Beware the City merry-go-round
- 12 Feb 09, 11:08 AM
He wasn't told, he didn't know and, besides, those that did know advised him to appoint Sir James.
That, in summary, was Gordon Brown's defence of his decision to appoint Sir James Crosby to help regulate Britain's banks at the Financial Services Authority. This after last night's revelation that Sir James had received warnings from that same regulator that his growth strategy for HBOS posed risks to the bank.
The Halifax Bank of Scotland, you may recall, went on to need a "little extra help" from you and me - in the form of £11.5bn of taxpayers money.
The prime minister's essential message was that it is only with the benefit of hindsight that the warnings to HBOS look significant. The FSA warning to the bank that grew too fast was, he said, "standard and routine"; it was one of 29 similar reports issued at the time (2006) and did not conclude that HBOS posed a risk to the entire banking system. That is why the Treasury were not told.
The search for who knew what when, and who could and should have acted differently, will go on. In part, because lessons do need to be learnt. In part, because Mr Brown's enemies want to prove that the rail of failure leads from the bankers to the prime minister.
The lesson I've already learnt is that the City merry-go-round which Sir James Crosby rode - first a banker, then a government adviser with a knighthood, then a regulator - made us all sick.
UPDATE 1140: I've just noticed that Gordon Brown's defence of his appointment of Sir James Crosby to the FSA related only to the period 2003/4, ie when Sir James was made a non-executive director of the FSA.
The most serious FSA warning to Crosby's bank HBOS came in 2006. The following year he was made Deputy Chairman of the FSA. By then, of course, Mr Brown had been replaced as chancellor by Alistair Darling.
Could this be a case of saying "not me, guv"?
