAKE OR DO WE NEED TO BRUSH UP ON OUR MEDIA PRESENTATION SKILLS TO THE REST OF THE WORLD.
WHAT IS THE POINT OF ALL THIS GOVERNMENT MONEY GOING TO THE BBC TO SPEND ON KEEPING US DEPRESSED AND HATING OUR GOVERNMENT.....WHY IS THIS BEING ALLOWED TO CONTINUE TO HAPPEN?
AND WHY ARE WE SPENDING HUGE AMOUNTS PANDERING TO THIS LOWBROW CELEBRITY OBSESSED CLAPTRAP THAT FILLS OUR TV SCREENS?
Let's get highbrow again and to hell with ratings.
IT IS TIME THE GOVERNMENT REDEFINED THE BBC'S REMIT TO INCLUDE BEING AN AMBASSADOR FOR BRITAIN, ENCOURAGING ECONOMIC RECOVERY AND DEVELOPMENT .
LET'S GO OUT OF OUR WAY TO GET ALL THE NEW CHINESE, INDIAN , KOREAN , JAPANESE, ARABIAN , PAKISTANI, RUSSIAN AND SOUTH AMERICAN BILLIONAIRES BACK IN TOWN.
HOW DO WE DO THAT?...FIRSTLY BY GETTING THEIR KIDS TO COME HERE....LET'S COT THE COST OF EDUCATION FOR FOREIGNERS.LET'S SAY THAT IF THEY STUDY THEY CAN STAY, THEY CAN BECOME BRITISH.
What was clear recently was that the US and the Eurozone could not care tuppence about our plight.....
Are these really our friends?
I think they all rejoiced in our recent downfall.
I have always thought they were friends but is it not time to really re-evaluate UK's position vis-a vis Europe and USA.
How do we get big expat dosh back into the UK economy?
What sort of incentives would this require?
How do we discourage our richest and brightest leaving UK with their house-sale money or their talent to live in Australia or Spain?
How might we positively encourage them to come back....
....as Golden Homing Pigeons?
AND LET US ABANDON THE IDIOTIC AND ABORTIVE ATTEMPTS TO SCARE AWAY THE RICH FOREIGNERS FLOCKING TO LONDON ,BY OUR THREATS OF TAXATION THAT JUST MADE THEM SELL UP AND LEAVE .
Is it not time to think Swiss?
To become a maxi-Monaco
.....with our expertise in financial services to attract cash rather than lose it?
To Grandstand Cayman, outcosy Jersey, and outglib Gibraltar?
...in other words to do the opposite of what Obama wants us to do,
because these offshore havens have been a huge British success story....
let's do it here!
Let's defy USA, let's defy Brussels...
let's go solo......
we are the only ones who play by the rules and everyone just laughs at us now.....
SO MAYBE WE COULD DO IT DIFFERENTLY.....
Let's think smart.
Let's be selfish for Britain!
Let's make dreary London a place that people from the rest of Britain AND THE REST OF THE WORLD feel welcomes them, welcomes their cash and does not just rip them off.
We need loads of new SUBSIDISED hotels, we need rubbish picked up, we need cheap tubes and buses, cheap parking,FREE LOOS, NICE PLACES TO SIT, OPEN UP THESE PRIVATE SQUARES AND NATIONALISE THE DUKE OF WESTMINSTER'S AND THE DUCHY OF CORNWALL'S HOLD ON LONDON ....BUILD NEW SQUARES.
Let's abandon this green obsessive disaster that is behind half of our economic decline......
EVERYBODY KNOWS THAT NOBODY REALLY CARES EXCEPT A FEW SPECKY DEPRESSIVES, WHO DO NOT BELIEVE IN A RELIGIOUS DOOMSDAY, SO THEY HAVE INVENTED A NEW GREEN RELIGION WE MUST NEVER EXPRESS OUR DISBELIEF IN.
The orthodoxy of the down in the mouth under-forties.
Let's shock these youngsters by ...
Cutting petrol to 40p, cut car tax, ,cut emissions taxes, cut congestion charges ,stop whining on about environmental decline....It has all been a stupid depressive orgy of needless despair.....
IT JUST MAKES YOU FEEL NEEDLESSLY BAD ABOUT EVERYTHING AND IT HAS BEEN A DEPRESSING CUL-DE-SAC PHILOSOPHY I THINK WE ARE ALL GETTING BORED OF, THANK GOD.
THAT HAD TO BE SAID.
NEXT........
THIS WAR NONSENSE IS AN EXPENSIVE EGO LUXURY WE CAN NO LONGER AFFORD.
Brown would get a massive boost by saying:
OK CHAPS WE ARE GETTING OUT OF HERE, WE HAVE TO CONCENTRATE ON OUR OWN PROBLEMS, WE ARE NOT WELCOME IN AFGHANISTAN ANYWAY, LET'S CUT OUR LOSSES AND GET THE HELL OUT OF HERE ,AND TO HELL WITH THE LOT OF THEM , THEY HATE US ANYWAY ,SO CHEERIO, WE'RE OFFSKY.....AT THE START IT SEEMED RIGHT , BUT TIMES HAVE CHANGED....IF THE AFGHANS CANNOT FIGHT THE TALIBAN , NO-ONE CAN.
And lastly some tidbits.....
the abolition of student loan debt on proof of saving ability.....for every pound you save towards your deposit for your first house we knock a pound off your student loan.
The government need to re-attract Middle England by beating the Tories at their own game.
WE NEED TO RE-INVIGORATE TAX-FREE SAVINGS AGAIN.....TAX FREE INSURANCE, TAX-FREE PENSIONS, TAX-FREE ENDOWMNETS , TAXFREE ONSHORE ACCOUNTS....IN ORDER TO GET CASH BACK INTO UK AND IN ORDER TO COUNTERBALANCE THE LOW INTEREST RATES.
We need to encourage longterm investment in bankshares by giving taxbreaks for longholding shares.
We need an amnesty on OFFSHORE MONEY COMING BACK TO BRITAIN, TAX-FREE.
WE NEED AN AMNESTY PROGRAMME FOR TAX-EXILES , ALLOWING THEM TO PAY THEIR TAXES BACK , PAYE, INTEREST-FREE ON THEIR RETURN TO UK.
We also need a massive public programme of free financial education for everyone including savings, budgeting, avoiding consumer binges, avoiding and getting out of debt,and pension-planning ....this could be called... A PROGRAMME for ECONOMIC INTELLIGENCE., WITH FREE ONLINE COURSES AND THIS IS WHERE YOU COULD COME IN, ROBERT.
WE NEED TO LOOK AT HOW TO END DEBT SLAVERY AND ENCOURAGE FINANCIAL REBIRTH.
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What does Moore mean by "gagging order"?
If this issue was in the public interest (ie would have saved the economy if you believe him - pretty important), should he have :
a) accepted a personal settlement (read: bribe) worth £xxxx and said nothing about it
or
b) spilled the beans to the media and made it clear what was going on when it really mattered i.e. when something could be done about it.
Yep - so he took the cash and is now coming clear about the subject because presumably he knows nobody would dare sue him for breach of contract. He should give back whatever money he got as part of that settlement as he is as culpable as the rest....
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How do you get a knighthood for services to banking ? - Are we to believe that this man was especially selfless in his money lending, or that he was responsible for some hitherto unknown way of lending the money of someone else to a third party and taking a cut ?
Call him what he is - "failed former banker"
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Is it possible that Barclays Bank Ltd purchased Lehmann bros (or parts of) to enable them to action some creative accounting and to use it as a vehicle to hide "toxic debts". It does seem strange that despite there exposure to worldwide markets they have denied any great losses to the housing/credit crash.
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Everybody knew that HBOS and RBS did not take risk seriously. They had some good risk managers but absolutely no buy in from senior management and therefore the business was developping without a strong risk management framework.
As far as the FSA is concerned they are out of their depth, they lack skills and are just reacting instead of having a clear vision of what needs to be done. Not very helpful in these days!
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Deceit and Incompetence
Meryl Lynch sequestering huge bonuses shortly before the BoA takeover.
UK banks bailed out by the UK tax payer supporting tax evasion on a massive scale.
The deceit is extraordinary.
Sir James "personalised number plate and GB crony" Crosby now accused of ignoring and sacking the very man who warned him of trouble.
The incompetence is sadly no surprise.
What I can't understand is how a Labour politician could appoint such a man?
Enough is enough Robert. Please turn on the screws now.
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Robert Peston wrote ‘Moore's dossier of complaints that HBOS and Sir James were taking excessive risks was thoroughly investigated by KPMG, the accountancy firm.’
Not so.
Here’s what KPMG have stated-
‘This [investigation] had a narrow focus on regulatory compliance risk at HBOS - and did not examine the bank’s overall sales or investment strategy or any other aspects of the bank’s operations.’
So Paul Moore's dossier of complaints was definitely not ‘thoroughly investigated’.
Robert Peston should post a correction in his blog, lest people are misled.
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SCUMDOG MILLIONAIRES?? GOOD ONE!!
THESE GUYS ARE SO FULL OF IT WITH THEIR
HANDS IN THE TILL.
ITS SO EASY TO BE GENEROUS WITH OTHER
PEOPLES MONEY. .
LIKE THE DEPOSITORS AND SHAREHOLDERS
FUNDS,NOW ITS TAXPAYERS CASH TOO.
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To quote: And KPMG's conclusion - that HBOS had appropriate risk controls in place - was accepted by the Financial Services Authority.
I thought the point was that HBOS were not adhering to their own controls! History has proven the whistleblower right. KPMG were WRONG - QED!
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"Sir James chose to resign because he wanted to protect the FSA from incessant criticism by media and opposition politicians that its number two had made a chronically bad judgement as chief executive of HBOS."
Is this a comment or a statement of fact? If it's a comment on events and you're feeling sorry for Crosby, then you need to remember that the "incessant criticsim" has achieved what it set out to do. Without it, we would not have seen the removal of someone who had failed previously as a banker but had then been rescued by Brown to do another bad job. As many previous posters have inferred, evidence is starting to leak of how closely tied up in all of this the current government is and how they are trying to protect their friends whilst push the blame onto those who dare to stand up to them.
Alternatively, if Crosby did say this (and I can find no record of him doing so), then good riddance - he's been caught short and had no choice. Don't be mistaken to think that he did this because of any sense of honour.
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GOLLY GOSH!!
FASCINATED TO SEE MERV THE DERVS
OUTLOOK ON THE DEPRESSION. . .
GROWTH IN 2010?? TULIPS? YES!
ECONOMY?
YOUVE GOT TO BE JOKING MERV.
7,000,000 on OUT OF WORK BENEFITS IN
2010.
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Blimey!
I only posted 'I wonder what Mandy's up to these days?' @ #111 and it took nearly 2 hours to be moderated!
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I recall that when i worked for Bank of Scotland there were many people with whom i worked ringing alarm bells in our offices over the astonishing deals being done and the utterly blind reliance that the money would just keep coming in. Bonuses should be stopped. My shares (which i bought over the years) are just about worthless, I cant imagine them being worth much for a VERY long time. We have been ruined by 1. the risk department not shouting loud enough. and 2. the sales culture which has been running the organisation with too much power for too long. 3. by the top brass being totally completely unaware of what was happening, this problem started years ago by buying bad business.
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I work for a living, 16300 is my gross, Mervyn King just announced a 4% shrinkage of the economy. A 4% shrinkage of my economy is the difference between the breadline and poverty.
I've got 3 kids, do you honestly, truly, in your heart think that I'm going to just stand here and take this kind of crap from someone who has held himself to be my better
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How much did HBOS (and the other banks) pay their external auditors to cover up the facts.
Oh I forgot that was an "independent" investigation by KPMG so it was all above board.........................
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"Misjudgement" ? Not at all, he knew exactly what he was doing. Had he misjudged anything he would now be an unemployed factory worker with 3-4 mouths to feed in search of a job. Instead his "misjudgement" means that you and I are now paying the bill - not him, or his family.
Strange how our culture hinges upon the "Alpha" males, those who cannot do wrong, who are meant to lead and who no matter what errors they made in one post can always get another, equally lucrative post somewhere else.
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Robert
Are you the Business Editor for all of the BBC or just Newsround?
You should investigate meetings in 2005 between senior FSA staff and executives from all of the major banks. The FSA pushed for the Banks to complete comprehensive "fact finds" on every customer before they provided finance, in much the same way as they have to before providing life assurance, pensions and investments. The concept was sold to the banks on the basis that the extra costs would be offset by the fact that they could save up to £1bn per year in bad debts across the industry.
The FSA left the table with its tail between its legs when one of the executives asked who was going to tell the Chancellor, Gordon Brown, that they were going to take £1bn per year out of the economy.
How do you not know about this? Just for the record, the bottom is really going to drop out of the building industry in the next three months as firms complete existing jobs and can't fund the next one. You may already be aware of that one but you have no idea of the extent of it!
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And should KPMG as auditors have been invetigating the compliance risk given that what Mr. Moore had said been ignored or not considered by them as part of their audit procedures or business risk review ?
Was there not an interest in KPMG providing a "clean bill of health" to the existing management and preserving their lucrative fee generating audit relationship ?
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Robert, this is one time I cannot agree with you. What Paul Moore experienced is sadly quite typical within the banks if you are in compliance, internal audit or any other governance role. I know because I experienced it as well. Intimidation and bullying of these staff if they do not tow the party line is quite common and severe.
The FSA is usually blind to all of this and as soon as it sees something that might blow on them they get the bank to commission a report by one of the accountants. The banks pay their fees which could amount to six and seven figure sum. These reports are next to worthless, as the accountants normally water down these reports in order not to upset the fee paying client. The fact that FSA rely on these accountants is something that needs looking at seriously. FSA should do their own dirty work, but of course they neither have the capability or the experience. Most of them involved in supervision are career civil servants, who know next to nothing about complex products.
Paul has integrity which most of the people he was working with severely lacked. He is being punished for his integrity as he cannot find work since his departure. The others have prospered. What does it tell you about our society?
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17 - Stevewo
Try not to be so objective - you'll embarass yourself. Your non-sweeping, non-generalising, well informed view of bankers and banking must be a credit to you and your family.
Keep up the good work.
Not.
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Small comfort being that the Blairs are sitting on 2 flats in Bristol that are now worth approx 50% of the purchase price, oh and a big mortgage in Connaught Square. Shame Prudence isn't quite so personally greedy.
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James Crosby's appointment, like so many aspects of this current crisis, comes under the "If it is too good to be true it probably is" category.
I suggest that each time our ISP captures one of our emails for storage, an automatic message along those lines is sent to us that creates it as a default Screen Saver.
For those without a PC, use the money that is inevitably going to be spent at the next election on the "No more boom or bust" and "Labour isn't working" billboard messages to plaster the billboards with the same message.
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Throughout history, bankers have formed circles and clubs around them, the present are no different. The members of these circles, of which there are inner, intermediate and outer, some interlocking some not, are bound by common values and psychology, by blood, inheritance, education, history, money and ultimately of course, power and the desire to retain it absolutely.
The members of the inner circles are hardly ever seen in public life and generally do not hold public office. Our prime ministers, government ministers, politicians, business leaders, banking heads and other public figures belong to the intermediate and outer circles. They might migrate inwards but only after leaving public office.
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Of course KPMG were paid by HBOS's management when they were asked to assess HBOS's risk.
There is always a potential temptation to keep the person who is "signing the cheques" happy and of course the board who were making short term windfall profits from the sales based business models will have set the terms of reference.
The desire to maintain client relationships has clouded the judgement of professional accountancy firms in the past.
Hindsight seems to have proved KPMG and the FSA wrong.
Indeed many auditors of financial institutions appear to have seriously misjudged risks and as such over-valued assets for a considerable time.
The fact that it took the Moore accusations to "encourage" Sir James to leave the FSA voluntarily beggars belief.
We're told that HBOS would have failed, Sir James was one of the architects of the policies that moved them towards such a fall from grace.
How can someone who has been responsible for a significant amount of the problems be expected to effectively contribute to effective regulation.
It all seems to prove the old boy network is as strong as ever and the city, regulators and many politicians continue to belong to a self serving club.
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Don't be too mean on Robert Peston, he says in his piece that Paul Moore won the big argument!
Unfortunately it appears that the big boys want to make the small and narrow argument the key one.
ie
KPGM report correct (boxes ticked appropriately) = Bankers are wonderful and deserve their knighthoods and bonuses
classic tactic
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FSA overseeing the banking industry.
MBA's overseeing the Health Service.
Peter Mandelson overseeing the auto industry
Home Secretary telling professors off for being nasty.
A common thread has emerged in modern Britain.......the dim witted are telling grandma how to suck eggs!
Only problem is grannies ain't so dumb.....there comes a point when they just turn their hearing aid off.
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POLITICIANS AND THEIR WORDS
When considering where all this is headed it is essential to remember where the fundamental truth that the banking, political and social elites lie. They lie all the time; lies drip from their mouths, through their television and through their press. They lie effortlessly and they don't give a damn. Mendacity is their trademark. I urge you to remember this with all your heart - whatever you hear from any of these people is lies. When fragments of what they say are true, know that it is only for expediency and will no doubt come wrapped in, or wrapped around a lie.
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Robert,
You are wrong
"In 2003 and 2004, he warned HBOS's senior directors that they were expanding the bank's loan book too fast: HBOS was lending too much.... "
Saying a financial institution nay be growing too fast (and may get into trouble) is the same as saying a car is going too fast (and may crash).
As a Risk person, he needed to articulate that funding was the problem. And unless you can say that the losses arising from the mortgage portfolio or the corporate portfolio were so excessive so that HBOS would go insolvent then it is just a scattergun harbinger of doom which is not good enough or specific enough.
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I'm astonished at the clear desire to find scapegoats and to ignore the facts throughout all of this.
It seems clear (to me) that HBOS' major problem is funding its excessive mortgage book - not that it was especially bad quality lending - and its excessive reliance in its corporate arm on property investment and development.
The head of regulatory risk is qualified to comment on neither credit risk nor industry risk - as he himself states, he is not a banker. He is a barrister and from reading his own brief CV in his memo, he appears to have no actual banking experience at all. His career has been entirely in the (banking) regulatory space.
He does not appear to have ever been Head of Risk (even as quoted in this blog) but was instead Head of Regulatory Risk at a time when the regulations were at best 'light touch'. When he was pushed out, the structure at HBOS was changed to have a Head of Group Risk (to whom a Head of Reg Risk would have reported) rather than the CFO, to whom Mr Moore reported.
The only thing that surprises me is the decision of Crosby and his chums to choose to not rebut Mr Moore more forcefully as there are clear holes in what he has to say.
Just for context, my entire working career has been within credit risk functions of banks - for what it's worth, my largest bonus to date has been £3000...
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This comment was removed because the moderators found it broke the House Rules.
WHEN ALL IS CONSIDERED THIS IS ALL JUST
FURTHER EVIDENCE OF ABUSE OF THE
BRITISH PUBLIC BY BROWN, NULABOUR AND
THE GRAVY TRAIN OF SYCOPHANTS.
WHEN WILL BROWN RESIGN?
WALK THE PLANK GORDY WE ARE READY TO
PUSH!
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#122
whistleblower1970
Great post!
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#118 glanafon
Sadly....I have to fully agree with your post.
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The football's crap tonight.... 2-0 so far!
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Sorry!....I think only one post per blog should be allowed from each poster!
I blame too much cheap wine for now (pre QE that is!)
So....it's good night from him...and it's good night from me!
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Here's an economics question for you as this is an economics blog.
Did Ms Smith gain an economic advantage by allocating her family home as a secondary home and her sisters house as a primary home?
If so, how much would she be better off by allocating one over the other ?
She says she broke no rules (and I believe her) but was there an advantage to be gained ?
I have a suspicion that there was.
Isn't this a cultural thing ?
A bit like asking bankers why they took the bonus's ?
(cuz they broke no rules)
Pots and Kettles ?
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Robert - lots of respect for your previous record of analysis and newsbreaking.
BUT ....... NUANCE ?
REALLY?
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And did you hear the latest one on bonuses - a banker arguing that in fact they all need BIGGER bonuses to attract better people at the top than the ones, like Crosby, who got them into the mess in the first place.
Good logic that.
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122. At 8:24pm on 11 Feb 2009, whistleblower1970 wrote:
'failure of the regulator's statutory objectives'
Get Moore before that comittee now
That's why the resignation, somebody, somewhere broke the law...
I hear the clinking of cuffs...at last.
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NEARLY THREE HOURS FOR MODERATION
PITY?
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Come on then Sir James,
they are going to hang you out to dry, you may as well get in there first.
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Paul Moore's revelations do far more than undermine Mr Crosby. A couple of days ago four former "Masters of the Universe" - one paid more than £4.2 million - sat before a committee of the House of Commons and apologised - unconvincingly - for banking failures but claimed that no one could possibly have forseen what would happen.
Well Paul Moore did. Many of us "mere mortals" saw this crash coming a long time ago.
How about £4.2 million for Paul Moore?
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This is your weakest blog ever Paul. 3/10 at most!
Why did the FSA not back Moore at the time?
From point 3.23 from Moore's letter to the Parliamentary committee:
Maybe they felt constrained as James Crosby was a non executive director of the FSA at the time?
In other words, Crosby was already one of the FSA's own. Extraordinary! As for the KPMG "approval". The incestuous relationship between big firms and their accountants has been an increasing problem over the last couple of decades. This was certainly a problem with Enron.
Add the tendency for the "great and good" to whitewash each other whenever possible - just think of the Hutton/Kelly affair. This is a cultural problem in Britain now.
If Crosby feels the allegations are false, he can sue for libel. Otherwise he can slink away with his tail between his legs. I would love to see a trial. Let a jury decide. This really could bring down the government.
As Private Eye might say: Come on Sir "Shames" - where is your writ?
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Hi,
I am a joiner, if I fit a door incorrectly, one I don't get paid and two more than likley face the sack.
I know its a simplistic point of view but surely there must be some responsability on the part of the banks and the government.
I know that the rest of the world is suffering too but it seems as if our country is again the laughing stock of Europe( I leave the U.S. out for obvious reasons).
I have had no work since september and I know I am not on my own. the majority of the trade work in the Uk is now done by immigrant labour.
Between Brown and his cronies and the incompetant greedy bankers our country has gone to pot.
Hitler and Stalin would be proud of them
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Paul Moore's memorandum is a wonderful and powerful piece. Everybody who is affected by the recession should read it. Compared to the double talk of politicians, this is sheer poetry in its considered thought and clear vision. He doesn't even want to apportion blame which, given the 'large settlement' he was given, is a luxury he can afford.
He speaks of clear warnings as early as 2003. He outlines an uphill struggle to be heard until he was sacked in 2005. Surely there is evidence of criminal negligence on the part of HBOS execs, non execs, auditors and the FSA?
Mr Moore seems to have kept his head (common sense) when all around were losing theirs. What better recommendation for a regulator? Let's give Mr Moore a knighthood and make him CEO of the FSA today. Implement his suggestions in full with immediate effect. No review, just action. Initiate a broader review to build on his suggestions.
Since every bank has one of these Risk Managers let's interview every one of them and seize relevant papers ASAP to see just what other banks knew about the problems, when they knew it and what their execs did about it.
Similar scrutiny for regulators, politicians and treasury officials. An awful lot of people did nothing while evil prospered. Let's find out who they are; turn a little light on their activities or inactivity.
Let's call it Social Justice - Oh someone already did. Come on Cameron, pull your finger out. I don't care any more whether Gordon admits any responsibility, answers any questions - he's a lost cause! It's time for action. I know the old Tories won't like you for it: "These men have titles, they are gentleman, honourable etc". No they are just highly elevated, highly motivated and highly rewarded thieves and criminals, or at least thry would be if the rules were fir for purpose. Let's put some flesh on this social justice idea of yours before someone steals your clothes. ...again
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This comment was removed because the moderators found it broke the House Rules.
so it looks like
the victims are the targeted borrowers
the criminals are their money lenders
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Ok, I was wrong - there can be no trial because Mr Moore's allegations were made under Parliamentary Privilege. I'm glad for Mr Moore's sake, but otherwise - what a shame!
What I find staggering, as a mathematician myself, is that mathematicians like Crosby and McKillop could rise to the positions they are in and be so ignorant of economic history. The literature is out there and very readable. Perhaps they just weren't interested.
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I also find it worrying that the government has been considering abolition of juries in fraud cases because of "complexity" issues. This must not happen.
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yawn....
who else is bored of reading/watching/hearing about this? Surely we should be focussing on the future?
Like it or not there are too many people responsible for this mess, and yes the ex-chiefs of the banks played their part, but what about the investors and shareholders that were pressuring them to grow the business?
These people will never truly be held accountable, they certainly won't be made to "re-pay their bonuses" or anything of the sort, and to be honest, why should they, they did the job they were asked to do by the board that employed them.
Shouldn't we be using all this "intelligence" that so many people clearly posting here have (with the benefit of hindsight - who hasn't?) and focussing on the recovery of our banking system and economy?
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its becoming obvious to everyone
so the bankers saying sorry is not fooling anyone, Crosby resigning fools no one,
it is clear now, the banks went on the rampage after labour relaxed the banking rules, the very rules that kept the banks in order for decades.
Tony Blair on record as not liking the regulation , so fills the FSA with yes men, and then Broon, puts the man who was one of the worst in charge of the FSA
Ministers and ex ministers on all sides of the house have profited, the Lords have profited, the old school tie brigade have profited, and we the plebs have paid for it and will continue to pay for it.
The Government are to blame, the Tories are to blame for not being an effective opposition and pointing the obvious out, of course they had their snouts in the trough too.
The accountancy firms are at fault for signing off the accounts.
No more of these faux apologies and mock investigations, prosecution is needed and it is demanded.
If I hear one more Labour MP say they had growth and low unemployment , playing politics, whilst the people go hungry , then they deserve all being shipped out to Afghanistan, with no body armour to serve on the front line.
Waster the lot of them. Come the election vote for Indy or none of the above, the whole system needs changing
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Andy whatisface, 60grand a month, thats 15grand a week.
I have to work for a whole year for that.
And you wonder why I might be a bit miffed about it.
Rest of big business on absolutely phenomenal salaries+bonus.
MPs on 66grand p/a + second job as minister, another 50grand + expenses
And you wonder why I might be a bit miffed about it.
I'm not alone.
I suggest that those in power, those that want to hang on in power do something about it.
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I was born and bred in Yorkshire and was always proud to say so. We used to have great names in industry like Rowntrees and Salts. Sir James Crosby makes me ashamed to say that I'm a Yorkshireman. If we cannot re-establish values which are based on something other than money there's no hope for any of us.
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#137
You're right to say that Crosby was both CEO of HBOS and a non-executive director of the FSA - a serious conflict of interest in my view - at the time of Moore's sacking.
The extent to which Crosby influenced the FSA's findings about Moore and their Arrow report on HBOS's risk management remains to be seen.
Given his position at the FSA, you can easily see the pressure Crosby would have exerted on the FSA's supervisors to give him a clean bill of health at HBOS.
Crosby jumped ship in time - he could see what was coming, while keeping the FSA sweet.
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C'mon mods, footies finished now, allow these comments through if you are still up - midnight Wed night now
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"What's the point? Well, it's that Sir James was not obliged to resign as the FSA's deputy chair because of evidence that he broke any law or regulation.
And the FSA put no pressure on him to resign.
Sir James chose to resign because he wanted to protect the FSA from incessant criticism by media and opposition politicians that its number two had made a chronically bad judgement as chief executive of HBOS.
So the lesson of hindsight is that Sir James made a disastrous judgement about HBOS's rate of expansion - but not that he committed a crime or a misdemeanour. "
Excellent point. That is what worries these executives. However, fiduciary mismanagement and negligence do need to still be looked at again, and whether or not they blew off risk because they believed that the government would intervene to save them if they made enormous mistakes. The problem with just claiming stupidity is that one has to assess the presuppositions that could lead such educated and wealthy people to become imbeciles in their area of expertise. It's like hiring someone to wash your car and then hands it back to you caked in mud, and asking for a tip and a back slap for a job well done.
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Moore was the HEAD of HBOS Group Risk. It was his duty (professionally and legally) to warn Crosby and Co that their business model was unsustainable and too risky.
So he did that.
So Crosby sacked him.
Crosby et al then replaced him with an ex sales manager who had NEVER practised risk management in her life but was happy to keep her gob shut in return for a lucrative job on the board. (And to be fair to her, with mortgages to pay and families to feed, we might all make that choice)
Read Moore's statement to the parliamentary select committee - published in full on BBC website and linked to by #34
Analogy Time: The Health and Safety manager at ACME Explosives Ltd. warns of unsafe, risky, corner cutting working practices. The CEO fires him and hires a yes-man. The works then goes up in a ball of flame, killing, say, 20 people. The CEO goes to prison.
Question is, would you then write an article on the BBC website defending that CEO to the hilt? If you did, would that make you utterly compromised? From now on, I'll just read the comments and not bother with the article...
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I wonder how much of the problem with public opinion is that this all looks like a very pally setup - whereby Brown heavily relied on the banks throughout his time as chancellor, appointing all his millionaire, faceless buddies as heads of the various bodies like the FSA and then it all imploded, leaving us screwed and exposing where the real power in this country had lain, and still does
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KPMG are reported to be paid £11million pa currently by HBOS as their auditors since 2001. Independent investigators they are not.
If you do not agree with someone in your regulatory risk area and orgnanise their departure, when the views of that someone is according to Newsnight similar to the feelings of the FSA since 2002, you should be in trouble.
Why Crosby was appointed to the FSA is the major mystery and this will put pressure on Mr Brown ongoing.
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'No pressure on him to resign'
Bet he had some pressure in the way of phone calls from a higher power
The same higher power that appointed him to a position of ridiculous conflict of interest.
We have been thrown a very culpable scapegoat today. Wonder when the government will stop hiding and own up to its responsibility? - wonder when Robert will begin to focus on the wider responsibilties?
Wont hold my breath
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This comment was removed because the moderators found it broke the House Rules.
Hi
On subject of Banks
I would someone to explain
BANKS received our money for BAD LENDING
Does that in MORTGAGE or LOAN LENDING to us?
IF YES
Does that me my MORTGAGE or LOAN has been paid for?
or
BANKS will be PAID TWICE?
rgds
Tony
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post 154. At 9:42pm on 11 Feb 2009, formerhbosworker
The time is 00:22
Have the moderators gone home?
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Now the facts are really starting to come out. Not only did the banks preside over this catastrophe, but they apparently suppressed opposition to their policies. It's ugly stuff.
And it really isn't as nuanced as Peston asserts. The British public have been done over by the banks, and it's completely scandalous.
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When did Robert Peston warn that the wholesale money market might dry up?
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Hi
On subject of Banks
I would like someone to explain
BANKS received our money for BAD LENDING
Does that in MORTGAGE or LOAN LENDING to us?
IF YES
Does that me my MORTGAGE or LOAN has been paid for?
or
BANKS will be PAID TWICE?
rgds
tony
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OK think most people on this blog and across the country agree that we have all been had by the bankers, and everything that the government has done to avoid this crisis has been a bail out to the very people who caused it, and has not worked. Those at the top of government, the experts, and the bankers do not have a clue what to do.
The only people to suffer for this failure is us. So my proposal is that we give them some ideas, other than the stupid ones that they have had up to date.
My idea is, those who have lost their jobs as a result of their(bankers,governments) failures, and those who will loose them in the future should have all their debt payments frozen, along with any interest, until such time as they are in gainful employment at a level of salary that they had before. I see no problem with this as once unemployed their debts become toxic anyway, as they have no way to pay them back. At least they will not loose their homes.
I am sure there are better ideas out there amongst the common people than mine, as the brains of this country are certainly not at the top.
I know many will say why give them good ideas which they will use to their own advantage, my answer to that is its the ordinary working people of this country that need help now, and at least we can vote them out at the next election.
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I remember 2004/5. At the time I looked in to buying a 2 bed flat in the worst part of east london. Even though I had no debts and a good salary as a duty solicitor, the amount I needed to borrow was nearly 5 times my salary and I'd have needed to lie on a mortgage application form to get it. I wasn't prepared to do so.
What I find amazing is that KPMG and the FSA saw nothing wrong with the mortgage market at that time when it was plain many flats and houses were being purchased on false income details. Did they really believe the business cycle and the 18 year house price cycle were banished or did they say what their client wanted to hear. I know which i think it is. Because their is no doubt, the mega bonus culture undermines professional objectivity.
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bajan barbados bloggers + missing financial records / files
"However from the comments being posted on this site the voting public has matured and is more educated and savvy and they don't want integrity legislation only, they want to see people jailed for theft and corruption once proven."
+
"The Bird's were technologically way ahead but this lot are hot on their tail.
The Bird's actually ran a paperless Government in Antigua, a goal only dreamed of by normal everyday businesses"
+
http://barbadosfreepress.wordpress.com/2006/11/03/missing-financial-papers-in-barbados-government-funded-organization-we-can-guess-where-they-are/
http://barbadosfreepress.wordpress.com/2008/03/27/report-kpmg-accountants-facilitated-fraud-that-helped-kill-bear-stearns-what-does-this-mean-for-barbados/
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And all this time, the BBC had been cheerfully pointing fingers at other countries for their lack of transparent Corporate Governance and rampant cronyism !!
Perhaps Robert Peston could tell us the exact degree of transparency of HBOS' Corporate Governance and whether there was any cronyism involved in this sad episode ??
My impression is that the transparency of their Corporate Governance varies from "extremely murky" to "clear-as-mud" !!
Arthur Andersen got hammered for their involvement in Enron and the accounting world was left with the Big Three. Will we now be left with the Big Two ??
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The interesting issue for me is about how banks manage or rather should manage, risk. There is also an issue about how much trust investors, shareholders, regulators and the public in general can place in the judgement of the senior management of banks and indeed other financial institutions. In this case it appears that the whistleblower was right, and lost his job. we've had other examples where most economists failed to highlight the risks undertaken by the banks, at least in part because as individuals the economists feared for their jobs if they went too much against the perceived status quo. As a consequence investors, shareholders and the public have lost vast sums. As a profession, economists have failed us, and it will be very difficult for them to be trusted again.
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191. At 11:38pm on 11 Feb 2009, beanoir wrote:
'yawn....
who else is bored of reading/watching/hearing about this? '
couldn't agree more.
'Like it or not there are too many people responsible for this mess,'
Thats right mate, it's all my fault, I fell for it hook line and sinker.
Now all I've got to look forward to is one weeks pay as redundancy and 66pounds per week JSA
'Shouldn't we be using all this "intelligence" that so many people clearly posting here have (with the benefit of hindsight - who hasn't?) and focussing on the recovery of our banking system and economy?'
I think you will find that that is YOUR Banking system and YOUR Economy that's broke, mate.
There are too many people who, having been shafted once too often, can see no reason to participate in lining the pockets of the wealthy classes any longer.
There is an alternative
Perhaps you could use your 'intelligence' to think what that might be.
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With all due respect, anyone can make a mistake, but to be poor in judgement at the level Crosby was operating is distinctly unacceptable. He was did the right thing, and good riddance!
But let us not believe him to be making a honourable and ethical decision, he's not leaving because of the misery his poor judgement played in bringing about, but to try to safeguard his cronies from the criticism they're going to get anyway. Poor decision-making seems to be a habit with him.
It's not that they don't understand that they are not trusted, nor ever will be again, it's that we know they just don't care...they really don't! That is why they are going to be pursued to their dying days. The whole rotten edifice needs tearing down and rebuilding to a new and more ethical template.The real people of this country more than deserve it, and if this lousy Labour government won't do it for the people they serve, then the people will rightly kick them out and do it for themselves. Come election day, Labour will wither under the heat of rage and fury of the people for this debacle...old boy networks need shutting down forever!
Globalisation, corporatism, one-world anything, will be stopped in its tracks, because it has shown itself to be run hegemonically, on the backs and at the expense of the people...how dare they use the people's tax money to bail these greedy swines out!
If you don't like what I'm saying, then just remember why I'm saying it...those whom believe themselves to be kings of the world and all that's in it, have made life a downright mess. It's unforgivable, in criticism and remembrance.
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for goodness sake!
Moderators-this is ridiculous!
Read previous posts of Jericoa, myself and others re saying sorry.
Sorry implies a sense of responsibility, contrition and a desire to make reparation.
Not seen any of these qualities - just abuse of the word 'sorry'
When those with a sense of responsibility like Paul Moore are treated badly and bullied by those without a sense of responsibility (James Crosby and the like) there is no hope, is there?
Above all, to say sorry, you have to see that you've done wrong first.
None of that in the banking/political fields either.
These are absolutely fundamentals of society.
If those in positions of power don't have these fundamental qualities, then how, on earth can anyone else be expected to have them?
It is notable how the lack of the above requirements to say sorry go hand in hand with arrogance, lack of respect and an unshakable belief in being bomb proof.
Common decency, courtesy and respect goes a long way, but not a lot to be seen in our society at the moment.
Back slapping, jobs for the boys etc etc.
Nothing will ever change unless this does. You can change the lid on the pot, but the contents stay the same.
This whole exercise is a diversionary tactic-focus our anger elsewhere so we don't see what's going on.
Well done Robert-bonus on its way for you-you've achieved your objective.
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"And KPMG's conclusion - that HBOS had appropriate risk controls in place - was accepted by the Financial Services Authority. My understanding is the FSA stands by that judgement. "
This makes no sense at all. How can the FSA stand by a judgement that HBOS had appropriate risk controls in place? If it had appropriate risk controls in place, it wouldn't have become bankrupt.
Risk of unavailability of capital is a risk, as much as defaulting debtors is a risk. And it seems very likely that if they hadn't already gone under because of the former bad risk assessment, they'd have perished because of excessive bad debts in a property slump (negative equity) when the recession (depression) began to bite.
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# 39. At 5:32pm on 11 Feb 2009, Danricv wrote:
""HOW TO BEAT THE CREDIT CRUNCH
Simple SImple SImple
Do not give menu (money presumably) to Institutions
The government should pay on our behalf
all or part of our DEBTS per family or individual-
Money goes to lenders BANKS
We have excess money left ---we spend
buy- Car- Fridge etc and money recycles
We are all happy and better off
Simple SImple
Tony
Edinburgh""
Tony - that is much too clever and simple an idea but seems devastatingly appropriate as a solution . . . however, this government isn't capable of changing direction in order to adopt such an approach . . they'd produce numerous reasons why it wouldn't be as efficient as the great leap into the unknown that they've cobbled together as a solution . . £500 billion represents 25k for each of 20 million borrowers . . and having that amount of debt lifted would fire up demand . . extrapolate to the other afflicted economies . . . yeah . . inflation . . I know . .a small price to pay for an effective response.
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I have been impressed with the majority of your reporting to date Mr. Peston.
It saddens me that you do not comment in more depth on Moore's written testimony - especially given the lack of in-depth analysis available on the BBC's main pages.
From my understanding of tuesday's session, and my reading of the full written testimony, Moore states that upon challenging KPMG's analysis of his dismissal he was paid a substantial sum with an associated gagging order.
He also includes extracts of written correspondence from the CFO to support his claims that he has been 'strongly reprimanded' for trying to fulfil his duties as the head of 'risk assessment'.
In my (humble) opinion this appears to be one of the better examples of evidence-based testimony and deserves much more commentary. Surely those of us currently funding these banks deserve every effort to enlighten us as to the as to the nature of the crisis we are currently enduring?
At the very least you might have made mention of section 2.8:
"But let's start with the cause and this fairly obvious proposition: even non-bankers with no "credit risk management" expertise, if asked (and I have asked a few myself), would have known that there must have been a very high risk if you lend money to people who have no jobs, no provable income and no assets. If you lend that money to buy an asset which is worth the same or even less than the amount of the loan and secure that loan on the value of that asset purchased and, then, assume that asset will always to rise in value, you must be pretty much close to delusional? You simply don't need to be an economic rocket scientist or mathematical financial risk management specialist to know this. You just need common sense. So why didn't the experts know? Or did they but they carried on anyway because they were paid to do so or too frightened to speak up?"
I would hope in future that I do not need to go to sources to understand the true nature of the debate.
Alex J Lennon
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I have a large collection of collective nouns for different categories of entity.
These have come from various sources but I have never seen a collective noun for "A Group of Bankers."
Many years ago I made one up of my own - "A Wunch of Bankers." (after Rev. W. A. Spooner.)
I made it up as a joke at the time although I always thought it had some truth in it - little did I know how accurate it is!
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GUESS WHAT?
One of America's biggest Banks has just declared that Bonuses shall no longer be called Bonuses but Awards!
I wonder why?
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I'm with post #1 Mr Tweedy...
Can we move on now rather than tediously apportioning blame?
The economy here in the US isn't rosy either - but their journalists do not seem to be revelling in the disaster as much as their UK colleagues.
Wonder why?
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btw - would everyone feel happier if the financial world upp'ed salaries and cancelled bonuses...same difference except they wouldn't need to earn them....
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I am with Mcnultyr at post 3
"And there was me thinking that the reason the wholesale funding market dried up was because the wholesale market thought that borrowers would have difficulty repaying."
The problem is that with v large powerful companies, such as HBOS was at the time; there will always be enough people who will keep their head below the parapet and assure anyone who will listen that all is well.
It is clear that we have allowed some businesses to get so big that their failure threatens our existence.
We need some form of control which puts a cap on size, and thus allows failure to occur without singnificant fallout on the world at large.
Promote "local capitalism" and sleep at night
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OK, at long last it's coming apart.
1. Start making some arrests. The dealers threatening to abscond with their clients lists are effectively robbing their employers.
2. Start making people unfit and improper people who intend to do so.
3. Impose a blanket ban from the markets on anyone leaving. It's common practice in other sectors not to be allowed to rejoin, for instance an accountant becoming an auditor, for two years.
4. Freeze all dealers bank accounts until a legal decision is made whether a clawback of bonuses made under false pretences is justified.
ACTION THIS DAY
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#221
There are certain people wanting to abscond with the loot, as if nothing happened. They are responsible for destroying many people's lives, and you want to let them off? If you were in the pub, I'd be inviting you outside for a private debate right now.
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This comment was removed because the moderators found it broke the House Rules.
When does this mess move from economic and political to criminal?
Does anyone care?
I assume the last person wanting to see this issue "go criminal", so to speak, is Gordon Brown. Since there is now a chance that Brown was receiving messages from the FSA and other advisers that some banks were out of control (a la HBOS Risk Manager Paul Moore's alarm bells) long before the meltdown, he's unlikely to start calling for the lawyers to take a look at the situation.
One wonders these days who on earth speaks up for us poor b****y taxpayers?
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Careful investigation of Hansard will show that a few Labour MP's voiced their concern over the Banks, in general,cavalier approach to lending:-
“Having checked the numbers of robberies and muggings in the past year, I can say with certainty that the public are much more likely to be robbed by the financial services industry than by burglars or muggers. The difference is that criminal theft is usually a single event, but robbery by financial institutions continues every week for decades.”
Paul Flynn MP Newport West
House of Commons - Hansard Report – 11.06.02
Courtesy of Loancheck website
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Does this mean we will now have a new incompetent organisation formed to
regulate the incompetence of the regulator .
What has gone on within the financial sector is nothing short of criminal . Get rid of all the lackeys and these jolly good old chums within these regulators , empower an organisation to actually police these charlatans , and re-regulate the city .We have to regain control of the city these cowboy financiers and bankers must be held to account , one answer could be that their bank accounts should be frozen and as with otheres , e,g, those guilty of profiting from illegal activities should have some of their overblown remunerations returned .
Why should the dealers and managers anddirectors be allowed to continue living the life they live ,considering that it was their actions that single handedly has brought the Uk to this state of ruin
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Where do we find the child who will say that "Mr Brown is not wearing any clothes"? Enough is enough!!
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So Sir James did not resign because he was guilty of anything except massive poor judgement - WELCOME TO THE REAL WORLD!!
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So - now that zero interest rates aren't working, King is going to set the printing presses to work, producing pretty portraits of the Queen that he will use to buy other government promissory notes.
Why do I feel, in my water, that this CANNOT be a good idea?
Why do I feel that I would rather feel economic pain now rather even worse pain in the future?
Clearly we HAVE to feel some pain - we binged for ten years. Assets of every kind became massively overvalued. We can't get away from that fact. SOME sort of painful hangover seems inevitable.
I read a horrifying story in the Online Guardian yesterday about the plight of ordinary people in Zimbabwe. The Zimbabwe dollar is now so worthless that in some areas the people have been grubbing in streams for flecks of gold. No-one will take paper money any more.
A whole day of panning might, just might, produce one fleck of gold that could be converted into a loaf of bread.
Gold is now only trusted currency.
Inflation is a persistent problem in Britain - it always has been.
King's plan to turn on the printing presses seems like a colossal mistake to me right now.
Perhaps the answer is to withdraw every last penny of my meagre savings from the building society and buy sovereigns.
At least I'll get the pleasure of cackling over them by candlenight.
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As reported it appears that HBOS under Sir James Cosby was warned three times (2002, 2004, 2006) by the FSA that HBOS needed to strength its control infrastructure and to improve its handling and mitigation of risk. In view of this and the Paul Moores situation there is considerable surprise that Sir James Cosby was appointed to any positioning within the FSA let alone deputy chairman.
It yet again raises the question if the FSA is fit to regulate the banking sector. In fact the FSA appears to be part of the cosy banking club.
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I work in the aerospace industry on safety critical parts (i.e. the plane may crash if we get it wrong) and when I or my boss sign for something it is a legal statement that we have done the work to the best of our ability and to the correct processes.
We also have risk people who are trained to play devils advocate and they also sign that they have done their job, and I have to show that I have assessed their concerns and that the risulting risk is below a legally defined limit.
If we get it wrong then we can be taken to court. If it is shown that we have signed that something is safe despite suspecting otherwise we can go to prison.
As Banks and their accounts seem to be financial WMD, why are such safeguards not in place in Finance? Accounts should have an appendix clearly summarising all risks seen by the risk group and showing why these are not considered significant. If the accounts or risks are subsequently shown to have been purposely misleading, then everyone involved should be personally liable and any monies gained as a result recovered plus fines or prison sentences.
In the HBOS situation, it would have then been impossible to publish the accounts without a statement of the risks included, and even if Mr Moore was fired, his replacement would have had no incentive to agree to a different version.
Bring personal accountability back into the board room.
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So the FSA had concerns about HBos, the whistle blower was SACKED BY HBos, the FSA still had conserns than along comes Super Gordan and places the HBos Bos incharge of leanding regulation at the FSA!
Problem solved the FSA no longer has concerns about HBos.
In the UK fantasy land the goverment place the kids in charge of the cadny store
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So a whistle blower beocming public about his sacking causes the goverment and the FSA to cover their back sides!
Over the next week every one who have known will be issuing statements stating that in actual fact they had been acting on it...
Well every one execpt G.Brown who will claim he was not told
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How come KPMG are not implicated. If they thoroughly investigated Moore's dossier of complaints and conlcuded that HBOS had appropriate risk controls in place they obviously got it very wrong.
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Did Gordan or Darling have ANYTHING to do with his appoitment to the FSA.
If so did the FSA publish and written recomndations about his sutabilality or was the appoitment forced upon them?
I can not beleive that they were not asked on their views regarding a new board member before the goverment made the appoitment.
Given HBos's histroy with the FSA they must have had concerns about the new board member.
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Dear Mr Peston,
Is it possible to use the freedom of information act to discover exactly what correspondence took place between Crosby and others culminating in his timely, for Brown, resignation?
If it is possible, I suggest you get out there and do so and report back to us.
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If KPMG gave a clean bill of health they were clearly wrong.
Surely the shareholders can sue?
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How can you trust a bank if their adverts are full of pop songs and dancing?
I never did.
Is that how their attitudes on banking?
Provided Andy with a marketing background with a Harvard MBA, I wonder why.
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KPMG have a case to answer in this. They had a conflict of interests and were not independent and should not have been the ones looking into the Moore case. As the auditors of HBOS they knew which way their bread was buttered (and we know what auditors are ultimately the servants of those who pay their bills, remember Aurther Anderson and their employer Enron).
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Paul Moore's memo warning Philip Crosby of the risks made very interesting reading. Of even greater interest would be the most recent performance appraisal of his successor, assuming that that person was in the newly created post through to the time when the bank needed to be rescued.
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#230
Why is it that you can say that and my #37 which said exactly the same thing, but with background and detailed instance, yet less overtly, gets spiked?
You are very, very right, that's exactly what some have been saying, but they have to post overseas to do so.
Hard evidence by the greatest authority possible of very great corruption reaching right to the top of this government.
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Good morning,
At last the truth.
It seems to me the banks were making so much money, or to be precise, the top dogs were making themselves very rich, they chose to ignore any warnings.
All they had to do if it all went wrong was resign and that is what has happened.
Will the bonuses be reclaimed, no, were the checks in place, no.
It is the rich looking after the rich.
I my view, what has happened is nothing less than criminal.
Those people will be sitting on their yachts in Monaco harbour sipping champagne and smiling all over there faces.
You mark my words, a little way down the road these people will be on the board of some big company, as though nothing had happened.
I repeat it is the rich looking after the rich.
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I'm afraid, Robert, it sounds rather as if you've been taken in by the latest banker's spin on the situation.
It's difficult to square your comments with the BBC news item (http://news.bbc.co.uk/1/hi/business/7885059.stm) which lists the worries the FSA had over the risk management at HBOS and indicates their worries were outstaning year on year.
Sir James may have left the FSA to save their face, but some of us will suspect he went before he was pushed, for the purely personal wish to avoid looking even more of an idiot if he tried to tough it out.
Then there's the tax evoidance issue (raised on TV news last night) which has considerable embarassment potential and I notice you also didn't mention.
And of course it looks very bad when the chief gamekeeper is a well-known poacher . . .
I think quite a few of us believe at least half the problem is the way the boards of Britain's top companies are run as a private wealth-creation club for the exclusive benefit of their members, rather than of either the company and shareholders or the rest of the country.
The way in which these money-mad egos walk easily from private business to civil service at suitably enhanced rewards also deserves scrutiny. Does it operate in the public interest? The suspicion is that it does not.
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GB is morally bankrupt.
Dunderheads.
Unless we change our ways immediately, we're sunk.
Never before has any government sunk so low.
Broken promises to the left of us, broken promises to the right of us.
Labour must resign.
Any further delay will destryo the world.
No apologies are now acceptable.
Enough is enough.
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Moore takes the money and runs, says nothing until the s hits the fan and suddenly he is a white knight. Come on lets get real here:
Why was HBOS not called to account by the FSA
Why did Bank of England not intervene
I say again both should have been fined and the money paid into the failing banks at minimal cost.
Stop whitewashing everything, get it sorted now or we will continue to be the laughing stock of the financial world. We are now!!
Get real bankers with honest intentions appointed as Non Executive Directors now
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Not sure whether Campbell and Mandy have thought the spin on Crosby presented above through, since absence of intentional wrongdoing on Crosby's part would even more point the finger to the guy in charge of banking oversight at the time, the MP who now is PM.
Peston's assessment also seems outdated following this morning's news on The Times site that the FSA questioned HBoS's practices in 2002, raising the question how Crosby ended up on the FSA's board - Brown meddled in here I suppose.
The real question now to pursue is whether Brown initiated the Lloyds-HBoS merger after talking to Crosby.
And an investigative reporter could look into who paid the KPMG bill!
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For years I have wondered where all the money is coming from to pay for huge property price increases, endless home improvement, new cars, enormous TVs, designer nic-nacs. Few people in Britain make things nowadays and this is how I thought you made profits. I felt increasingly alienated from British culture that seemed obsessed with spending money and less interested in craftsmanship.
My mum taught us that being in debt was a bad thing and made us feel guilty about running up credit-cards. So we live modestly. Now I know where all the money came from - gambling. I feel more contented with what I have in life, but expect to be poorer in the future. I have been a lifetime Labour supporter. I will not vote for them in the next election
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Isn't this perhaps linked to the big fat bonus issue?
There is only one reason that any of this really happened and that is the now discredited bonus and greed driven culture, throughout the finance industry, which was ever more subscribed to by ever more bonus and greed driven top managers.
In reality, the people of the UK need financial sector managers and directors to be outcome focussed, client and shareholder focussed and even - to some extent - protective of the overall UK and global economy.
But we recruited (and even seemingly delighted in supporting and rewarding) bonus-driven, self-serving individuals who, encouraged by the organisational cultures in their various banks, have clearly made decisions that conveniently served themselves and their own pockets rather well.
In many respects these people have been predators of the industry, rather than promoters of it. In some ways, we need to see these sorts of people in these positions not as heroes or role models but more like a field mouse would view a hovering buzzard overhead.
(And, big bank corporate shareholders, where were you when this was happening?)
But, surely this is all just exactly what you are going to get if you set up an industry with managers that are "bonus-focussed"?
And all that waffle about, 'we need to pay competive wages or they'll go elsewhere' ... well then let them go, because in the longer term they will only destroy the industry. And, anyhow, just where are they going to go to now?
In my view, this man presided over an unhealthy corporate regime and failed to manage the situation and failed to change the organisation's operational culture to something better.
Do we really want someone like that heading up the FSA? Isn't it time to either get old dogs learning some new tricks or to get move the old dogs aside?
If we head up our regulators with people from the big bonus banking culture then, in my view, the recovery is going to be a very long time coming.
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Robert you must get off the fence over this story!
Read Moore's statement to the select commitee
http://news.bbc.co.uk/1/hi/uk_politics/7882581.stm
How can the FSA accept an investigation into his allegations, by KPMG, when KPMG are the auditors of that company i.e. huge conflict of interest as they are highly unlikely to be critical of the very people who are paying £millions in auditing fees?
You say Sir James Crosby has not committed any crime or misdemeanour but what he did was "criminally negligent" as he was deliberately gagging the Risk manager and preventing him from doing his job properly, eventually sacking him and replacing him with an unqualified "sales manager" with no risk management experience.
I think, as shareholders we should start a group action to sue Crosby, the FSA and KPMG for their gross negligence which has resulted in the losses to our shareholdings.
Until these people are called to account for these dodgy dealings, the whole incestuous merry go round will continue to fleece ordinary investors and employees alike.
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Here nothing much is going to happen to bankers but if they had done some thing in US soon they will be told to be packed up and sent to US. As they were dealing with money markets there is a good chance they will get there flight to US to face justice.
Hope hundreds of british banks will be investigated by FBI and prisoned if they are found guilty, this way we will be able to see benefits from globalisation.
FSA having bankers in board is like criminals put in charge of policing; there should be separation. You cannot expect a banker to police other bankers. They could we used as advisers to tighten regulations like police using criminals as informants. Please note I am note saying bankers are criminals.
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No 42
Indeed , after allhis impatience and scheming to get the Top Job. Golem must thinking on the old saying "be careful what you wish "
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230 Kevinnotsew
247 Rahere
Indeed, what a Capital idea. Research can be most revealing, can't it?
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234. agc3167
I vote this best comment on the blog.
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MAKE A CAREFUL NOTE OF MY 247 BEFORE IT DISAPPEARS.
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Its an indisputable fact that HBOS's funding model was the main cause of their problems - as Eric Daniels said yesterday banks usually go bust because of lack of liquidity not because of bad loans although HBOS's massive foray into commercial property clearly would not have helped.
Sir James Crosby, architect of the strategy, clearly has questions to answer.
However, I would not place too much credence on Mr Moore's claims that "I knew this was going to happen, told them so and they sacked me for that" until we have heard the other side of the story.
In my lengthy experience of managing staff and dealing with such issues its very easy for the aggrieved party (the member of staff) to make claims and obtain sympathy for their position. Its much less easy for the employer to make their case publicly not least because of data protection/confidentiality laws etc.
It was quite striking that Lord Stevenson (ex HBOS Chairman) said on several occasions to the Treasury Select Committee on Tuesday that he would send all the papers to that committee to review. He clearly knew the situation but did not feel able to disclose the details in public.
Interesting that the FSA backs the judgement it made on this as well.
There's undoubtedly a lot more to this than Mr Moore's claims.
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Ouch Mr Peston, even the also pro-government Guardian seems to report more balanced about the KPMG Moore report:
"Sources close to Moore, himself a former KPMG partner, are critical of the KPMG report, pointing out that the practice audited the bank and received more than £11m in fees. They cast doubt on the FSA's impartiality as Crosby was on the board at the time. They also argue that the bank settled his employment claim because it did not want to rely on the KPMG report in an open tribunal."
Mr Peston, has your reporting on Crosby been part of your dues for all the recent leaks the government provided you and you somehow not being arrested like Mr Green?
Your reporting today is certainly not up to proper standards, but perhaps still meets the government's and BBC's requirements.
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Dear Sir
I would lick to wock for the Fiancial serviess Authorithy or a bannk. I have a certificate for simming 500metes hope my applycation is successffull. I driv a car but can't afford the petrol but will walk to interview you if you give me two year notice.
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# 232 noninflatable
Don't jest. About a year ago I converted several thousands of pounds of my savings into gold sovereigns and krugerands (and I'm still working on it). Whilst it may sound far-fetched, it's not inconceivable that in the the next, say, 5 - 10 years there could be occasions when a few gold coins could come in very handy.
I treat my growing preparations for Armageddon (stocks of water, food, fuel, medicines, ammunition and other essential household supplies) as a kind of insurance against the increasing incompetence of our political elite.
The one to watch is the UK's energy security (lack of). As our politicians go through the most amazing contortions to cling on to their privileged lifestyles, with ever diminshing interest in the wellbeing of you and me, still less in the UK's future energy landscape, it's as well to assume that self-reliance will be the key to surviving the next decade in any shape.
Just review the breathtakingly self-centred political nonsense of the last 12 months (or, indeed, the last decade) and ask yourself whether our political elite have YOUR best interests at heart? Such has been the rapid decline of our political processes, institutions and integrity under the Blair/Brown regime. Those two rogues have a great deal to answer for.
Anyway, I'm off to count my gold coins again.
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Any bets on how long before unforgiving public opinion will force the top culprit who presided over this banking mess out of office?
In order to focus on the future we first need a complete spring clean.
While crash and his cronies remain in office nobody of sound mind could possibly have any confidence in any recovery plan.
America seems to have a well thought and talked through economic recovery strategy in place, and agreed by all sides.
Here we are fire fighting with worn out men who lit the fire, without an agreed plan.
It wont work! Please Gordon do the decent thing ... Resign at 10am today.
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Moore's dossier of complaints that HBOS and Sir James were taking excessive risks was thoroughly investigated by KPMG, the accountancy firm.
So that is ok then- one of the top four accountancy firms that also signed off the accounts of the clearing banks during the past few years as representing a "true and fair view" of their financial status!
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Clearly the right move here is for the FSA to recruit Mr Moore to a senior position - that should focus a few minds.
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I wonder it if could be possible to put together a group of independent auditors to go through all of those banks. Not starting a committee that will take months and waffle but a bunch of auditors, like in large companies.
Strangely enough, we hear nothing from top business people in all this saga
Surely Sir james wanted to spend more time with his family?
Comically, I have head many high flyers are trying to re-negotiate their divorce settlements downwards!!
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This has to be one of the more glaring CYA jobs ever, on behalf of Broon and his cronies. Journalism it ain't. to use the term "nuance" is risible. Heard of sub-prime? Heard of HBOS £150bn CDS liabilities? Hmm? Not only was Moore right, he was vey right. To point to a review of limted remit by KPMG (and Iwould never trust an auditor to see their hand held infront of their faced, especially if it might jeopardise another pay-day) is pathetic. Auditors, just like the oh-so-clever rating agencies, sat mute and took the money. No, this whitewash cannot stick.
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Can not wait until 10am. How many tuimes will Brown say "it was the right thing to do"? Bets are on - I say 5! One thing is for sure he will accept no responsibility in this affair - if he did, there would be public outcry and there would be a general election tomorrow. Brown's performance today and the proceeding parliamentray Q&A could make or break him as....I think they call it 'leader'!!!!!!
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Yes, thanks Robert. Now can we get back to the overall scope of the business editor and not exclusively discuss the banks - it would be nice to change the subject even just for a while?
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Robert, I heard you on R4 this morning, saying that Andy Hornby was quite rightly culpable as he was in charge of HBOS, even though he did not actually propagate the culture and strategies that got HBOS into their dire predicament. In fact it appears he tried to put the brakes on, but responsible nonetheless.
You basically said that he was in charge and the buck stopped with him. I agree.
It is nice to see that somebody appreciates the concept of responsibility at the BBC.
Maybe you should interview Gordon Brown?
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Have you noticed who are keeping their heads well below the parapet? Yes, you've guessed it, the accountancy firms!
When is someone going to ask questions about their role in this mess?
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Obviously the FSA and KPMG got their conclusions from the investigation horribly wrong - we can only speculate why. If material changes had been made at the time to HBOS's business model it might still be around today.
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Yes, I agree with others above, so have you been spun Robert? Surely the one led to the other anyway - remember what you and others told us about the securitization trick with toxic mortgages, i.e. mortgages debtors have defaulted on coupled with a housing collapse leaving not enough equity to cover the debt either. Or did I get it all wrong?
Wiffy
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Surely it's obvious that Sir James Crosby resigned yesterday morning so that Mr Brown has something to say at PMQs half an hour later?
Secondary reasons might include personal honour and a view that the FSA was damaged by his continuing presence, but the timing tells us all we need to know about the main motivation,
And they say the City is short-termist.
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We can have the inquest,trials and summary executions later...........however,what is anybody doing about clearing up the mess ???????
All talk-No Action.Has the Darling Brown partnership snoozed off ? Or are they just awaiting the next financial/global summit some 2 months off ?
There are(like in US) NO SPECIFICS.Just billions being swallowed up into imaginary solutions to stimulate the economy.That dosh is merely propping up ailing banks with no release where it's required.Nice to be shored up by the UKplc when you're skint-tidies the books up a bit for now...............come on you guys out there-just HOW MUCH toxic debt are we all exposed to then ? Until we know-we can't plan a strategy to tackle it.Simple as.
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Sir James Crosby is just one of the greedy elite who sat aloft helping direct our nation to oblivion.
He did not care because he was too busy counting his own gelt to stop and consider that which some of us have been bleating on about like a bunch of 'Casandras' for years.
You cannot spend more than you earn forever. No fancy model is needed to know where it will end.
It ends with banks lending money to unemployed people to buy houses in the hope that they can make a living on borrowing more and more against its never ending growing value. It ends with avarice and ruin.
We are becoming the stuff of history books.
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#253
A very good point - I expect some disgruntled US shareholders will even now be discussing which Directors and Senior Executives from the major UK banks they would like to invite over for a chat, a court appearance and a possible stay.
That New Labour US-extradition-lite law looks like it will be fizzing with activity some time soon.
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"So no-one in their right mind would argue that Moore got it wrong in respect of the big issue - though Moore's critique was not that funding would dry up, but that borrowers would have difficulty repaying (which is an important nuance). "
If I remember correctly the reason the funding dried up was because borrowers couldn't repay. How is Moore wrong?
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Dear Robert
Explanation right enough, BUT it is now a question of Accountablity, the FSA failed also to regulate. so Fianancial professinals are responsible for the Crisis, so again whose head or heads are going to Roll, so far theve all got away with it.
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Another breathtakingly article from comrade Peston at the State Banking Broadcasting Corporation in the Republicj of Westminster.
Robert - where do you get off?!
Meanwhile, back on planet reality, as the pound yoyos up and down and the trade deficit widens and the internal money supply dwindles and the guvt spending increases any businesses that haven't gone bust already are trying to imagine how long they can hold on with ZERO encouragement from ANYONE and zero INCENTIVE from anyone and zero STRATEGY for the FUTURE of the country as a whole except to say that if they want to borrow themselves into even more debt the banks will be right up there and the insolvency circuit judges will be right down there too when they fall over.
Is the future BANKRUPCY and STATE DEPENDENCE for everyone? Is that the best a BRITISH Guvt can offer?
Is that the plan?
Is that Brown's vision for Britain?
Is he setting it out right now? Seems so.
BROWN OUT! COALITION NOW! Let's have a government worth the name.
I read a report about Zimbabwe last night and thought for a moment it was about Britain.
GC
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And as an entirely separate thread, keep an eye on our Belgian colleagues, who just threw out the nationalisation of Fortis, the former Société Générale. That may head the bank into bankruptcy, dismounting not only the politicians linked to it in a not dissimilar way as here, but also having a knock-on as other banks exposed to them also fail. The first domino has started to wobble, the second is in the Netherlands. Beware ABN-AMRO and HBOS.
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KPMG aren’t the first company in all this to keep giving their client a clean bill of health
Then again you might leave yourself open to legal action if you uncover something you should have noted the first time through....
..... or lose a big customer
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#265. jonbly wrote:
'Clearly the right move here is for the FSA to recruit Mr Moore to a senior position - that should focus a few minds.'
No, they won't do that. He is not in the inner cosy circles. It is who you know and who you have leverage on that counts for getting powerful, prestigeous and cushy jobs.
Accountants and accountancy firms have as much to answer for as those bankers.
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I will say zis only once-stop goin on about ze bonk system-if you wonk with the wrong bonker then you will have to piss on to the next bonk.
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Robert,
let me get this right
The ex CEO of HBOS who sacked the head of Risk management for raising conerns about the banks exposure to the wholsale markets in 2004 was at the same time a non executive Director of the FSA that dealt with the compaint against him?
The FSA then asked KPMG who were responsible for the companies audit to investigate the Risk control process ( please note that KPMG would have had a responsibility to flag any undeclared risks in this area in their audit report )
Suprise suprise KPMG report back to the FSA that the risk processes are satisfactory - begs the question if the processes were ok why was the head of risk sacked Oh yes he didn't fit in ?
Move on to 2008 HBOS is effectively declared bankrupt and has been for some time because of the exposure to wholesale markets which was flagged in 2004 but ignored in 2004.
Does the FSA send in investigators to establish when the board knew that they were no longer viable and whether their public statements had mislead the share holders with regard to the financial health of the bank and its exposure to risk ?
No they do not send in investigators - so where is the CEO of the bank that ignored the warnings in 2004? Suprise suprise he is number two at the FSA and advising GB on how to get out of this mess.
I now understand why we have not had any fraud squad investigation into the conduct of these banks by the FSA.
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I am at a loss as to why we continually use the respectable term of risk regarding the current banking crisis.
It was gambling.
With other peoples money and other peoples jobs. Senior bankers, and city traders gamble; simple. They have no higher level of gambling ability than the punter who walks into your local betting office, or the professional gambler who turns up on your tv for the Poker Million. In fact probably less than the latter who do tend to make stacks of legitimate money.
And while I'm ranting, didn't this whole thing start with the American sub-prime issue? Now I'm no expert but that struck me as more Del Boy than Masters of the Universe. Let's see how much we can get for a distinctly dodgy and nominally worthless asset.
Anyone want a left handed screwdriver?
Ok rant finished.
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HBoS has fallen off the cliff because it has too many dodgy assets, not because of its whoseale funding. If you have decent quality assets, funders don't run scared when there is a bump in the road. And Northern Rock has demonstrated that in case your assets are dodgy, depositors can also quickly hang a bank out to dry.
HBoS had a repuation of being the lender of last resort, i.e. if you wanted to aggressively finance a deal that other banks wouldn't fund, you could always call HBoS. HBoS had this reputation in the private equity and the real estate development scene. Go ask around the Dublin-based bankers to get an insight into HBoS's appetite for real estate risk in the early years of this century (not that the Irish have a great reputation!).
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What's up moderators, have I been banned by Campbell?
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So a big 4 audit firm agreed with the management of one of its major clients, what a surprise!.
As an accountant, one of first things i would say to any client is that borrowing on short term markets, to finance long term debts will one day lead to a crisis of funding.
I have, in my time lost clients where i have fundementally disagreed with their business models, however i have always seen my role as accountant to give honest advise on business risk, ensure a sound financial basis to the company, and if needed whistleblow, not to turn a blind eye.
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Robert & others posting here.
Have any of you actually been involved or met with some of these so-called specialists and auditors from the likes of KPMG, PwC etc.
Often they are relatively young, with no real business experience. Sure they have excellent degrees and talk great theory but try discussing double entry accounting or the like and their eyes glaze over. Real world knowledge is sadly lacking.
As many have noted the FSA back in 2002 are now quoted as saying that HBOS did not have suitable controls in place and were too "sales focussed" . This tends to imply that the KPMG report may have very client centric to support internal policies/decisions at HBOS rather than protecting lenders and shareholders.
Interesting to note that Gordon Brown quoted the KPMG assessment but looks as though they were wrong or not thorough enough.
Perhaps they have been also advising Gordon as well. Might explain the mess the UK is in.
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#39 Danricv
Right "Simple, Simple"....
... unfortunately we had Simple and it got us here....
Tell me if I got your plan right:
Firstly personal debt in the UK is in excess of 1 Trillion pounds
I'm not in debt, but as the money has to come from somewhere to pay off all or part of OUR debts I’m going to have to pay additional tax or why not just take some of my savings (as it now seems having them is a crime)....
..... and as your debt has been reduced – the level of debt being one of the major problems we have – you say that with your spare money (part of my money), you’ll buy a car or a fridge... when are you going to realise not having Debt does not mean you have spare money!!!!!!
.... and the “money recycles... we are all happy and better off”
OK so I buy the fridge:
My money goes to the man at the shop – he takes a slice which contributes to the overheads and wages
The distributor/importer takes a slice and it contributes to overheads and wages
The shipping company take a slice and it contributes to wages and overheads – not UK
Finally China are paid for the goods
How much of the money you propose the Government should use to help you buy a new fridge do you think will be “recycled” within our economy?
If the Gov are trying to restimulate consumer activity, we must be aware that the majority of consumer items are produced abroad and as a result only a % will remain within the country and be recycled
It will come back at some time from China – in the form of a loan!
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# 3 mcnultyr
That struck me too.
An important point. I'm glad you got it in early (because nobody will be reading down here).
To refine it, though, if wholesale markets had been working with the efficiency beloved of economic theorists, they would have stopped lending earlier than they did, and we would now be in a shallower hole than we are.
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No misdemeanour? FSA's Principle 2 " A firm must conduct its business with due skill, care and diligence."
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Surprise, surprise. Emperor Brown says that the FSA did not tell him about their HBOS concerns in 2003. This is one fairy tale that is not going to have a happy ending.
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Blah Blah Blah Blah..............when will someone pick up the key to Pandoras box and just give us all a bit of HOPE !
It's a bit like getting a final reminder-we all know what's in it but we don't want to open it up to see the bad news.
Unravel the toxicity now then push on...........or dare anybody aspire to that ?
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The labour government have shown since 1997 a complete inability to choose competent individuals. This is yet another case if as reported this man was Browns choice for this role. The same applies to the choice of ministers in charge of departments. It is about time such posts were given to professional managers who can be scrutinised by MP's (acting solely as our represntatives) before and during their tenure and sacked for poor performance.
Has any one counted up the number of times this government has said "we have to learn the lessons..."
I feel I am funding the most expensive training scheme yet invented. I would rather these people went home and played Simcity or similar with toy money than lose my taxes so recklessly and continuously.
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I am surprised this has not surfaced earlier. Crosby drove HBOS into an expansion strategy fuelled by wholesale market borrowing. I was always totally bemused by this given Halifax had the largest number of savers in the UK.
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"So the lesson of hindsight is that Sir James made a disastrous judgement about HBOS's rate of expansion - but not that he committed a crime or a misdemeanour."
The latter remains to be seen Robert. The consequences of this "disastrous judgement" are certainly worse than when the bus driver drives his double decker into a low bridge. If criminal negligence does not apply to financial management, then it should.
Adam Smith always thought that "joint stock" (limited liability) companies were a conspiracy against the public. The time has come to abolish limited liability for directors of public companies. If companies become insolvent - or need rescuing - the directors should be declared bankrupt; possibly with remission if they "spill the beans".
That would increase "due diligence"!
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maybe the moderators can find a few seconds to enlighten me why my posts are all barred?
you've got the email address
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I read with great interest the expostulations of sincere indignation so eloquently expressed by so many commentators on the greed, cupidity, covetousness, pride, vanity, arrogance, corruption, and much more in a similar vein, of bankers, regulators, politicians and all and sundry in any position of authority in society.
Please tell me, good commentators, why you do so? Do they not exhibit all the characteristics we accept in ourselves but hate in others?
Ever since the First World War we have had a society which has moved further and further from moral values, virtue, and rectitude to liberty and licence in all things. Our right to decide is not merely paraded, but demanded. With supreme arrogance we sniff at religion, old fashioned morality, and God. We declare that Darwin is one of the greatest men of our time for propounding a theory that not only excludes any higher power, but which requires no morality at all. Are we not all geniuses, little gods able to define how life should be and people behave? Not a very good job we have made of it, is it?
Now for the wake-up call, dreary bugle that it is. Read the Bible, or any other genuine spiritual text, and you will quickly find that every single one of the things you are complaining about in the unworthy predators who have destroyed our economy is forbidden by every one of those texts. But who knows that today? Where are they taught it? If that brings you to the realisation that religion is as relevant to the 21st century as it ever was thousands of years ago, then you have taken the first step in the direction of an economy free from all the things you abhor. And once you realise that genuine morality is as old as the hills and very much in need of affirmation, re-affirmation, and inculcating in the young from an early age, you may hope for some form of recovery in this benighted country. Until then everything you devise for a brave new world will end up with all of us in the same soup we are now in.
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Dear Robert
CHHAPTER AND VERSE 283*
This is the best the ive heard in along timeand i totally agree that the three party system of politics in this country has ruined it beyond belief, SO if all the Brains in Parliament sang from the same sheet then just maybe the bickering and back stabbing might end and this ONCE great country of ours would find a way back from the Abyiss.
ONE MIGHT SEE A PINK PIG THOUGH OR A COW FLY OVER THE MOON.
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#234
There is personal responsibility in the boardroom.
Directors can be taken to court if they haven't acted in a proper manner.
Robert reported that at the Treasury Select Committe hearing the failed bankers were not able to explain why there banks had collapsed.
This looks like a bad case of negligence to me.
Can't understand why the shareholders with the power to do so easily (i.e. the institutional shareholders) haven't taken these guys to court.
Have they also got something to hide which they don't want stirred up?
The bad smell is getting stronger.
What is really going on here?
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These problems all seem to stem from the time when the Tories gave little building societies the green light to demutualize and set themselves up as banks. They all had delusions of granduer and no experience of the banking system. Sir Crosby was, I believe the Head of the Leeds Permanent Building Society, a small but highly respectable BS but certainly he had no experience of the commercial banking system. These small BS were highly regarded and very experienced in what they were set up to do.
I know why the Tories got it into their heads everything needed privatising, so that we could all become shareholders, what a joke but I could never understand their reasoning behind it all. They broke the backbone of this Country.
All our utilities are now owned by foreign companies, who have no real interest in the well being of UK citizens. they privatised the rail system, which now costs us all more money and trains go where companies want them to go and also decide when we can afford to travel, not when & where passengers want to go, same with the buses. No joined up thinking in the transport system.
What was wrong with Building Societies serving the needs of those that wanted to buy houses, which at the end of the day we all need a roof over our heads.
The Tories also allowed Council houses to be bought, great idea but why wasn't the money ploughed back in to the system to build more social housing, which was always going to be needed.
Deregulation always gives a green light to those who can work the system.
We have cowboy builders, double glazing agents, second hand car dealers, and now bankers etc. etc.
If you sadly don't regulate, the unscupulous will always survive and prosper.
Its no good David Cameron and George Osborn sitting there all smug, acting like bullies in the school playground, their party is also fully implicated in the downfall of this Country.
Where Oh where are the statesman, certainly not in Parliament.
They have all, no doubt, enjoyed the fruits of capitalism and chose to ignore the blinding obvious, which most of us could see. The bubble just had to burst, it was unsustainable. The vast majority of the public sitting on the sidelines watching the few take obscene rewards, which now seem to be based on non existent profits.
Now pandora's box has been opened I wonder what it will reveal and who will find themselves feeling very uncomfortable.
but
more seriously, instead of trying to gain points with political gibes, we need the whole of the country to pull together to get us all out of the mess, created by so few for so many.
Listening to them in Parliament taking pleasure out of pathetic jibes makes me really angry. They need to do a real days work- all of them. They are all servants of the people, not leaders, although they did lead us in to this mess with their eyes wide open. We expect and demand them to work for us, not for their own gratification, ego trips or political point scoring.
I don't want to hear them say how awful it is for people out of work, that is just so hypocritical. My son is a fully qualified furniture maker, which we paid for him to do, now on £60.00 a week and told he has not been unemployed long enough to be retrained even though we was willing to try something else, just to get working again.
The Country needs to become self sufficient again and we have a wealth of talent just sitting idling their time. People power is what we need, not wealth creators, who look after No.1
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Is it significant to note that many of the senior people involved in the demise of the banks carry a knighthood including Sir James?
The point was made at the HOC Finance Comittee review session on Tuesday that they had little or no relevant banking qualifications. It seems plausible to suggest that the main reason they held their post was that the knighthoods would look good on the lists of the boards of Directors.
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#39
"The government should pay on our behalf
all or part of our DEBTS per family or individual-"
But the whole system is dependent on your co-operation in striving to service your maximised indebtedness.
Yachts cost.
OK, free the slaves, liberate the animals, then what?
Have you never come across the term "Ideas above your station"
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This signals the end of New Labour.
What amazes me is that it took so long for them to spin into oblivion.
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As so often, a good piece. You are right to point out the nuance that other commentators seem to have missed - or ignored. Hindsight is such a wonderful thing and we are fortunate indeed that potential leaders, such as David Cameron, are so magnificently endowed with its blessings. Such a shame that Gordon Brown is not correspondingly prescient!
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I haven't read all the comments, so this might have been said already.
1. In the public interest the letter of engagement between HBOS and KPMG relating to the investigation should be disclosed.
2. The only way to stop the auditors being too cosy with their largest clients is to enforce audit rotation. Appoint the auditors for a fixed term, say 4 years, and ensure that they cannot be sacked without the approval of the courts eg for negligence or incompetence.
3. The "statutory" auditors as described in 2 above, CANNOT do any other remunerated work valued at more than 10% of the audit fee for their audit client.
4. I presume, or hope, that the Minutes of Audit Committee meetings are immediately made available to that company's regulator whoever that may be.
I have more proposals but this will do for starters.
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It is now clear that, as many of us ignorant members of the public have suspected for a long time, the crisis has not come as such a surprise to the bankers or the finance specialist such as yourself. And unlike the public - blaming them is really a red herring - people like Crosby were being paid enormous sums of money to know what was going in in the financial markets.
The real problem now is credibility with so many "experts", whether bankers, regulators, politicians or people like you in the media pretending that they had no real inkling that a tsunami was or could be on its way.
Credibility will not return until examples have been made and key guilty men have been relieved of their ill-gotten gains.
They cannot be allowed to get away with daylight robbery with the connivance of the media, just because many of us in the public are unable to understand the full implications of what has happened and what will happen if the poachers are allowed to roam free with their winnings and fat pensions
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The Crosby affair now opens other questions.
My question is why Lloyds-TSB decided to takeover HBOS? Lloyds must have known that the government would not have let Halifax fail but it would have been another nail in this government with regards competence (!).
Now, as I understood over the last couple of years, Lloyds was one of the two UK retail banks that had been relatively conservative in the mortgage market both here and the US. They had no investment bank arm for instance.
Why would a bank that is relatively healthy decide to buy a bank that has toxic assets to spare at the very time these very same toxic assets were exploding?
It surely makes no business sense whatsoever. From the point of the company, surely it would have been better to let Halifax fail and Lloyds buy that part they required from the Government at, in all probability a knock down price.
I'm not an accountant and I'm not a private equity guy but could anyone explain?
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I worked for HBOS during Sir Jame's tenure. I also know a large number of people who were eliminated from the organisation for being "off message". Pointing out to the board or management something they didn't want to hear was a good way of shortening your carrer.
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Robert,
To my actual and real cost I found out, by trying to take the Financial Ombudsman Service (part of the FSA) to court that they are protected by parliament against any action unless you can prove 'bad faith'.
In my case just because they made up most of the 'main issues' (facts of my case) as they saw them was insufficient for the court.
The FOS, and I presume the FSA, never have to change their findings unless the claimant (p moore) could prove 'bad faith' by the FSA a virtual impossibility.
During my fight for justice I found the Ombudsman on average adjudicated 4.6 cases per week.
So the reality is that the FSA can forsake accuracy for speed; they have nothing to lose and their really is no justice the FSA process is a complete waste of time and money.
Justice is not served when the adjudicator is unaccountable yet staffed and funded by the industry the complainants are seeking recourse from.
At the time of my problems the FOS' Independent Assessor (effectively the house of lords Law Lords) was, you've guessed it an ex-director of the FSA/FOS.
FSA's incompetence is safeguarded.
Box ticking and presentation is so far ahead of facts in the UK that it is why the UK is in this mess.
Knowledge and facts are relegated to mere details whilst 'positive presentation' and unwarranted confidence is lauded and rewarded.
Why did no MP ask the following simple question to the array of bankers before the select comittee:
'Why did the banks believe that short term foreign money was going to fund the long term lending of their banks (I believe there was £700 billion in 2007 up from £2 billion in 2000)?'
Anyone with an ounce of intelligence could see short term deposits from flighty foreigners was an unsustainable business model.
But a cycnic would say it was a great ruse for the bankers personal pay and bonuses.
When they got found out or retired they would have more personal wealth than they could spend in many lifetimes.
Where was the 'moral hazard'?
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KPMG are surprise surprise the auditors for HBOS so their assessment of risk practices in HBOS were not likely to be disinterested
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Post 13, the New Fonzi wrote:
"The FSA need to get their act together. Their 'soft touch' regulatory system has failed abysmally and absolutely."
I quite agree. These so-called regulatory bodies have no teeth and act more in the interests of Big Business and the Govt than the consumer. Just look at the way the ICO let BT off the hook over its illegal 2006/2007 secret trials of the Phorm/Webwise system of internet data interception. And the ICO merely tap BT over the knuckles for passing customers' PII to a 3rd party contrary to the DPA.
And the Ofcom is no better, with Ed Richards from Ofcom openly supporting ISPs using Phorm-like models to analyse customers' private internet data.
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Evening all. I’m not sure if this is exactly the right place to comment, but here goes.
I really don’t want to be in the position of defending bankers and bean counters, but some of the comments here about the housing bubble seem to be missing the main culprits. It’s easy to blame banks for lending to people who would never normally have been eligible for a mortgage or to blame those for borrowing, without considering one significant factor. That is the lack of affordable rented accommodation. Since Thatcher more or less forced councils to sell off their housing stock and then ring fenced the receipts so that they could not be used for more social housing, rents have soared and buying was actually a cheaper option for many households. As an example, my brother was flooded out in the 2007 floods. I don’t know the exact amount but his mortgage was somewhere in the region of 750 GBP per month. The rent he had to pay on a comparable property while his house was being repaired was around 1,300 GBP per month. You can see similar price differentials right across the board from flats to town houses. It doesn’t take a genius to realize that an awful lot of people on low incomes were going to jump on the housing bandwagon if given half a chance, not because they were particularly greedy, but because it offered a cheaper option plus the chance of acquiring assets that could be sold on later to realize a profit. The banks were culpable in that they seized the chance to exploit the market, but it was government policies that created the market in the first place. In fairness to Thatcher, I believe she imagined people would live happily in houses they considered a home rather than a semi-liquid asset.
While it was the Tories who introduced the measures, Labour stand condemned for not reviewing or repealing them in the years they have been in power. In fact, they actively conspired to maintain the upward spiral. A friend and Labour activist told me back in the early 90’s that they wouldn’t touch the housing market because of its importance to the UK economy.
Conclusions; first, that the government as well as the banks must be held to account for what they have done, especially Messrs. Blair and Brown. THEY KNEW EXACTLY WHAT THEY WERE DOING, AND REFUSED TO CHANGE TACK.
Secondly, there is an urgent need for good quality rented accommodation. Until there is, the housing bubble cycle will continue to repeat itself. You have only to look at other countries where renting is considered a normal option (rather then something only a fool does) to see the difference it has made to property prices; it cushions the market from the extremes of the market. If buying a house has to compete with reasonable rents, then it becomes a relatively less attractive option and the demand drops off. Conversely, housing prices will not drop too far as people start to see houses as homes as much as a means of a quick return. It becomes something that people will approach seriously rather than being desperate to jump on a bandwagon. A house as a long term investment is fine; as a short term one it’s a disaster.
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Do I understand this article correctly:
http://news.bbc.co.uk/2/hi/uk_news/politics/7884877.stm ?
GB seems to be saying that it was OK that he appointed Sir James to the FSA as
"the problems alleged by Mr Moore were not the reason HBOS fell: "It was because its whole business model was wrong." "
...and the man who came up with this business strategy was then the ideal man to have as an advisor and be on the FSA board????
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If, as at least one poster has said, excessive bonuses were the cause of the banking collapse then I would assume the logic is as follows:
Bankers were incentivised to lend without proper targets to ensure they operated within sensible risk parameters. Presumably, this "Bonus Incentive" was such an effective motivator that all these bankers met and exceeded their targets such that they coud expect a hefty bonus.
If this is the logic, then it also follows that either:
1) The people who say that bonuses should be scrapped are wrong (because they clearly are effective motivators) and it is the target setting process that needs to be reviewed rather than the "bonus culture".
or
2) Most research suggests that pay is merely a hygiene factor and not in itself a very useful motivation (I am not doubting that there may well be exceptions to this rule). If this is the case then surely the bonuses cannot have been the cause of this crisis as so many are suggesting.
So I guess my (genuine - I haven't decided on my own view yet) question is which is it?
Did the bonuses cause the crisis but need to remain to motivate people to get us out of the crisis or are bonuses ineffective motivators and hence not the cause of the problem at all? The only thing I am certain of is that the target setting process was not effective in the context of the last 18 months.
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#307 - is it your fault that the mods are taking so long? Are you posting such contentious material that it takes them 90 minutes to decide whether or not it should be posted?
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> And some would say that it's right that he
> quit, because all of us are paying for
> his misjudgement with the massive financial
> support that taxpayers have been forced to
> give HBOS.
Was it misjudgement or negligence? That's important,
because negligence is wrong.
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There was a former HBOS director on 5 Live yesterday who made the point that if Crosby had taken Moore's advice and announced that he was going to slow HBOS's growth, the shareholders would have booted him out because their dividends weren't going to grow as much. Yes the bankers were reckless and the regulators were too lax but people need to bear in mind that Crosby, Applegarth and Fred the Shred didn't go around putting a gun to people's heads and forcing them to take risky loans. The banks were merely satisfying the demand from people for buy to let mortgages. There's more than enough blame to go around here, from the government who were only too happy to have the corporation tax off the bank profits and the CGT off the bonuses to cover up for the decline in manufacturing, the shareholders to whom nothing mattered except increased dividends and to Joe Public who wanted a Posh 'n' Becks lifestyle with several holidays a year, a flash car and plasma TV's.
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Time to scrap the FSA.
They were set up to as part of the Financial Services Act which allowed the industry to go play with securitisation, wholesale funding and the like.
What it mean't at the time was that the Building Society bosses (and savers) could make a killing on going public. I know, back then I made a fortune out of stock options gained from minimal deposits.
Twenty or so years on, they have all but come to grief. And, the FSA which was men't to regulate them has about the worst track record in history.
Give us back the High Street Banks and Building Societies, and leave the international money markets to play on their own. They will soon reduce to a manageble problem once they have to assume their own risk.
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Moore's critique was not that funding would dry up, but that borrowers would have difficulty repaying (which is an important nuance) - surely you mean nuisance
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Executive directors of Public Companies and bodies seem to be able to decide their own remuneration and consequently award themselves massive salaries and outrageous bonuses. This is in spite of being mere employees of the organisations they work for. The owners of these organisations i.e. The Shareholders, have no effective say at all and thus allow these officials to plunder the pensioners funds, shareholders funds and company reserves and assets in order to aquire short term remuneration by way of bonuses etc.
This iniquitous system must change, by statute, in the very near future.
If the self selected clever ones threaten to leave and thus deprive us of their invaluable services, well then, let them go and plunder some other companies and countries that may approve of their activities.
And, by the way, let them return the plunder that they have looted before they leave.
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Have Paul Moore's recommendations to curb HBOS aggressive sales strategy been addressed now then?
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Stephen Hester said only 500 people at RBS contributed to their woeful performance. This week they announced several thousand more redundancies. Are those 500 are amongst those being asked to leave the firm then? The announcement said it would not include customer facing staff...which would surely include Corporate Sales & Trading then? So the big deal-maker / loss-generators are not impacted? Great PR RBS, keep it up...
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#295
Rahere well remembers some battles royal in the early eighties with Arthur Anderson and Coopers in particular to establish the principals of risk hedging.
For the record, and to be fair, they wanted to gross up the hedge deals on prudency grounds. However, we pointed out that risk is not a balance-sheet item as it is thoroughly intangible until an event crystallises it, but that hedging operations can create changes to the exposure at the expense of concrete events in the interim. The events must be accounted for, and that means profit and loss or balance-sheet movements which are simply the result of the underlying risk. The focus is the risk, not the deal, in a word.
Take a company doing an interest-rate swap as a simple example. It's exchanging floating-rate risk for fixed-rate cover. It might be argued that it's loaned the principal of the cover at a floating rate and borrowed at a fixed rate, but in fact no such loans exist, only an agreement from each side to compensate the other for the difference in interest rates against the fixed strike rate. Those are interest income or expenditure against cashbook, and that's all.
The principal of offset is quite unusual and in general not permitted. However, IAS1 s. 33/4 allows or specific exceptions, in this case IAS39 which is currently under review to apply the lessons being learned in such fora as this.
It has however become quite clear that audit fnctions have left much to be desired. RBS' accounts, for instance, confuse covered and speculative hedging in a quite illegal way, covered hedging being the management of a particular risk - I nearly said tangible risk, which verges on the oxymoronic - while speculative hedging looks to gain profits from market conditions generally, without an underlying objective. the former's offsettable within limits, the second should be grossed, but generally isn't. The reason for grossing it up is that lacking motivation, it actually creates default risks on both sides of the deal, and these are rarely offsettable. For instance, on Black Monday, many banks grossed up their settlements, not allowing any offsets, and many defaulted.
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#308 "Do they not exhibit all the characteristics we accept in ourselves but hate in others?"
Speak for yourself!
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Biggest problem for Dave when he takes over from Gordon won't be bankers and the economy, it will be quelling civil unrest and riots in the streets.
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So just to re-cap on recent events.
1) The FSA has been found out as a corrupt and / or useless regulator
2) The Tri-partite system allowed each party to blame the other in a 'ring a round' of blame.
3) The people who were employed to look at risk were fired if their views intefered with profits.
4) The people running the banks and making the key decisions don't know anything about banking.
5) The ministers in the Exchequer and the Cabinet themselves clearly have no idea what's going on.
6) The press don't understand the issues, but are quick to tell everyone the bad news (because they live in the belief that only bad news sells papers)
With markets being wholly reliant on confidence to keep them afloat - it's actually amazing they haven't been in free fall since this thing all started.
I would also add into this mix that the BoE clearly doesn't know what it's doing (or whoever gives it the mandate) as they are changing rates (and even proposing printing money) based on inflation data for the last 3 months.
First of all they cannot realise this data is not and has never been accurate and secondly how fast do they think people and businesses react to rate changes?
My mortgage has dropped dramatically but it will be a while until I have built up enough savings from that to feel confident to start buying again.
.....but the BoE already have their finger on the 'print' button....
Absolute idiocy.
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Re: 24 thecoopster
Excellent post, one of the best that I have read for a long time, and I have read many!
To any who may have missed it:
READ POST 24.
Top marks to "thecoopster".
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Coming a bit late to this one and not about to read through 300+ posts, but isn't asking KPMG to report on HBOS a bit like asking Arthur Andersen to report on Enron, and that ended well, didn't it?
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#307 Econoce
Me too!
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#331 garenthm2
Yes, I agree some people borrowed when the should not have done. Advertising works - that's why big companies spend lots of dosh doing it. But the borrowing occurred because it meant bigger bonuses for the mortgage sales people. Also with all these mortgage agreements, they could sell them on, and make lots of dosh for the mselves, again. What they failed to do was to look at the future and see that it could end up where we are now.
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my posts have started disappearing up the bum testing linkage in the wire
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IDNKYN.Post no.128
The Fall online.
Random thread.
''Fan blued skies''.
After Madeoff and Co.
....expect new US laws(fraudulent sale of stock,securities...) to appear shortly.
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Ah well.......there's always the cricket next week.More overpaid "stars"with an underperforming trait.
HBOS ? H(ave) B(onuses)- O(ver) S(ubscribed)
RBS ? R(ight) B(onus) S(cheme) !
BBBS ? UNREPEATABLE
FSA DITTO ABOVE
GB Great Britain-but Gordon thinks it's him !
Darling Darling not up to much at all
OFWAT/OFGEM/OFCOM etc etc Cronyism
Yes,the cynic pervades but no smoke without fire.
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Great link 8 Se7ensport. Horrific lack of control re HBOS subsidiaries checking self certified mortgages.
The more pieces of this jigsaw that come out of the box and get pieced together the more grotesque the image is looking. Whilst it was plain to see the housing market was going crazy, individuals are free to make their own decisions and live and die by their own swords. When it comes to organisations doing the same and slaying the whole tax paying nation at the same time then something needs doing. Keep going with the investigation Robert. Definately, FSA, Auditors, Government are next on the list.
Hopefully the Queen is taking a good hard look at her knighthood list. Now there is one person with a bit of common sense.
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I wonder how many risk managers get fired for telling the directors they're not taking on enough risk?
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Sir James Crosby, is the man who's report into how to stop the fall in house prices and increase the avalability of mortgages basically says that the way to do this is for the taxpayers ie us to underwrite the riskier mortgages that the banks can no longer afford to touch, thus increasing the overall supply. Talk about the lunatics running the asylum, what kind of mess are we taxpayers getting drawn into here, and why is there not more interest taken in the details of these various bailout messures by economics reporters on the BBC?
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can i ask why 303 and 314 both of my comments have been removed to review by moderators for EXCESSIVE USE OF CAPS
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I APOLOGISE BUT USE OF CAPS HELPS ME WITH MY SIGHT SO I CAN READ WHAT IM TYPING..
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No. 34 badgercourage:
I read the link about Paul Moores testimony and what struck me was the disconnect in HBOS between oversight (Paul Moore's role) and Process (in the sales function).
HBOS appeared not to be able to review sales processes in the light of red flags being raised by the GRR in HBOS.
I worked some time ago in a Credit Company specialising in Car Leasing and HP. We implemented a new telephony system, which recorded sales conversations. We were shocked to find that company policy was not being implemented correctly at the sales interface.
However, because we had a change mechanism in place, we were able to align company policy with the sales process. Nowadays most of this is automated but even automation needs rules and audit controls.
Perhaps this was one of the weaknesses of HBOS - no procedure to manage change however that change arose ( in HBOS's case from the GRR)!
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The first reaction I heard from Robert to the Sir James saga was that he had seemed to be the banker who got away.The piece then went on to say that he had been the one who as chief exec of HBOS really drove the sales culture but that he had appeared to get off scot free when he left.Oddly I have not heard or seen that repeated and - silly me- it struck me that there might have been pressure put on someone somewhere.
It was so interesting because it seemed to be one of those stories which people in the know were aware of but not the rest of us who are out here innocently going about our business.What happened to the report?
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brown pushed him no doubt.Browns credibililty is shot to pieces(not that he ever had any in the 1st place).the man is arrogant and is so pompous.why are we stuck with this bloke? why cant he resign and do us all a favour.
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re entry 248 - Moore was subject to a confidentiality clause, so he was unable to speak out.
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Thank you moderators for re-insating my post - much appreciated.
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I'm a bit late to this, but hey, so what.
First Paul Moore has not won the argument, because what he complained of was not what brought the bank down. He was looking in the wrong direction. It was funding that brought the bank down not sales practices.
Second, if you read his memo to the Committee you find a risk officer who was clearly ineffective. A risk officer should be able to understand a business case and then persuade people to modify it as required. Moore reads like a legalistic nightmare with no inter-personal skills. he seems to think that shouting is enough and anyone who quotes with pride his interchange with Mike Ellis needs their head seen to.
Finally he really shows his hand by dismissing Jo Dawson as a "sales manager". She is, in fact, a highly rated, tough, effective business-woman. No suprise she is the only HBOS executive to get a senior role in Lloyds. All her business life she will, like anyone running businesses, have been balancing objectives against risks. She will have been a far more effective risk manager than Moore because she understood the business. Moore seems to think that only someone with his narrow, legalistic view of risk is allowed to opine.
In fact I do think HBOS's risk stucture was weak, too much was devolved to the silos and there was not an overarching appreciation of all risks, something Moore was clearly incapable of supplying.
No I have never worked for HBOS, yes I have met Jo Dawson.
Wait for the HBOS retort, Crosby may have gone, good for him: but this is not over yet. Worth reading Moore in full. He is now unemployable I guess.
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For yukapataya # 339
"Biggest problem for Dave when he takes over from Gordon won't be bankers and the economy, it will be quelling civil unrest and riots in the streets."
As a Manchester man I was brought up on stories of the Peterloo Massacre in 1819, and its first victim, the two-year old William Fildes.
Next time it won't be the Manchester and Salford Yeomanry and a cavalry charge with sabres drawn.
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Can anyone explain to me how when the economy is going to hell in a hand cart, led ably by 'Crash Gordon' our Home Secretary can help herself to "a nice little earner" by staying at her sister's house while in London and claiming full allowance ? Not only that this means the Met have to ensure 24 /7 cover on this place at huge public expense. The only consolation is in 2 years time she will have at least 1 job less but by then she will no douby have a few directorships in the pipeline.
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Sorry if I am repeating earlier bloggers' comments but RP's comments here are so blindingly obvious - ythe major cause of te market failure really - one wonders why make hem now? are the institutions the latest target of GB's wrath or is this just a diversion?
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Sorry - I meant to post #362 on RP's next blog! The current one hardly deserves comment!
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Is there anyone in the financial services industry who is not tainted by association with the mistakes of the past ten years? Surely the FSA needs to be headed by smart, sensible outsiders, who can ask the right questions.
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#325. fiddler1951
not just BT and Phorm
How about the BBC and Omniture (Visual Sciences)
although now they only collect data from international customers, I am led to believe that they were also doing it to domestic customers.
http://www.theregister.co.uk/2009/02/06/bbc_omniture/
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One might like to question the 'professionalism' or possible conflicts of interest in having one of the 'Big Four' conducting the original review.
What value should we place in future on the opinions of the accountants who are so heavily involved with their current or potential clients businesses?
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i want to place on record my disgust against the moderators for removing my 303 post yesterday and still mulling over my 314 post .
my 303 contained nothing DEFAMTORY WHATSOEVER AND NEITHER DOES MY 314 POST.
nothing that is any worse than anything else allowed to be posted by moderators on here and anything else published on news items by the bbc.
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Bajans say FRAUD
Green Monkey
February 13, 2009 at 5:03 am
Fraud 'Directly Related' to Financial Crisis Probed
Read about it at:
http://abcnews.go.com/TheLaw/Economy/story?id=6855179&page=1
http://barbadosfreepress.wordpress.com/2009/02/12/bbc-news-financial-article-sending-barbados-free-press-hundreds-of-new-readers-every-day/
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The thing about this that most alarms me is not that Crosby, made huge errors of judgement whilst HBOS CEO, but that the FSA were appointing members of their board from the banks they were meant to be over-seeing. This is complete madness, it's like a criminal acting as his own judge. It goes beyond mere conflicts of interest, banks were in effect regulating themselves. The FSA really was just a white elephant.
Why is this particular aspect of the story not being pushed by the journos, it's an open goal.
I'm going to invest in rope factories, we're going to need miles of it for all the public lynchings that will have to be made.
RESUBMITTED AFTER CENSORING BY THE STASI BECAUSE I MADE A FUNNY, A PLAY ON THE WORDS 'CROSBY, STILLS AND NASH' THE FAMOUS AMERICAN FOLK BAND. YOU CAN PROBABLY WORK IT OUT.
SO UNFAIR PESTON IS ALWAYS CALLING PEOPLE NUMPTIES AND STUFF.
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Question: at the time of the investigation by KPMG following Paul Moore's complaint, what was their relationship with HBOS? Even if they were not the current auditors, the chances are that their hope for fat consultancy contractsfrom HBOS would have been sufficient to ensure that the outcome of their enquiry would confirm the views of the current Executive. Between 1990 and 1999, the proportion of the major US accountancy practices' income earned from auditing fell from 53% to 34% while that from tax and consultancy services rose from 47% to 64%. I doubt if the UK situation varied much. Thus the notion that KPMG's sign off somehow gave HBOS a clean bill of health doesn't stand up. Worse - as hindsight in this case has glaringly demonstrated, the cosy relationship between government, the FSA and major private companies (most notably of course, the banks) is so personalised and their interdependence so vital to each of them, there is in fact no body able to stand above the mania of the day and come to the aid of the man in the rowing boat struggling to halt the super-tanker.
How this situation can now be remedied while at the same time avoiding complete collapse is a matter for urgent discussion.
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#145 - yes, spot-on.
Barclays have been ducking and diving like no other bank over the last year or so. This will be the next financial imlposion to rock the city.
Their position is actually WORSE than that of RBS. The board will do ANYTHING to prevent full disclosure of their off balance sheet liabilities.
The Lehmanns move was to buy time and avoid spectatular write-downs. The tactics seem to have worked - for now at least.
They are relying on a general upturn to rescue their 'assets', but if it does not arrive soon enough - then watch out!!
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#359 adamsmiththegreat
What a load of claptrap - your explanation of what brought down HBOS is as outdated as the 'invisible hand' your namesake claimed existed.
Of course it wasn't funding - funding was merely one of the SYMPTOMS of the problem, not the CAUSE of the problem.
The excessive risk taking meant that there was too much money sloshing around that was effectively 'promises' as the bankers were all counting on continued growth (of the FTSE, the housing market and the economy)
When all these promises came under scrutiny they were found to be just that. When the US sub-prime market started defaulting the value of these promises fell dramaitcally and suddenly all spare cash had to be used to plug the holes.
....this caused the funding shortage - plain and simple.
With regard to your personal attack on Moore's interpersonal skills - when you're a professional you don't let wishy washy feelings get in the way of your profession.
Some of the most annoying people in work are also the best at their jobs.
The whole point of the Risk manager is not the be friends with everyone - but to clearly highlight excessive risk.
I don't know anything about Jo Dawson, but the mere fact that she was a 'friend of Crosby' is enough to demonstrate that she could not have been independent in her analysis of HBOS's risk.
....and that my son, is borne out by the compete and utter failure of the bank causing it to have to be taken under state control (which will be the eventual outcome).
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#372
Seems obvious doesn't it, that the cause of the problem was that more money was borrowed than could be paid back. So its just about a miscalculation. The attempt by certain sections of society (bankers, landlords and financiers) to gain even more power and control over the lives of others went wrong because they squeezed a bit too hard. Perhaps we should see Money as something that simply exists to ease the process of giving what one person has to someone else that wants it. As opposed to an opportunity to steal part of what is being transfered.
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Seems yesterday's comment that it was wholesale funding that knocked HBoS just got very outdated. As I have written, HBoS got a poisonous balance sheet. The huge profit warning just out confirms Mr Moore got it completely right.
If there was anything left of Mr Crosby's reputation this morning, it certainly has been turned into a black whole just now, as has the HBoS balance sheet.
This makes the following question very pertinent: did Brown initiate the Lloyds-HBoS merger talks following some HBoS balance sheet chat from Crosby?
Or was the FSA, i.e. Mr Crosby, courting Lloyds?
To be continued
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Moore still overstating re corporate lending it in the light of today's Lloyds/HBOS results (13th)? I think not.
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Even with the existing controls in place, the lack of oversight into corporations is bad enough in the UK. When you go offshore it can become very scary.
Combine politicians' undeclared conflicts of interest with their ability to throw around "bailout" cash and you have all the right conditions for impropriety.
Referencing the earlier comments about Barbados and the Caribbean there are "bailouts" going on everywhere but if must be asked "What is the public getting for the bailouts?"
Here is a story about Barbados central bank bailing out an island insurance corporation that then transeferred the bailout money to the parent corporation based in another country (Trinidad) that was in worse shape. What do the Barbadian taxpayers get for their assistance to a private corporation? So far, nothing.
Barbados Money Laundering Advisory story
http://barbadosmoneylaunderingadvisory.wordpress.com/2009/02/12/is-weak-clico-barbados-subsidiary-bankrolling-trinidad-hq/
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359 Adam Smith The Great
Careful what you write, especially when the person you defame is a barrister.
How is decrying over-expansion of sales, risky sales, looking the wrong way? Every bank 'sale' has to be funded so clearly the two are opposite sides of the same coin.
The massive losses at HBoS announced today by Lloyds make the whole thing a bit academic. I don't know Jo like you know her but I guess she must have got her new job at Lloyds for something other than her risk management skills.
I think Moore would agree with you that he was ineffective. I think his whole point was that HBoS were institutionally disinclined to take risk seriously either by design on the part of Crosby et al or by omission on the part of non execs, clearly not qualified to provide due diligence. The emails he published demonstrated the hostile attitude his role encountered - Seemed fair to me. I'm sure he has other material that will back up point, otherwise his settlement wouldn't have been so quick and one sided.
Do wish Ms Brown happy Valentines when you see her. I think we'd all like to hear/see her account of how her effective risk management saved HBoS from a much worse fate than that which it befell.
I'm sure Jo will thank you later for riding to her defence and raising her profile in this matter.
Happy explaining.
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I am a HBOS employee and over the last 5 years I have seen the company I love and have spent my whole working life at graduadly infused by a sales culture that does reward sales highly but only pays a token nod towards risk...as long as it doesn't stop sales. A culture whereby you are only as good as yesterday's sales figures.
I think todays news is appalling. How Hornby and his directors (and Crosby & Co) have allowed this to happen is criminal. A British institution has been run into the ground. Our West Yorkshire founders who sat in the Cock Inn in Halifax will be turning in their graves.
Staff, shareholders and the public deserve an explaination ....and they should be dragged kicking and screaming back in front of the select committtee. Then turn them over to the HBOS staff .... who they've avoided ever since September.
I don't blame Eric Daniels.....I'm sure Hornby and Co were sparing with the truth. As late as midday on 17/09/2008 when the proposed bailout by Lloyds was announced staff were being told "no need to worry. we are a strong, well funded bank".
What I do question though is what in gods name are they doing employing Andy Hornby as a consultant?? Surely by now he's demonstrated his lack of business skills....please lets not give him any further opportunity to damage the company further.
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re 357
Yes - a confidentiality clause that HE signed up to so he could get a nice big pay-off. He should be as ashamed of himself rather than being smug.
He now argues that its "in the public interest" that he tells his story.
WRONG.
It would have been in the public interest for him to have said more in 2005 rather than just taking the money and running.
I completely agree with post 248 - Moore has tried to ride in like a white knight, but to me he is an utter utter disgrace and his statement is completley self serving.
In my view, he should be probed on what deal he got for his silence and have that money taken off him and given back to HBOS shareholders (ie taxpayers) as he basically agreed to cover up the issue.
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This comment was removed because the moderators found it broke the House Rules.
379 Branchero, 248 Pleanmull
My 380 was referred, don't know why as the email hasn't arrived. Mods, please forward.
Moore appears to have got his payout as damages for abuse. HBoS insisted on the gagging clause presumably because they didn't want it known how badly they had behaved and what contempt they had for risk, but unless they publish, we can only speculate.
Ironically, Moore was working to protect Shareholders interests although many would have seen it as restricting their profits at the time. Sadly, widespread greed supported Crosby at the time and amazingly he still enjoys good support even now that his incompetence and the consequences therefrom are plain for all to see. I guess current support is mutual back covering and whitewash.
What was Moore's motivation for coming forward at the time? His company were attacking him, the FSA and Government weren't interested, and trying to sell a boom at risk of bust in 2005 wouldn't have found much sympathy from the public either. Sometimes you have to stop caring for the sake of your own health.
Once he knew there was interest in the truth and worse, that the great and powerful were lying to protect their interests, he came forward. He has committed no crime, he has not swapped protection under law in exchange for testimony. He gets nothing from coming forward except more abuse from the likes of you.
I sense your anger at those who have messed up so badly, and I share it. Until Moore, these parasites seemed untouchable. Thanks to Moore, they are squirming. They are exposed. Get with the programme and direct your righteous anger at those who deserve it. For me, Moore is on the side of the angels, our side.
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#381
Thanks - your comments noted.
For the avoidance of doubt, I am a bank supporter and I do not hold any anger towards those that have messed up (I presume you mean HBOS, National Rock directors etc). I dont think that much of the criticism the banks are facing is justified.
As John Varley said in the select committee hearings earlier this week, the problem now faced by ALL financial institutions are a result of systemic risk in the financial system as a wholle (which included thousands of overseas financial institutions and which governments and regulators are resonsible for controlling). Admittedly, some banks were more heavily exposed to that systemic risk than others and some have failed whereas other continue to succeed.
However, like in all industries, different companies have different financial and operating models - why dont we have the Woolworths directors in front of the select committee being quizzed on why they had debt on their balance sheet and why they had an exposure to pick'n mix sales causing 27000 to lose their jobs (yes, said tongue in cheek). And being asked to justify their salaries (CEO was paid almost £1m and the whole exec board got bonuses in the year the business went bust)
Or the directors of numerous (20 or so) other retail businesses that have gone under as a result of their capital structure and/or over-exposure to products which would clearly suffer under a downturn.
I know this is simplifying the debate, but it is unfuriating seeing the banks used as scapegoats when the government were being warned of fundamental issues with the levels of debt in the economy almost 8 years ago.
Anyway, back to your point, as you say, we can only speculate as to the details of Moore's agreement, however, I find it does very little to promote the public interest (4 years late), seeks to sensationalise the matter and further undermines the credibility of our banking system, is self-serving AND (as many have argued) does not prove a point because the risks which he identified (credit quality of business HBOS was writing) were not the ones that caused HBOS's collapse (reliance on short-term money markets). For this reason, I find his 'dig' at the banks and bank chiefs completely pointless and annoying.
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Moore is not a whistleblower. It's an insult to whistleblowers to describe him as such. He kept quiet for 4 years and then claims to have come forward 'in the public interest'. Well, I don't believe it. I think he had personal motives i.e. against his former boss. A proper whistleblower, deserving of the name, would have acted 4 years ago. Moore is just having his cake and eating it. Not that I have any sympathy with senior bankers, who are just a bunch of crooks and have ruined our banks and brought the economy to its knees with their greed. Criminal charges must follow.
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382 Branchero
I can't imagine what it's like to be a bank supporter in the current climate. Maybe your pension is secure, maybe you won't have to pay tax to cover the national debt, maybe your savings enjoy fixed interest rates or your share portfolio is somehow immune from the meltdown. Very few aren't touched in some way by the chaos financial short-termism and greed have caused.
I admit that I have a very parochial view. I consider that any industry that pumped careless money into the housing market, inflating it to such an extent that ordinary folk could no longer afford a home, is anti social, anti community and ultimately stupid because the bubble will always burst eventually. Same for lending on credit cards where ordinary folk struggle to pay the interest let alone pay back the capital. There is no place for such behaviour in a civilised society.
I'll give you that poor understanding of sophisticated software models, inept credit agencies, automatic trading systems that overreact to short selling (to name but a few) are elements of a (global) financial system in crisis. But for me, the biggest systemic failure, for without it most of the other faults would be mitigated by human intervention, is that it would appear that the significant (senior, ruling) part of the system in most countries is led by greedy, self-serving, reckless, careless and largely inept individuals.
It may well be that these people are in the minority, but their actions damage trust in the whole and jeopardize the good work done by the many. We have to root out these criminals. I grow tired and annoyed at people who hide behind global scale and systemic failures to excuse these people and keep their gravy train running.
I take your point about non banking enterprises that have failed. I probably couldn't run a big company so I have no envy for the remuneration of those that can. My understanding of Woolworths was that it had been inefficient/disconnected and therefore risky for many years, but while that risk was accepted and finance extended, they managed to bungle through and make profits after paying debts and interest. It was only when credit was withdrawn that the business collapsed. You could well say that it was the blindness to corporate risk in banks that allowed Woolworths to continue so long. If it weren't for reckless lending, Woolworth's might have closed years ago. I'm not qualified to say.
More to the point, Woolworths wasn't bailed out with Billions of public money. I don't know if the CEO was inept or whether he/she has moved on to run another company badly. I guess we need to prevent failures destroying workers' lives and moving on wherever it happens, but these guys were allowed to fail, the banks weren't.
So, we have to prosecute failed individuals in banks so that sufficient stigma attaches to them to prevent them moving on. Where criminal negligence can be proven then past benefits must be clawed back where possible. I believe that so many were caught up in the bubble that nobody could have burst it in 2005 by blowing the whistle. Those inflating it could have stopped themselves of course. It's only now that the bubble has burst of its own accord that the public want to know how they were fooled and by whom. This is the public interest that Moore serves and maybe the creation of a new system with better (or even just the traditional) checks and balances.
I will accept that Moore keeping silence in 2005 was self serving, probably self preserving. His speaking out now might be to get back at Crosby as you say, but the cheque probably served that purpose. It could equally be that he has professional pride to see risk properly managed, wants social justice for his fellow citizens or wants to be part of preventing such disaster in future. There's nothing base like more money or protection from prosecution to be had. To my mind he showed integrity, tenacity and courage at HBoS. These qualities fit better with any of these last three possible motives than with your first, more cynical view.
I guess we'll have to agree to differ.
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Hello again,
Just another quick question wasn't the current chairman of the FSA, Lord Turner, Vice-chairman of Meryl Lynch from 2000-2006. the er, 'boom years?'.
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When will people wake up to the fact that the whole Banking system is organised crime on a massive scale. Fractional banking is crooked, always has been and always will be. The Bankers control governments, that's why Brown can't and wont do much. Banks should not be allowed to use savers money for their investments. They should carry out investments using their profits. They use savers money for their risky speculation. If it goes wrong it's your money lost. If it is successful, they take the profits to pay themselves well and give the savers a pittance in interest. Nationalise them all and let the tax payers benefit from the profits.
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"Permit me to issue and control the money of a nation and I care not who makes it's laws"
Mayer Anselm Rothschild...Banker.
Go here to learn about the corrupt Banking system
http://www.youtube.com/watch?v=cy-fD78zyvI&feature=related
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The Whistleblowers at HBOS are both right.
There is an "Emperor's New Clothes" culture at HBOS.
Everyone is so determined to be in-tune with their local management's thinking, that nobody will air an independent opinion.
Consequently, the Emperors (Hornby & Crosby) were both found to be naked.
Hans Christian Andersen could have written the story with HBOS in mind.
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with everything reported on the bbc and the comments from politicians that the bbc have chosen to publish on the site and report on the news channells
im even more astounded the moderators removed one of my previous posts questioning whether a certain ex hbox employee was ever right to take his post at the fsa!! given the troubles the fsa had identified and what has also been reported by 2 ex employees.
im sure those 2 wont be the last to come and speak out.
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Robert Preston:
Maybe Mr. Crosby resigned, because he made mistakes...
~Dennis Junior~
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