Link to this page: http://www.socialistparty.org.uk/issue/760/16492
HBOS scandal is just the tip of the iceberg
Matt Gordon, Bristol Socialist Party
HBOS has been called the 'worst bank ever' after colossal losses resulted in a government-brokered merger with Lloyds and a subsequent taxpayer bailout of £20.5 billion.
Others have called it 'an Ealing comedy for our times', referring to the bungling, ineptitude of the Bank's management, the 'HBOS three'.
But for the majority of us who are now paying the price through austerity and a stalling economy, this 'comedy of errors' is no laughing matter. 32,000 workers lost their jobs as a result of the merger between HBOS and Lloyds, and many of them will still be struggling to get new work as the UK service sector is continuing to contract four years on.
A recent report by the Banking Standards Commission has savaged the HBOS three for being personally responsible for ruining the bank and "sowing the seeds of destruction".
It has also implicated the Financial Services Authority for refusing to even investigate the bank's dodgy practices.
But the HBOS three are likely to survive this recent scandal with their fortunes intact.
The HBOS three
Lord Stevenson, chairman from 2001 to 2008, already had a knighthood and was given a life peerage for his work at the bank - he is likely to remain a board-member of Waterstones bookshops.
Sir James Crosby, CEO from 2001 to 2006, is now sitting on a pension pot worth £25 million. This entitles him to an annual pension income of £700,000 - 100 times greater than the average private sector worker.
Andy Hornby, CEO from 2006 onwards, was still at the bank when the share price crashed but has since made good on his losses as head of gambling giant Gala Coral.
Gala Coral, which is owned by a string of hedge funds and private equity investors, has thrived since the onset of recession by making money from misery and desperation.
The report reveals that the bank's losses were much greater than was known at the time. It estimates that shareholders lost 96% of the company's value due to bad loans and excessive risk-taking.
The losses would have grown had the government not stepped in and bought up 43% of the company.
Bank bailouts not only gave the main political parties the excuse they needed to embark on a programme of rapid 'deficit reduction' - cuts to vital public services, pensions and jobs - but have reinforced the wider economic stagnation in the UK economy for which we are all suffering.
Calls to ban the three from ever working in the City again, and to follow the precedent of Fred 'the Shred' Goodwin and strip Stevenson and Crosby of their titles, do not go far enough.
All three should be held criminally responsible for the misery they have caused both directly and indirectly to millions of people, including being asked to cover some of the losses from their own considerable fortunes.
The report touches on an important truth that there is no real difference between 'good' retail banking and 'bad' investment' banking.
It admits that any of the planned 'structural reforms', such as those from the Vickers Report, to ring-fence 'retail banking' from 'investment banking', would not have prevented the collapse of HBOS.
In reality, they were contaminated, not with investment banking, but with the virus of capitalist greed.
The only real way to regulate the banks and prevent a further crisis is for them to be fully nationalised under democratic control and run for the benefit of ordinary people.
Those struggling to pay their mortgage could be helped and not punished, service workers could have their hours cut but pay and pensions increased, small businesses could get cheap loans and the banks could finance public works such as mass house building. This could be the start of a socialist planned economy on a world scale.
In The Socialist 10 April 2013:
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The bedroom tax
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