The juxtaposition of events on 6 April tells you all you need to know about the system under which we live (free market capitalism) and the government that is supposed to be running it (Thatcherite-plus). It has already been widely remarked on that on the very same day that the bedroom tax, extended council tax and PIP (personal independence payments that replaced DLA, but with a 30% cut in expenditure) came into effect, 13,000 millionaires received a tax cut each of an average £108,000 a year (a windfall gain of £2,076 a week) from Osborne’s infamous abolition of the 50p tax rate.
But what has not received the similar attention it deserves is the report on the HBOS bank collapse that came out on the same day. It shows that the banker who “sowed the seeds of destruction” at HBOS is now sitting on a pension pot worth some £25 millions from the collapsed bank, providing him with an annual income of £700,000 – a staggering £13,461 per week.
The enormity of this can be judged on several counts. He – and he is Sir James Crosby, knighted for services to banking! – received a payout more than 100 times that of the average private sector worker who has to make do on retirement with less that £6,000 (£115 a week).
Second, the Parliamentary Commission on Banking Standards report, published a week before, castigated Crosby, Hornby and the former chairman of HBOS, Lord Stevenson, for a “colossal failure” over the bank’s collapse in 2008, noting that it would have gone bust anyway even if there had been no financial crisis because of £47bn losses racked up in just 3 of its divisions.
Third, what has happened since then to this trio whose out-of-control lending by their gung-ho management team destroyed the bank? Nothing that they could complain about. Crosby is still sitting pretty, while Hornby has a top job at bookmaker Coral and Stevenson still holds directorships at the Tate and Glyndebourne. Welcome to free-for-all capitalism.
The morals of this story are legion. ’One law for the rich and one for the poor’ does not even begin to describe the enormity of it. These three brought down HBOS, not as a result of the Lehman fallout, but because of their uncontrolled reckless lending which it then cost taxpayers £20bn to bail-out. Yet they did so with impunity – apparently there’s a 3-year rule that inhibits City regulators taking action against them.
So why wasn’t action taken before 2011, or given the magnitude of this scandal why isn’t the rule suspended or indeed wholly withdrawn so that they can be prosecuted? The parliamentary report recommended they should be banned from the City for life. They must be laughing all the way to the bank.
