Bad banking again

Sir James Crosby's decision, announced yesterday afternoon, to relinquish 580'000 pounds value follows from last week's report about the near collapse of HBOS Bank in 2008 and the roles played by Sir James as chairman and also by Lord Stevenson and Mr Andy Hornby.

HBOS had to be rescued by Lloyds Banking Group but the taxpayer also had to chip in with a 300 billion bail-out. In his statement yesterday Sir James said he was “deeply sorry” but pointed out that at the time the bank was “widely regarded as a great success”. That is not how the inquiry, with hindsight, saw it. The report said Sir James was “the architect of the strategy that led to the course for disaster” and that “perilously high-risk lending sowed the seeds of destruction”.

When last writing here about the more recent misbehaviour at Barclays Bank I asked “How many more cases of this kind are still to come?” The banking business is going through a very bad reputational period but the government still seems unwilling to take strong steps to enforce reform.

I suggested that a moratorium on all kinds of honours and awards to bankers until they put their business in order might work wonders. It would not be necessary to make any announcement -- jut let the banking community work out what was happening for themselves and take the hint.