Breaking the bank

ITS collapse tipped Britain into the most prolonged recession since the 1930s and required a £45.5bn taxpayer-funded rescue package. Yet, as the Financial Services Authority published its report into the Royal Bank of Scotland’s demise, one question remained unanswered: why has no one been held culpable?

Even though the disgraced chief executive Sir Fred Goodwin fell on his sword as a condition of the last Government’s emergency takeover, the numerous failings fall into three categories – political, regulatory and banking.

First the political. Decisions and “mistaken assumptions” were taken “against a backdrop of political pressures for a light touch regulatory regime” championed, at the time, by Gordon Brown and Ed Balls.

Then the regulatory. The FSA, by its own admission, says its flawed supervisory approach failed to challenge the bank’s robust management which became increasingly “resistant” to outside interference.

And while condemnation of Sir Fred was damning, why did RBS directors – and shareholders – not to speak out when it was clear that the £50bn takeover of Dutch-based ABN Amro was going to break the bank?

Taxpayers have every right to be sceptical when there is such obfuscation over levels of accountability – they continue to pay a heavy price for this financial recklessness.

There is merit in suggestions that future bank takeovers will require greater regulatory approval and that directors of banks will receive delayed payments in the future so they pay greater heed to the long-term consequences of their decisions.

In the meantime, Business Secretary Vince Cable should ban the main players at the RBS and FSA during this crisis from assuming directorships, or key positions, elsewhere.

It is the least that he can do in the circumstances.