Britannia Radio

This is scandal after scandal and Gordon Brown is at the heart of all  
of them.   It is now clear that the banks behsaved as they did  
because they were given the green light to do so right from the top.   
Brown saw their reckless behaviour as providing the false prosperity  
to get him elected.

Bankers themselves then behaved imprudently and had their noses  
firmly in the trough and - as it turns out today with the vast  
pension which the former head of RBS wangled for himself at the great  
age of 50 - showed scant regard for decency..

xxxxxxxxxxxxxxx cs

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TELEGRAPH            26.2.08
1. Brown ordered ‘light touch’ on bank regulation, says watchdog
[online headline -  Gordon Brown helped fuel banking crisis - FSA head)    
[SEE yesterday’s preliminary posting “Failed regulator rewards failure”]

Gordon Brown helped fuel Britain’s banking crisis by pressuring the  
City regulator not to intervene and stop reckless lending, Lord  
Turner, the head of the Financial Services Authority, said.

    By Robert Winnett, Deputy Political Editor

The authority’s chairman claimed the regulator was under political  
“pressure” not to be “heavy and intrusive” with banks such as HBOS  
and Northern Rock.   Instead, it was told to operate a “light touch”  
approach, which had now been proved to be “mistaken”, he told a  
Commons committee.

The failure of the regulator to intervene earlier has been blamed for  
the banking crisis, which has led to the near-collapse of several of  
the country’s biggest banks.

Lord Turner’s remarks, made to MPs, are deeply embarrassing for the  
Prime Minister, who oversaw the FSA while he was Chancellor.
Mr Brown has repeatedly been accused by political opponents of  
failing to take responsibility for his role in the banking scandal.  
The latest allegations came as the Treasury prepared to unveil  
details of another bail-out package to rescue ailing banks.

The first stage, to be announced on Thursday, will be a deal to help  
the Royal Bank of Scotland (RBS).

It will see taxpayers underwriting more than £250billion worth of the  
bank’s debts for up to a decade, just as it announces the biggest  
corporate loss in British history of up to £28billion.


Appearing before the Treasury select committee, Lord Turner told MPs:  
“All the pressure on the FSA was not to say why aren’t you looking at  
these business models, but why are you being so heavy and intrusive,  
can’t you make your regulation a bit more light touch?
“We were supervising people like HBOS within a particular philosophy  
of the way you do regulation, which I think in retrospect was wrong.
“It was not the function of the regulator to cast questions over  
overall business strategy of the institutions - you may find that  
surprising.”
He added: “I think (the FSA’s actions were) a competent execution of  
a style of regulation and a philosophy in regulation which was, in  
retrospect, mistaken.”

John McFall, the chairman of the committee, said the remarks had  
raised serious questions about the FSA’s independence.
Mr Brown and Ed Balls, previously his key adviser, had regularly  
boasted of the benefits of so-called “light touch” regulation.

The Prime Minister has also faced accusations that he became too  
close to senior bankers such as Sir Fred Goodwin, the former chief  
executive of RBS.

Lord Turner, himself a former investment banker, said: “There was a  
philosophy rooted in political assumptions which suggested the key  
priority was to keep it light rather than to ask more questions.” He  
effectively admitted that the regulator had not been fit for purpose  
for much of the past decade.

Two weeks ago Sir James Crosby resigned as deputy chairman of the FSA  
following claims by a whistle-blower.

Paul Moore claimed he was sacked five years ago by Sir James, who was  
at the time head of HBOS, for warning that the bank was taking  
excessive risks. Sir James insisted there was “no merit” to Mr  
Moore’s claims.

Lord Turner promised there would be a “fairly complete change” in the  
regulation of British banks and said the FSA needed to do a “much  
better job” in tackling City excess.

When asked whether the FSA was fit for purpose he replied: “We have  
to get it right in the future...it [the FSA] is going to be fit for  
purpose given the changes we are making.”

Philip Hammond, the shadow chief secretary to the Treasury, said:  
“Lord Turner’s remarks suggest the FSA was subject to political  
pressure not to clamp down on reckless lending.’’

Today the Government is expected to unveil the latest rescue package  
for RBS. A similar package of help for Lloyds Banking Group, the  
country’s biggest mortgage lender, is due to be announced tomorrow.

Last night RBS executives and senior Treasury officials were locked  
in negotiations over the exact terms of the bail-out for the bank.  
However, the broad principles are understood to have been agreed.
The Government will “insure” more than £250 billion of RBS assets,  
much of which is so-called “toxic debts”. As part of the deal, RBS  
will pledge to increase new lending by more than £20billion over the  
next two years.
==============AND ----->
2. Anger over £8m pension top up for Sir Fred Goodwin
Royal Bank of Scotland’s disgraced former chief executive has picked  
up an £8m pension top-up after being sacked by the lender for leading  
it to a £28bn loss last year, the largest in UK corporate history.

    By Philip Aldrick, Katherine Griffiths and Mark Kleinman

The payment was made despite RBS and Sir Fred’s insistence that he  
received no compensation for loss of office after the taxpayer  
stepped in to rescue the bank. It means he is already drawing a  
pension for life of £650,000 a year at the age of 50.

The revelation, by BBC business editor Robert Peston, [him again?   
WHO leaked this to him and WHY? -cs] comes on the day that RBS’s new  
management unveils the full horrors of its performance last year. New  
chief executive Stephen Hester has already said the bank, now 70pc  
owned by the state, made up to £28bn in losses in 2008. He will today  
detail plans to dump £300bn of bad and “non-core” assets into a  
ringfenced unit.

Sir Fred is understood to be in discussions with the Treasury, UK  
Financial Investments – which manages the taxpayer’s bank stakes –  
and RBS about amending the pension top-up. The Treasury said in a  
statement: “This is another example of the culture of rewards for  
failure that we are determined to sweep away for the future.   We are  
committed to cleaning up the banking system – both the financial  
balance sheets and the behaviour of those that lead them.”

Sir Fred’s payment, which almost doubles to £16m the £8.4m his  
pension had earned by 2007 after 10 years on the board, was agreed by  
the previous management.  [That’s almost £8 extra for a further year  
in a failing bank -cs]  An RBS spokesman said: “The company is taking  
further legal advice in respect of certain aspects of Sir Fred  
Goodwin’s contractual arrangements and continues to discuss the  
position with UKFI.”

Before the Treasury Select Committee this month he said: “My pension  
is the same as everyone else in the bank who is in a defined benefit  
pension scheme.” However, it is believed he and other board members  
were given special terms that boosted their pension from the age of 50.

The Treasury added that it has been “vigorously pursuing with the new  
chairman [Sir Philip Hampton] whether there is any scope for clawing  
back some or all of this pension entitlement” and has “a view to  
testing any potential for legal redress”.

The bank’s new management will today reveal plans to use taxpayer  
insurance for £300bn of toxic debts under the Government’s “Asset  
Protection Scheme”, full details of which are expected alongside the  
results. In return, RBS may have to meet draconian targets such as  
monthly lending levels. The Government will apply the same pressure  
to Lloyds Banking Group and any other bank which uses its insurance  
for toxic assets. The issue of forced lending has been the subject of  
intense debate with some banks claiming there actually is  
considerable credit available – the problem is now demand.

Banks may put up to £600bn of toxic assets into the scheme. Given the  
enormous sums involved, politicians are determined to extract  
meaningful promises from banks to increase lending, in the hope it  
will help reverse the economic downturn.

RBS will also announce that Nathan Bostock, a senior executive at  
high street bank Abbey, will run a new subsidiary. Mr Bostock is a  
former colleague of Mr Hester.