Yesterday, four former bosses of UK’s RBS and HBOS (former HBOS chief executive Andy Hornby, former HBOS chairman Lord Stevenson, former RBS CEO Sir Fred Goodwin and former RBS chairman Sir Tom McKillop) faced the Treasury Select Committee for a questioning session about their role in the financial meltdown and the disasters that came to befall their banks.

The key snippets of this session, which has been dubbed “the show trial” for all the public apologies it started off with, can be found here.

A very British questioning session: And what a weak and ultimately toothless show this was. In no way did the questions asked of the ex-bankers, and the way they were asked, approach demonstrating the full fury of popular feeling on the subject of bankers’ responsibility for the global financial crisis, or get to the root cause of why things happened the way they did. Occasional political points were scored by MPs asking a few uncomfortable questions, and we heard the embarrassed apologies repeated again, and we also heard their partial admissions of responsibility – but we are still none the wiser why the allegedly capable, intelligent and shrewd people like these four ended up in this mess, destroying reputations of their banks, and contributing to the global financial crisis. The whole hearing has had a very British feel to it – we are angry, and we’ll show it, but we won’t push it too far, because it is just not the done thing to do.

Not so gentlemanly across the pond: A similar US hearing starring Lehman Brothers’ Richard Fuld was a slightly less amicable affair back in October 08 with him being repeatedly referred to as villain. However, one can’t help feeling that the top banking chiefs are all getting away with it at present. Will we see any of the american ex-banking bosses in US courts? Time will tell; certainly the US litigation system seems to have plenty more teeth than the UK system.

The UK four getting away with it so far: The UK four have good reason to believe they got off lightly. Oh, whoopy-doo, yesterday they got a gentle rapping on the knuckles for screwing up and it was all done by 2pm in the afternoon. We are there to pick up the bill for their financial gambling rampage whilst they keep their fancy homes and art collections paid for with past bonuses. There is no law under which they can be prosecuted, thanks to the deregulation of the financial sector. And their apologies did not cost them anything.

No responsibility really taken: The point is, whether or not they admit responsibility now, I think that the top people in the financial sector have never truly appreciated their unique responsibility for maintaining a globally stable financial system. They have overlooked just how globalised banking has become in recent decades, and that the stakes played in their game of financial poker are incredibly massive and capable of causing immense unchecked losses across the world. Not many, and certainly not the failed banks’ decision-makers, have been worrying themselves with these thoughts until now. Because if they truly did realise the enormity of it all in the past, they would have stopped and done everything possible to stop the runaway train before it got too late.

Irresponsible, negligent, reckless, cavalier, juvenile… too late to realise this now though. And no amount of public show trials will put this right or change anything.

Fear: You know my biggest worry? That we will still never learn from this. People have such short memories and are swayed by market sentiment far too easily. Sure, we’ll put some controls and regulations in place, and maybe even change the way we reward risk-takers. But a new loophole or hare-brain scheme will come up which someone else will exploit in future and get the unwary into masses of trouble. Periodic recurrence of stock market bubbles every century and the extensive damage they cause is ample proof that we can’t control the irrational side of our behaviour. Everything in this world repeats itself, time and time again…


Copyright 2009 by CuriouslyInspired