Browns lasting legacy: The destruction of the City of London.

Some of you have been in touch with me since 1997 when I started my 
monthly paper-based news-sheet called "Facts, Figures & Phantasies" , 
metamorphing into a website of the same name .

Jeff Randall here declaims that there are no veriable FACTS anywhere 
in the banking world.  Had I been providing the same service today it 
would have to be shorter because one thing that has got progressively 
more difficult over these 11 years is sorting the Facts from the 
spin, the Figures from the corporate responsibility waffle and the 
glossy photographs from the Phantasies [OK 'fantasies' !!]

He is,  like most today,  in despair.

cs
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TELEGRAPH    23.1.09
It's impossible to get any hard facts and figures from British banks
Jeff Randall believes the disintegration of Britain's financial 
sector has finished off Gordon Brown's dwindling reputation for 
competence

Jeff Randall

In these hard times, there is a lesson from Hard Times for all 
involved in the disintegration of Britain's finances. Thomas 
Gradgrind, Dickens' unlovable utilitarian, insists: "Now, what I want 
is, Facts. Teach these boys and girls nothing but Facts. Facts alone 
are wanted. Stick to the Facts, sir!"

Who remembers Facts? They are what I used to believe were contained 
in the annual reports of reputable banks. How gullible. For a start, 
the juxtaposition of "reputable" and "banks" forms a glaring 
oxymoron. If the credit crunch has taught us nothing else, we now 
know that the balance sheets of institutions to which we entrust our 
savings and investments contain precious few Facts.

There is, of course, lots of information - yards of it. It takes the 
form of historical numbers, comparative statistics and, if we are 
lucky, some qualifying opinion. But all this, it seems, is not the 
same as Facts. In the Delusion Years, when money for nothing was a 
hard currency, there blossomed an industry within an industry. As the 
financial-services sector boomed, so too did corporate governance. 
Alongside the growth of impossibly complex derivatives came an 
explosion of disclosure and compliance.

Legions of lawyers and accountants were recruited to give the 
impression that banks and other lenders were open and honest with all 
their stakeholders: investors, customers and employees. Vast 
departments dedicated to the pursuit of CSR - corporate and social 
responsibility - sprung to life. Bloated payrolls of useless do-
gooders were masked by eleven-figure profits.

The buzzword was "transparency". It sent a comforting message. But, 
when stress-tested by our nosedive into recession, the edifice of 
banking clarity turned out to be a hall of mirrors. What we were 
seeing was not what we were getting. It was the age of Factless 
prosperity, a triumph of legerdemain.

The absence of Facts is not simply a source of shame for bankers who 
have conned their customers and investors, while bringing the economy 
to the brink of ruin. It is embarrassing for a Government which has 
pumped in many tens of billions to the banking system, only to 
discover that the recipients are still refusing to come clean on 
toxic assets.

For Britain's charlatan financiers, objective reality meant only what 
they could get away with. How else can we explain the speed with 
which real cash has vanished? As the true level of impairment becomes 
clear, the Government's £37 billion bail-out in October looks 
pitifully inadequate.

Some £20 billion of that went to Royal Bank of Scotland, which owns 
National Westminster, Coutts, Ulster Bank, Direct Line, Churchill, 
Lombard and a huge banking operation in America. Today, the stock 
market's valuation of the entire shebang is £5 billion. The share 
price is indicating that without state largesse, the business would 
be worth less than nothing.

How so? Answer: the markets believe that deep in RBS's vaults there 
is the financial equivalent of a leaking nuclear reactor: a portfolio 
of mortgages, business loans and (this is true) commitments to 
Russian magnates, which, if valued properly, would wipe out all its 
capital. Deprived of Facts, investors have decided, not unreasonably, 
to assume the worst.

Earlier this week, an exasperated executive from a bank asked me: 
"What have we got to do to make people believe us?" Too late, old 
son. Having successfully disguised Flannel as Facts for the best part 
of a decade, nothing you say has credibility. Shareholders would 
happily swap a bank boss's promise for a bucket of Zimbabwean 
dollars. It really is that bad.

On Monday, Sir Victor Blank, the chairman of Lloyds Banking Group, 
which formally absorbed HBOS this week, told me on Sky News: "This 
bank has come clean. I believe everything is out there as far as HBOS 
is concerned." There was a time when such an assurance from a 
respected grandee would have calmed the City's nerves. No more.

The next day, Lloyds' shares lost nearly half their value, amid fears 
that undisclosed horrors inside HBOS will compel the Government to 
nationalise the merged entity (it already owns 43 per cent). One 
suspects that Lloyds was bullied by the Prime Minister into rescuing 
HBOS, without knowing all the Facts. [This was stated by me yesterday 
in my "Thursday Round-up" where I said "When the deal was being 
discussed it was suggested in many financial columns that Brown had 
close ties to  Sir Victor Blank of Lloyds and that he put great 
pressure on him for the takeover " -cs]  I hope, for Blank's sake, 
that he is right. For if HBOS is forced to reveal yet more nasties, 
the only honourable course for him would be resignation.

Aside from Jonathan Ross and Russell Brand, it is difficult to think 
of more unwelcome guests for a Downing Street party than the bank 
bosses whose maladministration of private assets has helped to wreck 
Gordon Brown's chances of staying in public office. In trying to save 
the world, sorry, the banks, he has wiped out what was left of his 
reputation for competence.

When the credit crunch began, Mr Brown repeated robotically that the 
problem's genesis was in America, inviting us to conclude that it had 
arrived in Britain on a disease-ridden rat from Wall Street. As the 
debacle unfolds, however, the home-grown nature of Britain's troubles 
is becoming inescapably clear. Reckless borrowing, irresponsible 
lending and a deeply flawed system of regulation (set up by Mr Brown) 
did the trick.

On Tuesday, while the world was glued to Obamarama, I followed the 
Bank of England's Governor to Nottingham University, where he gave a 
speech on the subject: What went wrong? Mervyn King is essentially an 
academic: he studied at Cambridge and Harvard, before teaching at the 
London School of Economics. As such, he is enthusiastic about Facts, 
a characteristic that sets him at odds with those he regulates.

After a blizzard of Facts about Chinese electricity production, 
Brazilian car sales and Japanese industrial output, Mr King 
eventually got round to the United Kingdom's woes. His disparagement 
of our bankers was refreshingly frank, arguing that recent measures 
were designed to "protect the economy from the banks". Later, in an 
unscripted comment, he accused the banks of holding their customers 
"hostage". This played well with an audience made up largely of CBI 
members.

But, for me, the bit that really hit home was Mr King's assessment of 
how total debt in the UK, relative to GDP, was allowed to double 
between the early 1990s and 2007. "It is clear that policy did not 
succeed in preventing the development of an unsustainable position," 
he said.

Yes, domestic policy failed. It is a Fact. But have we heard that 
from either Mr Brown or Alistair Darling? No we haven't - and I don't 
think we are going to.

Instead, as winter drags on, and the economy is run into the ground, 
they can barely mask their panic. Meanwhile, the rest of us, like the 
narrator of Hard Times, look on in despair as "the ashes of our fires 
turn grey and cold".