On the 11 May 2010 the Coalition Government began its vindictive and accusatory blame game: “It’s all Gordon Brown’s fault” cried the Prime Minister. There are still second rate MPs who use the phrase in the House of Commons hoping to curry favour with Downing Street.
Over the last three years targets have included NHS managers, doctors, nurses, school teachers, tax evaders, benefit claimants, Libya, the Church of England and many more.
The existing financial regulatory system was torn up and a punitive atmosphere pervaded the headlines as the Financial Services Authority (now the Financial Conduct Authority) decided they would prosecute as many people as possible.
Three years have passed and now 7,000 bondholders in the Co-operative Bank, with savings of up to £25,000, face massive losses. This is because the Bank needs to raise £1.5 billion of additional capital. There is to be an inquiry but the basic understanding is that the Bank has toxic loans acquired in 2009 when it bought the Britannia Building Society.
Despite this the Regulators watched while the Co-operative tried to buy 631 of Lloyds Bank branches. It took a credit agency to alert the world to its problems. Even then the Chief Executive of the Co-operative Bank, Peter Marks, said
“There will be other opportunities to expand our bank.”
This was said in April 2013 which implies that the Board of Directors, the financial regulator, and the auditors had no idea about the problems the bank was facing.
All those people retain their salaries and pension and their honours present and future.
Andrew Bailey, Head of the Prudential Regulation Authority (“PRA”), said last week
“While we recognise the concerns of small investors who have seen the value of their investments reduce…the PRA has a general statutory objective to promote the safety and soundness of the firms we supervise.”
Ebenezer Scrooge, referring to Christmas traditions, said “Bah, humbug.”
Perhaps those losing money in the Co-operative Bank might say the same.