Category Archives: Bank of England

Maxwellisation? Enough already.

So first we had the so called ‘credit crunch’. Bankers all over the world, all paid telephone number fees, ran banks into the ground and brought various economies to their knees. Then we had the bailouts – Governments all over the world and not least the UK, decided the best way out of the ‘credit crunch’ was to give the banks billions of pounds, dollars, Euro’s, you name it, they gave it, to the banks to replace what they lost in their bizarre spending frenzy. And that resulted in mass austerity across the UK, Europe and the US – probably elsewhere as well but I’m not an expert.

Then came the clean up – or the apparent clean up. What happened to cause the credit crunch and how regulators and Governments could ensure we wouldn’t get a repeat performance anywhere in the near future? And how was this clean up done? Well that’s the latest page in the most bizarre story of the 21st century history book – we clean up by burying as much truth as possible and where we can’t – because the public are demanding explanations – we introduce Maxwellisation.

I’ve read various explanations of Maxwellisation and they make as much or even less sense to me as the fateful and long drawn out love affair on the Maxwell House advert. I don’t know what happened in the agonising and tragic story of a love affair that was almost but never quite fulfilled. I certainly don’t know what it had to do with coffee! And similarly I don’t understand how the exploits of Robert Maxwell – who apparently ripped off not just his own company but also pension funds – could be introduced as a legitimate way to stop the rightful exposure of wrong doing?

I may be mad but surely we’ve got it the wrong way around? If our regulators and their third party experts do in depth investigations into situations and come up with explanations, in the form of reports, which finally expose the truth, how can it be right that the people named and blamed in those explanations, can challenge the reports before they are released? Are we saying our ‘experts’ and our regulators may have got things completely wrong? Is it in the nature of ‘experts’ who spend years doing these reports at vast expense to the public, to get it completely wrong? Is that an equation our regulators start with? I don’t think so.

This is like an appeal in the justice system happening before the trial. So the crooks, let’s say for the sake of argument bank robbers, receive the prosecution case and, before a Judge or a jury gets to hear it, half of it is removed because the accused don’t like it or they don’t agree with it. Better still, the accused’s lawyers may be able to come up with legal technicalities as to why the allegations can’t even be made in the first place. So what the Judge or the jury finally get to hear is an edited version of events as permitted by the defendants. Wow, I can see that going down very well with the criminal fraternity. Not a luxury extended to Tom Hayes but surely one the magic circle lawyers will be insisting on for more senior bank management in the future.

As someone who has spent years of my life investigating bank fraud albeit from the perspective of someone who is actually in the rock & roll business, the one thing I know is ‘the written word doesn’t lie.’ Even if people have been deliberately writing lies, the culmination of a proper investigation will just highlight those lies and you will be grateful someone bothered to put the lies in writing as an example of fraud or corruption or, at the very least misconduct or negligence. For example – how could any bank relying on untold amounts of emergency funding from the Bank of England and then needing several billion pounds from the public purse, possibly pretend to investors that it’s a safe bet to plough money into a Rights Issue? But read this absolute twaddle from Andy Hornby back in 2008 http://www.thisismoney.co.uk/money/news/article-1631967/HBOS-chief-Hornby-defends-rights-issue.html and you’ll see that’s exactly what some of them did! Now what part of Maxwellisation can alter those facts?

Better still, let’s remind ourselves of exactly how the great and the good from HBOS and RBS were still trying to pull the wool over everyone’s eyes even after they’d been so instrumental in bringing the Country to the edge of the abyss: http://www.publications.parliament.uk/pa/cm200809/cmselect/cmtreasy/uc144_vii/uc14402.htm

That’s a cracking read by the way.

I don’t know how anyone would do a comprehensive investigation into why we went into the Iraq war although logic would say the absence of the weapons of mass destruction, which were the reason for so many tragic deaths, raises some terrifying questions. But in the case or RBS or HBOS, it’s just not that complicated. If two music publishers can expose a massive fraud in HBOS and if certain members of SME Alliance are supplying the Times with evidence of massive issues in RBS, how can the FCA and their ‘experts’ be so endlessly challenged on their findings? The whole thing smacks of the dreaded ‘D’ word – deals. Deals to hide what really happened in our banking sector. Deals to protect the so called great and the good. Deals which, rather than give the public some sort of closure on what happened and show who was responsible, will just ensure the same or worse happens in the future.

There is no point in Maxwellisation – it’s apparently not a legal requirement and all it is doing is staving off the inevitable. If either of these banking reports ends up as another whitewash, there’s a whole army of people out there who will challenge them. Journalists, whistle blowers, small organisations like SME Alliance, Move Your Money and Bully Banks – not to mention various forthcoming trials (criminal & civil) which will shed more light on the reality. Clearly, if the FCA keep delaying their reports or if they allow the truth to be watered down, others will happily set the record straight.

I would say, from a public perception, Maxwellisation should really be called Orwellisation. We are continually walking backwards to Orwell’s views of 1984. The important difference is, there was no social media in Orwell’s world. No twitter or Facebook or Linked In. And unless the powers that be can wipe out the world wide web, Maxwellisation is actually and ultimately just like the coffee advert – long, drawn out and a fantasy. We’ve had enough fantasy when it comes to real people’s lives. Just like the cream always goes to the top of the coffee,  the truth, as Hillsborough has shown us, also has an amazing way of coming out on top and Maxwellisation won’t change it.

Surely the public have been on the receiving end of too much abuse from bankers without this latest trickery? Let’s just get on with it please, let’s publish these reports and stop all this nonsense. As a very good friend of mine would say – enough already!

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How much more contempt must society swallow from banks?

Interesting few weeks – the election of course with the Conservatives winning a majority – who saw that one coming? And, in the process, the Tories appear to have demolished most of the other parties, not to mention some key names in politics. Of course the SNP helped the Tories enormously – the idea of Labour with the SNP running Westminster had a devastating effect. It’s almost as if we collectively had visions of bearded, kilted Scotsmen rampaging all over England intent on rape and pillage, when we still haven’t recovered from the suited and booted Scotsmen who ran the Government and some of the big banks – so that didn’t help poor Ed. And this just goes to show that while we pat ourselves on the back for being a liberal, accommodating, multi cultural society, the truth is we’re every bit as Nationalistic as Germany, France or Italy. And why not? What’s wrong with being fiercely protective of your Country? And while, in this instance, we conveniently forgot Scotland is part of Britain, I think many of us did reasonably feel that is a tenuous situation which a second referendum could change.

Anyway the Conservatives won and that was certainly a relief to big business who were apparently sure Ed Miliband was anti business. But I wonder if anyone in politics could make a difference to the whims and pleasures of major corporations now – and especially our financial sector?

One thing that has been made abundantly clear (again) in the last week with a US Judge handing out multi billion pounds fines to our big banks, is how much more powerful banks are than Governments. If I was trying to explain to an alien what’s been going on over the last twenty years in the ‘Incredible saga between banks and society’ I would say:

“From the late 90’s, bankers decided they could make more money and bigger bonuses by forgoing traditional banking and behaving recklessly, unethically and with gay, greedy abandon until this conduct nearly brought even the wealthiest of nations to their knees by 2008. So Governments bailed the banks out with the monies they collect in taxes to pay for essential services, even although this caused mass austerity for millions of ordinary people. But we never really got to the bottom of the reckless behaviour and we certainly didn’t blame anyone. So bankers realised very quickly they could carry on with that kind of behaviour and nothing much would happen.

Pardon? Yes we do have laws on this planet and yes bankers did break them but the leaders running the various countries on behalf of the people, decided it wouldn’t be a good idea to apply the laws to the bankers? Why – well apparently it’s complicated (or so we’re told) and, aside from anything else, we, the public, would have felt loath to trust a financial sector where some of the bosses turned out to be convicted felons.

Yes I know some of them may well be ‘criminals in pinstripe’ but that’s not the point. You can’t just go around calling people crooks if our justice system hasn’t confirmed it – so the trick is, don’t prosecute people and then no one can say they’ve done anything criminal.

What happened next? Well obviously, realising they had immunity from the law and could therefore do what the f*ck they liked with no personal consequence, the bankers dreamt up even more blatantly criminal scams to make money because – what did they have to lose? And when they (banks – not bankers) were found guilty of crimes, either their share holders or the tax payer (again) paid massive fines on behalf of the banks to the organisations set up to make sure banks did behave well and didn’t break any laws in the first place.

No I don’t know why these organisations didn’t police the banks properly. But I suppose if they had, they wouldn’t have been able to demand billions of pounds in fines at a later date.

What happened to the bosses running the banks? Well obviously they got huge bonuses even although they were overseeing criminal operations. And let’s be logical – the banks may have been fined billions of pounds but that’s a fraction of the profit they made while acting illegally. So you could say these bosses were doing a good job in terms of making money – which is all banks care about.

Yes, you’ve summed that up beautifully – the people bailed the banks out when they lost everyone’s money; then the banks carried on robbing the countries blind while paying their executives millions of pounds and finally; the public paid the fines for their criminal conduct. It’s a total Catch 22 as far as society is concerned.

I realise it makes no sense to you – it makes no sense to most people on the planet. Don’t we have a say in all this you ask? Well yes we do. We vote for the kind of leadership we think will be best for society and who will stop this kind of thing. So why doesn’t it stop? I don’t know. And yes, I’d say society is deeply offended our elected representatives have given bankers immunity from the laws of the land. Many of us are trying to do something about it. I have written many a letter to various leaders asking for a logical explanation to what’s going on http://www.ianfraser.org/dear-mr-cameron-if-bankers-are-above-the-law-we-need-an-urgent-explanation/

I haven’t had any replies – no doubt our leaders are very busy trying to work out how to balance the scales of a disappointed and furious populace on the one hand and the all powerful and Government empowered banks on the other hand. It can’t be easy forecasting which camp will do the most damage if not appeased. Especially if there’s not much you can do about the situation.

And no, I don’t know how much more contempt society can swallow before it all turns very nasty.

What, you’re off to find a more logical, ethical planet for your holiday? I don’t blame you. At least you managed to catch the Eurovision Song Contest while you were here. Do you know, that used to be considered one of the most bizarre, hilarious and illogical things on the planet? Now it seems like a welcome break in an even more bizarre reality.”

Bad Saturday – Twenty people with teacups can’t stop the flames of the next credit crunch.

Not a good start to a Saturday. First the post arrived and it was one letter with a barely legible hand written envelope to Mr P Turner – well done to our postman for deciphering the address. All the same we could see immediately who it came from because of the Royal Courts of Justice stamp on it. We were surprised because we don’t have a pending case in the Courts. What we do have is an indefinitely stayed case regarding our never ending eviction hearings. It’s stayed pending the outcome of the HBOS Reading trials which were due to start in January 2015, were moved to September 2015 and, a couple of weeks ago, were moved again to 2016.

For those reading this who don’t know anything about Paul and I, we have spent years investigating and exposing a major bank scandal. It took us from mid 2007 to September 2009 to get the regulator involved and then another year to get the police involved even although we reported it in December 2007. For our troubles, HBOS and then Lloyds Banking Group tried to evict us 20 times and on their last attempt a Circuit Judge allowed it and refused us permission to appeal. So our last hearing was the second of 2 in the High Court where we were asking for and then granted permission to appeal. That was in August 2010. However, by this time the police were involved and the first arrests in the case were in September 2010. So in December 2010 the Bank asked us to agree to an indefinite suspension of any eviction hearing on the grounds both we and they were witnesses in criminal proceedings – it wouldn’t do for witnesses to be fighting each other. That’s where we are – on hold until the criminal trials are over and God only knows when that will happen – although thinking about it, God probably doesn’t know either.

Anyway, the letter, or rather the form from the Courts this morning, informed us that our case is now closed and we have 14 days to retrieve our paper work or it will be destroyed.

This could mean one of two things: First, a clerk in the court, tasked with filing, has seen the date on our case and assumed it must be over, or sorted, or in any event not going ahead because it’s dated 2010. I might make that assumption myself in the same way I would have assumed the HBOS Reading trials would have been over 4+ years after people were arrested. And if this is the case, which I hope it is, we simply have to inform the Court our case is not over and is still active.

The second and darker scenario is that this is some form of legal trickery by the Bank to get the case out of the High Court and maybe back to a friendly Circuit Judge. I can’t see why the Bank would do this or how it would be advantageous to them when they could simply carry on waiting for the criminal case to start which could be never? But, while I repeatedly say (these days and as a founder of SME Alliance) that I firmly believe there are good banks and good bankers, sadly I don’t include Lloyds Banking Group or team Horta-Osorio in that bracket. And I am always waiting for their next malicious move.

You don’t hear much about HBOS these days although there was a small flurry of news when it was reported the FCA review into HBOS (like the HBOS Reading trials) has been delayed yet again – until after the election. Well there’s a surprise. But I don’t think this is because anyone in Government or in the FCA/PRA has forgotten about HBOS – we are constantly reminding them it remains unresolved. I think it’s still a priority – or at least burying what happened at HBOS is still a priority.

Which leads me on to the second disturbing thing about this Saturday morning. Included in our e-mails this morning were a couple from our friends at WBUK (whistle blowers) who wanted to share a video on Youtube. The video is of ‘The Spaniard’ interviewing a former employee of the FSA/FCA turned whistle blower. https://www.youtube.com/watch?v=bS5c1FmVL8M

The whistle blower, who almost certainly isn’t called ‘Joanne’, says she worked in the financial sector for 15, 16 years and her last job was to help the FCA write mortgage policy so a financial crisis couldn’t happen again (so she was looking at what happened with sub prime) – I have no reason to doubt what she’s saying. She also says or confirms what a lot of us have felt for a very long time – the regulator is paid for and controlled by the banks.

This is not a revelation and I do remember a senior enforcement officer of the FSA telling Paul and I the FSA BoS Censure Report of March 2012 could have been published two years before it was but for Lloyds stopping it – which was a clear case of the tail wagging the dog.

Ridiculously maybe, even people like me who have battled long and hard with the FSA for 7+ years, still hope there is an element of good intention in the Regulator’s office and that ultimately, it will do what it says on the tin – i.e. regulate, control and, where necessary penalise the banks and bankers to stop them doing more damage to the economy and to society as a whole.

Some would say that is a very naïve view and one I have no excuse for holding but actually, it is essential we hold on to this hope because the alternative is too dark to consider. Which is why I found ‘Joanne’s’ words so depressing this morning. I am a member of WBUK and I know there is no glory to blowing the whistle. Whether you blow the whistle on the MoD, NHS or the financial sector, all you will get for your efforts is aggravation, alienation and sadly, in many cases, persecution leading to serious depression. So I think Joanne would have thought long and hard before she did this interview.

It’s quite hard to hear what she’s saying because it was a telephone interview so I’ve transcribed a couple of extracts:

“….it was all about making sure you work with the banks to protect the banks, not to protect the people. It’s definitely not independent – everything had to go back through the banks, even the wall to wall control by banks – it was absolutely astonishing. I was amazed at the amount of politics that was there and the fact that everything had to be referred back to – did it reflect well on the Government, did it reflect well on the banks – and that was the aim of everything.”

…. and in my opinion there were rules already in place that could have been used to prosecute banks and could have been used to hold somebody to account for what happened in the massive mortgage mis-selling scandals. But they weren’t because nobody had the will to. Because that’s not what we were there to do – we were there to give the impression that’s what we were doing but you weren’t actually supposed to do it.”

I would have transcribed more but it’s too depressing – maybe I will tomorrow. In short, what Joanne is saying is, all the harsh words from politicians, from the Treasury, from the regulators about how bad our banks are and what is being done to reform them, are no more than lip service put regularly in the public arena to deceive us. In reality the banks have been and are still holding all the cards and pulling all the strings. When you go to the regulator with a serious complaint, you are really sharing information with the banks and they will decide how it is dealt with. If Joanne is right in her allegations then Paul and I have furnished the Bank with 35,000 pieces of evidence about HBOS Reading. Not very clever of us.

Back to this morning’s post and Mr HO. I have no faith or trust that the HBOS Reading trials will ever go ahead – I hope I’m wrong but considering Joanne’s words, it seems unlikely the establishment would allow such a controversial story to come out. Similarly the FCA report into HBOS. If regulation is all about protecting banks and not the people, HBOS is a hot potato that at all costs must be mashed to a pulp and then smothered in a gluttonous gravy that makes it impossible to recognise let alone swallow.

While Ian Fraser’s brilliant book ‘Shredded’ (which I would advise everyone to read) exposed the horrendous goings on at RBS, there has been no major criminal case involving RBS bankers which would put Ian’s research in the spotlight and directly in full view of the Court of Public Opinion. Not so HBOS – we’re waiting for a major criminal trial to proceed and a major FCA review to be published. Additionally, there is at least one book taking a very candid look at HBOS waiting to come out and that is over and above the fact no one can doubt, after his years of blogging and articles, Ian Fraser is a font of knowledge about HBOS as well as RBS. Of course all concerned will abide by the rules of sub judice until the criminal trials are over but none of this will fit the criteria of “ did it reflect well on the Government, did it reflect well on the banks” Clearly not. So will the authorities ever allow HBOS to be fully exposed? Probably not.

And if that is the case, the only other place where much of the truth about the staggering misconduct in HBOS would come out, is in a High Court case when and if the Bank decide to re open our eviction hearings – although actually the stayed appeal is our case and we could also reopen it. Our defence in the eviction hearing is entirely based on what happened at HBOS Reading and the conduct of the management of HBOS and Lloyds after Reading was exposed.

So maybe the logic of the Bank and its high powered lawyers is to get our case out of the High Court where it could be as damaging as the criminal trials themselves? Or maybe our post this morning really was a case of a clerk having a tidy up? Who knows? Either way, Paul and I have learned a lot over the last 8 years and we will not be ignoring the Court letter.

I really, really hope that one day soon, someone, somewhere in authority, will decide enough is enough and bring about even a minor change of policy that starts reflecting the interests of the Country and its people over the interests of the Banks. I don’t think that someone will be David Cameron or George Osborne or Ed Miliband. All of this “first and foremost protect the banks” policy, started under New Labour and has progressed under the Conservatives. Sure, there are some really good cross party MPs or even Conservative or Labour MPs – but one swallow doesn’t make a summer and even a really good MP – my friend Clive May’s MP, David Hanson, is a very good example as is Brian Little’s MP, Jim Shannon – can’t change policy on his own.

Maybe Mark Carney who has said “no one is above the law”is the man for the job? And someone told me a while back that John Griffith-Jones is actually one of the good guys and I should talk to him – I would certainly like to and I would like to ask him for his comments on what Joanne has said. I would be so happy to see concrete evidence that actually the FCA considers “consumer protection” and “the reduction of financial crime” of equal importance to “market confidence.” But Joanne’s words make that hard to believe. Especially her comment when she was asked – if Wembley Stadium going up in flames equalled the credit crunch, how many fire engines would she say the FSA used to put the fire out? Her answer was:

….“there was probably a line of twenty people with teacups.”

That is very scary and we should all be aware the only outcome of this situation continuing is the next fire won’t be contained to a stadium.

Many thanks to both the Spaniard at White Rabbit Education and ‘Joanne’, for bringing this insight (or is it incite?) to our attention.

If you don’t identify the crimes or the criminals, you don’t have to support the victims.

There was an interesting article in the Guardian today on the subject of Lady Newlove’s report into the lack of support for victims of crime. http://www.theguardian.com/uk-news/2015/jan/27/victims-crime-let-down-criminal-justice-newlove I agree with her entirely – there is very little support. Equally interesting was the comments below the article.

For example, someone posted we are all more likely to be victims of financial crime than being mugged in the street. I would agree because PPI, IRHP, LIBOR rigging, asset theft (GRG) and various other fraudulent schemes, all have their victims – not that I am in anyway decrying the horrific consequences of violent crime.

However, there is a huge problem when it comes to financial crime. First and foremost, it is rarely classified as crime. It has various bogus titles and the most common is mis-selling. Also, financial crime is a political animal and as such, it seems to feel it is reasonable it should fall outside of the boundaries of common law. It shouldn’t do but it does. This is probably because any major case exposing the horrendous corruption in our financial system would have far reaching political and economic consequences. Not only would it risk serious ‘Brand protection’ to financial institutions, it would also damage UKPLC. Therefore even if you report serious and fully substantiated financial fraud to the police, you are unlikely to get an investigation – so you are unlikely to get a result.

Anyone challenging this view should consider why, when Banks are found guilty of money laundering for drug cartels, or of rigging LIBOR (which affects everyone), or of selling fraudulent products to consumers and SMEs, the answer is invariably a huge fine paid by the Bank shareholders? But no one goes to jail.

Occasionally and if you are incredibly persistent, the police will open an investigation into specific crimes by bankers or their associates in the financial system and, I can say from experience, that despite the initial euphoria victims may feel when this happens, what follows is a long drawn out process which gives little or no consideration to victims or to the consequences of those crimes. And while I adhere to the theory of “every man is innocent until proven guilty,” a justice system which takes years and years to bring cases to trial means that some victims, suffering badly from the effects of a crime, will have their lives on hold for an indefinite period. Some die before they ever see justice and that is a fact. “Justice delayed is justice denied.”(See below)

Take for example the case (which I won’t name for reasons of sub judice) where some 80 SMEs were first defrauded and then destroyed by employees and associates of a High Street bank. This was first exposed by the victims in 2007 but the police refused to investigate because the bank concerned assured them there was nothing to investigate. However, in 2010 and under the radar, a different police force did start an investigation. By the end of 2010 several people had been arrested but no one was charged until 2013. The trials for those people charged with assorted serious crimes were due to start in January this year but have now been put back to September and will finish in 2016 – if they happen at all. 2007 to 2016 is a long time to wait for justice. Three people have died while waiting.

The victims have lost their businesses, therefore their livelihoods and in many cases their family homes. They are all due compensation – but that won’t happen until after the trials as the management of the bank concerned are adamant no crime was committed (even although the Bank was the biggest loser of all) and the police have spent a fortune of public money on a witch hunt.

In the meantime there is little communication between the police and the victims except for the odd brief e-mail. The victims are dissuaded and even threatened not to attend any case management hearings – so they don’t know how the case is progressing (or not in this case) and if ‘victim support’ are aware of this crime, they haven’t acknowledged it. I know most of the victims – I don’t know any who have had any support.

The defendants on the other hand, are kept fully briefed by their legal teams (some of whom are paid for by legal aid), they continue to work or trade their businesses (which haven’t been destroyed) and some have requested and been given their passports back as and when they want to go on holiday abroad. Fair enough, they have not been found guilty as yet.

My point – most people in this Country are asking (quite reasonably) why bankers, who have already been found guilty of various crimes for which their shareholders have been penalised, have not been charged or gone to jail? I would say it is because the majority of the really serious crimes had to have happened with at least the knowledge and possibly the authorisation of those at the top of the Banks – not to mention key figures in associated ‘professional’ firms. But if Governments (via the justice system) start admitting our banks have been and are being run by criminals, it would destabilise our much loved financial system. So, even where a case does slip through the radar and bankers are charged with crimes, the main consideration seems to be how the authorities can limit contagion and, if possible, stop these trials actually going to Court. A valiant attempt was made to stop Operation Cotton and therefore other big financial fraud and VHCC (very high cost cases) from proceeding, via the legal aid débâcle. Fortunately it wasn’t successful.

And the victims? Well, better a few victims fall by the wayside than we tarnish the City of London. But actually it’s not a ‘few victims’ because we are all victims of financial crime and we are all paying the price (national austerity) while the charade goes on. And what a charade it is – after all that has happened and after banks brought world economies to their knees, top bankers demand and still get millions of pounds a year. And once a year they head off to Davos with the great and the good, to decide our economic future for the following 12 months. It’s not just illogical and unethical – it’s bonkers.

Great to see Lady Newlove has written a report and identified the lack of support for victims but, in the case of financial crime, which has reached epidemic proportions in the UK, the biggest hurdle to our justice system is a refusal to identify the criminals. Cost effective and sneaky but not democratic.

  • On the subject of “justice delayed is justice denied” and while I was looking for the origins of that quote, I randomly came across an extraordinary dark example of how this statement is sometimes abused by the very authorities we rely on for justice. The case is nothing to do with financial crime and the victim in the case is the accused. And this highlights yet again how important it is to democracy that justice is seen to be done and in a timely manner. I would say in too many cases, it isn’t. http://www.innocent.org.uk/cases/Karl%20Watson%20-%20Woffinden%20art.pdf

Bank of England Minutes v The Bank of England Plenderlieth Report

Just a very quick blog – mostly a copy paste job because I am very confused by the Bank of England Minutes 07-09 which were published today. I have to admit I have not read the entire document but, as of September 2007 I am surprised the minutes did not contain masses of detail and concern about HBOS (Fox) or Lloyds (Lark).

Here’s why:

In October 2012 the Bank of England presented the Plenderleith Report to the Court. I went through this report with a fine tooth comb because of some work I was doing with Paul Moore. And I came to the conclusion that, even although it did little good to the economy, the Bank of England, albeit frustrated by a lack of data from the FSA, was closely monitoring HBOS by September 2007.

I have very quickly I have taken out the salient points which highlight this position:

Executive Summary
8.
In relation to the specific vulnerabilities of the two banks to which the Bank eventually
extended ELA, the Bank was able to identify in advance, and to monitor, the increasing
liquidity strains thatHBOS was experiencing during 2008. There was significantly less close
focus on the liquidity position of RBS, but its funding problems did not in fact crystallise untila late stage, after the failure of Lehman Brothers.
9.
In relation to both banks, however,and indeed to the process of monitoring the risks to
individual banks in general, the Bank’s ability to identify impending threats in concrete terms was made more difficult by an underlap that had developed in the regulatory structure.Initially at any rate, the Bank was dependant on the FSA for liquidity data on individual banks; but the data available to the FSA were not forward looking and
lacked the granular detail the Bank required for an operational response like ELA. Equally, while the Bank could identify the threat that vulnerabilities in individual banks posed to wider systemic stability, the FSA was less closely focused on the deteriorating systemic picture. Under the pressure of events, this underlap was progressively bridged during the course of 2008, but it hampered how far in advance the Bank could get a clear view of the strains building up on individual banks.
10.
Since the funding difficulties being experienced by HBOS were identified at an early stage,
well in advance of its need for ELA crystallising in October 2008, the Review suggests that,
where there is advance awareness of such strains, the Bank might consider acting pre
emptively to provide bilateral liquidity support before the need becomes immediate.

 

And here is the main chapter on HBOS:

How aware was the Bank of the particular vulnerabilities of the two banks to which

it eventually extended ELA?
The case of HBOS
98.
As noted above, the run on Northern Rock marked a step-change in the level of the Bank’s
engagement with individual banks and it is clear that the Bank, and indeed the other
members of the Tripartite, were fully aware of the vulnerabilities of HBOS prior to its need
for ELA in October 2008. By September 2007 the Bank was receiving what it felt were more
appropriate data from the FSA, at any rate on banks identified as more vulnerable, including
daily liquidity reports from the FSA on HBOS (as well as on Alliance & Leicester and Bradford
& Bingley).
99.
Work undertaken within the Bank in November 2007 identified a number of key risks that
meant that HBOS was likely to be particularly vulnerable to a change in market sentiment.
These included: the risk of reputational contagion from association with other mortgage
banks, given that HBOS was the UK’s largest mortgage bank; HBOS’s reliance on wholesale
funding at around 50% oftotal funding, and within that its reliance on securitisation as a
source of funding; and its commercial property exposures. At that stage, HBOS was
nonetheless viewed as being somewhat less vulnerable than Alliance & Leicester and
Bradford & Bingley because of its more diversified business model.
100.
The increased focus on individual banks and improved data flow from the FSA was not just
confined to HBOS, Alliance & Leicester and Bradford & Bingley. From September 2007, the
Bank began to receive liquidity information on other major UK banks from the FSA at least
weekly. The individual banks’ data lacked in several respects the detail the Bank would have
liked, but it was used by the Bank to try to determine which banks would be most affected by
a crystallisation of the possible key risks to the UK banking sector. Iterations of this work
were shared with the Tripartite Standing Committee in October and November 2007.
101.
From late 2007, the Tripartite authorities began contingency planning to map out possible
options for resolving HBOS should the key risks facing it crystallise. There was heightened
monitoring of HBOS from March 2008 after the emergency sale of Bear Stearns on 16 March
and after an unfounded market rumour that HBOS was receiving emergency assistance
from the Bank caused a sharp fall in HBOS’s share price on 19 March. At this stage the Bank was considering in detail the consequences of HBOS, like Northern Rock the previous September,being unable to fund itself in the markets.
102.
By mid-April 2008, although still work in progress, a comprehensive contingency plan had
been prepared by the FSA, in conjunction with HMT and the Bank. This contingency planning
explicitly recognised the possibility of the Bank needing to undertake some form of ELA in
the event of wholesale markets beginning to close to HBOS. Although by May the immediate

threat to HBOS appeared to have receded somewhat, in part because it was able to
utilisethe SLS launched in April, the Bank continued through the summer closely to monitor HBOS’s liquidity strains on a daily basis as HBOS endeavouredto scale back assets and increase deposits in order to reduce its reliance on wholesale funding. In the event, wholesale funding became increasingly difficult as the maturity of funding available to
HBOS shortened progressively increasing the ‘snowball’of funding that had to be rolled at shorter maturities
With the failure of Lehman Brothers on 15 September, HBOS’s position rapidly became
untenable. When it finally needed to seek ELA from the Bank on 1 October, the approach did
not come as a surprise and the Bank was able to respond rapidly.
The full report is here

http://www.bankofengland.co.uk/publications/Documents/news/2012/cr1plenderleith.pdf

This report suggests the BoE and the Tripartauthority were fully or at least partially prepared for the Crisis. I could be wrong but the reports on the minutes seem to infer this wasn’t the case.

 

Christmas 2014 round up of financial crimes with no one going to jail.

My husband made a very valid point a few days ago and I have been thinking about it every day since. He pointed out that when we (Paul and I) started looking at misconduct in the financial industry and specifically HBOS, we couldn’t get anyone to take our allegations seriously because no one believed us. That was in 2007 and it took until late 2009 to actually get the FSA involved and 2010 before the police got involved – even although we made allegations to the police in November 2007. We’re not a lot further forward now in December 2014 because the criminal trials for that alleged crime won’t start until September 2015 – and even then, I’m not holding my breath.

It was disappointing no one believed us in 2007 but not surprising because the idea banks, or rather bankers, might be crooks, was out of the question back then. Bankers were seen as respectable professionals and your bank manager was so trustworthy, he or she could even sign your passport. The same doesn’t apply now and no one bats an eyelid at the concept of crooked bankers – in fact bad conduct is what we expect from them, to the point even the good guys (yes I do acknowledge there are still many good bankers our there) are tarred with the same brush.

Paul’s point was simple: It was tough back in 2007 because no one believed us, so nothing was done. Now, everyone knows the financial sector is rife with fraud and corruption and still nothing has been done! Not just in the case we reported – right across the board and in thousands of cases. Even more alarming is the fact that, in many instances I know of, where people have tried to report financial crime, the police will not investigate it! In all probability this is because they don’t have the budgets to investigate such a glut of criminality in austerity Britain – but that is of no help to the victims who are frequently told – “it’s a civil matter.” No it’s not – crime is never a ‘civil matter’ and even victims of PPI have a right to report it as a crime, get a crime number and, if applicable, also have it investigated. Of course that might damage crime statistics.

But no. Most financial crime is just swept under the carpet as “mis-selling” or “restructuring” and resolved by bank shareholders’ paying huge fines to the FCA. Think about that for a moment – we all believe bankers have committed criminal acts but nothing has happened. It just beggars belief and is really as scary as hell because, what it actually means is, we can no longer rely on the Law and really do have a two tier criminal justice system. There isn’t another, plausible explanation.

This terrifying thought was brought home again when I read the latest excellent Matt Taibbi article in Rolling Stone magazine: http://www.rollingstone.com/politics/news/the-police-in-america-are-becoming-illegitimate-20141205 where he is talking about the disparities in the US legal system and it reminded me that I still haven’t had a reply to my letter to Mr Cameron of December 2012 when I asked for some clarification about the apparent immunity bankers have from prosecution. In that letter, which I wrote after reading some worrying comments from Andrew Bailey (now head of the PRA), I said:

Mr Cameron, unless I am completely mistaken, Mr Bailey seems to be telling us that banks, and therefore bankers, are now officially considered to be above the law in this country and that, in the interests of confidence in the banking industry (which is already at rock bottom among the British public, and therefore can hardly sink any lower), they cannot be prosecuted.

I am writing to ask you, as Prime Minister, for some clarification.

Does your government endorse the notion that banks and bankers should be given a licence to commit criminal acts without any fear of prosecution? Is this now official government policy? Are the British public now being asked to accept that, despite incontrovertible evidence of multiple criminal acts by banks, including money-laundering, drug-money-laundering, Libor rigging, multiple frauds and assorted Ponzi schemes, bankers are considered to be immune from prosecution? And if so, can I ask on what grounds your government, or indeed the government of any democratic country, can justify such a policy?” Full letter here: http://www.ianfraser.org/dear-mr-cameron-if-bankers-are-above-the-law-we-need-an-urgent-explanation/

I didn’t write the letter to be confrontational – although I must admit I am incredibly disappointed the PM’s strong words in the run up to the last election about what should happen to criminal bankers, turned out to be hot air and no more. This is what he said to Jeff Randall in January 2009:

“I think that we need to look at the behaviour of banks and bankers and, where people have behaved inappropriately, that needs to be identified and if anyone has behaved criminally, in my view, there is a role for the criminal law and I don’t understand why is this country the regulatory authorities seem to be doing so little to investigate it, whereas in America they’re doing quite a lot.”

I wrote the letter because I genuinely wanted some reassurance from the Prime Minister that bankers are not above the law; we don’t have a two tier legal system and; something would be done to redress this inequitable situation.

So what has happened to clarify or allay my concerns since December 2012? Well a few things have happened but not what I was expecting. For example:

  1. I’ve never had a reply.

  2. Several banks have been found guilty of money laundering and even money laundering for drug cartels. And the only penalty has been a huge tax on the bank’s shareholders who have paid massive fines for the conduct of bankers. But no one has gone to jail.

*given that banks (buildings or legal entities) don’t have any physical ability to pick up the phone and negotiate with drug cartels – such deals had to be done by bankers. So why have no bankers been held responsible?

  1. Many banks have been found guilty of making billions of pounds with the PPI scam. They’ve had to pay the money back in many cases but, I assure you, not all cases. So again, the shareholders have lost a fortune. But no one has gone to jail.

* I often wonder who invented PPI? Did senior bankers sit down and plan how best to get thousands of their customers to take out insurance policies which cost them a fortune but could never be used? Or did someone in a bank find a recipe for creating and implementing PPI in a fortune cookie?

  1. As a founder member of SME Alliance, I talk every day to people whose businesses have been totally destroyed with various, ridiculously (and I would suggest deliberately) complicated financial products under the collective name of swaps. I’m not a victim of a swap and I know little about them (I’m learning fast) but even their titles smack of more contempt for businesses e.g. vanilla swaps. Can you have chocolate or strawberry? Probably. The FCA have said many of these products should never have been sold to ‘unsophisticated’ clients and in some cases banks have had to give the money back. However, the years it has taken for this to happen and the devastation these products have caused, apparently do not necessitate banks having to pay out billions in compensation. The redress scheme the FCA has come up with has conveniently been limited to peanuts – and no one has gone to jail.

* A journalist was telling me the other day of a case where someone challenged the FCA decision multiple times and was eventually awarded £500k – but of course the bank interest and charges on his account over the time it took to challenge the bank’s conduct meant the victim got nothing and the bank paid themselves £500k. You couldn’t make it up.

  1. The now infamous business recovery units like RBS/GRG have been merrily acquiring, appropriating, stealing their clients’ assets left right and centre and sadly RBS have not been working in isolation. It has caused outrage – it’s been all over the news, MPs have held debates on the subject, Committees have interviewed senior bankers and regulators and even the ever cautious BBC have suggested some bankers are crooks. http://www.bbc.co.uk/programmes/b04t6jy1 But no one has gone to jail.

* As a victim of HBOS Reading (similar model) I have so much to say on this – but am having to keep quiet for now but not forever.

  1. And while the likes of GRG and HBOS Reading have caused many businesses to fail, a separate scandal has specifically targeted farms across the Country for over 20 years. Repeated allegations have been made against a man called Des Phillips and various of the 59 companies he has been or is a director of including UK Farm Finance, UKCC and UK Acorn Finance. And some of our major banks have been heavily implicated in these allegations as have other ‘professionals’. It’s a sickening story which has resulted in many family farms being repossessed and, sadly, farmers committing suicide. You can hear about it here: http://www.bbc.co.uk/programmes/b040hzz5 or read about here: http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm141111/halltext/141111h0001.htm No one has been prosecuted so no one has gone to jail.

  2. Bankers or traders have been found guilty of rigging LIBOR. Again, massive fines have been levied – another penalty on shareholders. However, in this instance it looks possible some bankers will go to jail and one banker has even pleaded guilty. But let’s not get too excited that justice might be done. Read this: http://www.theguardian.com/business/2014/oct/07/banker-pleads-guilty-libor-rigging-rate-fixing

As you can see the banker concerned could get up to 10 years in jail but we don’t know who he is or what bank he worked for and reporting on this case is heavily restricted. Presumably, after the other three people charged have had their trials, we might know more. But I wouldn’t bet money on it – especially if the banker in question worked for one of the State subsidised banks. But it’s a start.

I could make the list much longer but, to date and looking at the 6 instances above, money laundering, PPI, Swaps, asset theft including farms and LIBOR rigging, it’s certain 1 person in the UK will go to jail and 4 people might. And when you look at the trail of poverty, misery, desperation and devastation these crimes have caused, it is unbelievably disappointing – not to mention scandalous, that our regulators, justice system and worse still, our Government, have let this happen. In fact it is morally and ethically reprehensible.

Of course individual bankers do go to jail quite regularly – they’re usually quite low down in the pecking order and their offences (with a few noticeable exceptions) just about make it into their local newspapers. But the top dogs – the ones who make policy – the ones who instigate and oversee the kind of conduct which allowed all of the above to happen, seem to remain above the law. Which begs the question – why do we have laws?

Meanwhile, the Government have issued the following figures regarding crimes to businesses:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/284818/crime-against-businesses-headlines-2013-pdf.pdf

I haven’t read it in any great detail but I’m pretty sure it doesn’t mention the wholesale destruction of SMEs by banks. I sometimes think we should move the Houses of Parliament to Canary Wharf and have done with it before La La Land spreads across the whole of London.

Here in the real world we are in the run up to what will be another very austere festive season for many people in Britain – and I’m not just talking about people or SMEs who have been defrauded by banks. I’m talking about those families who’ve lost jobs and/or benefits and most of all, those people relying on food banks or who have lost their homes and now live on the street. A lot of people would say – me included – our major banks and therefore our most senior bankers, were very instrumental in causing our national austerity. And, post the so called Credit Crunch, those same banks (especially the part State owned ones) have done little to help the economy and much to damage it further. Unbelievably, the people at the top of those banks continue to be heavily rewarded.

For example, yesterday (13th December) I was reading an article about the top paid European Bank CEO’s. http://www.cityam.com/1415705309/which-ceos-european-bank-have-biggest-pay-checks-two-uk-banks-take-second-and-third-place

Hmmm – £7.4M. Even when you deduct 50% tax, that still leaves approximately £71k a week. I think you could have one hell of a Christmas with that remuneration package!

Mind you, every silver lining has its own cloud and I suddenly thought – I bet it’s really tough finding the perfect Christmas gift for these top bankers because, what do you buy for the man or woman who has everything? So maybe La La Land has its own problems at Christmas.

Shame you can’t gift wrap integrity – if we could give some of them that, the whole Country might feel more festive. Still, there’s always the good old standby gift – Monopoly. After all, banks have bought, sold, packaged and mortgaged every property on the board many, many times over – but, to date, they have been very adept at steering clear of the “Go to Jail” square. But then I’m guessing Al Capone thought he would never lose ‘games’ either.

Did the Bank Wreck My Business? Yes – so what happens now?

Did the Bank Wreck My Business? Yes – so what happens now?

I’m pretty sure the ratings for the excellent Panorama programme, ‘Did The Bank Wreck My Business’, were very high last Monday. Certainly most people I know watched it – but then many of them have direct experience of banking abuse at the hands of RBS or Lloyds – so they would. In fact most of them were interviewed by Andy Verity and Jon Coffey although their stories weren’t used in the programme. Some would say (and I would agree) there are many more horrific stories out there that the production team could have used – but it’s not a competition. Every business annihilated by bank misconduct (known to many as fraud), is a tragedy. And, given the Beeb’s generally conservative, establishment stance, I think it’s nothing short of a miracle this programme was as frank and exposing as it was.

As always, when programmes like this are on, I took some notes. I do it mostly to collect quotes for my book (nothing quite like “from the horses mouth”quotes to make points) but I also do it because I’m so staggered at what some people in the banking world say, it has to be captured in black and white for posterity. One day future generations will surely look back and ask “how the hell (being polite there) did a democratic country let that happen?”

I know the transcript of the programme will be available soon (or I hope it will) but here’s some of my favourite quotes from last night:

Jon Pain (RBS) “The whole purpose of GRG is to help customers return to financial health…..”

Vince Cable (BIS) “Well of course I’m very alarmed because good companies appear to have been put at risk or in some cases destroyed by banks behaviour…..”

Stephen Pegge (Lloyds) “our goal is to support businesses (you know) small and medium sized businesses are really important to us….”

Jon Pain (RBS) “(But) I would in no shape or form condone any inappropriate behaviour by anybody acting on behalf of RBS – that’s not part of our agenda in supporting customers.”

Christ Sullivan (RBS) to Andrew Tyrie re GRG “It is absolutely not a profit centre!”

Ross Finch (Lloyds victims) re his meeting with an exec of Cerberus who Lloyds sold his loan to “When I expressed disbelief about their behaviour, um, he said, “what you’ve got to understand is I am a prick” – which I couldn’t believe he would say such a thing!”

I’ve just pulled out those quotes because they are either so absurd or so shocking– and they’ve been broadcast on the BBC, the bastion of British correctness. If even the Beeb is exposing RBS and Lloyds as a bunch of crooks, what can we say? Nine years on from the so called Credit Crunch and where are we? I would say, if anything, we’re walking backwards. As one of the founder members of SME Alliance and a member of Whistleblowers UK ( Paul and I blew the whistle on HBOS Reading – the HBOS equivalent of GRG), I hear horror stories about banks v SMEs every single day. But the exposure of banking atrocities is no longer limited to what banks like to portray as ‘the niche market of poorly performing SMEs’. Everyone knows how bad some of our banks are and Andy Verity’s programme should be one of the final nails in the coffin of bad banking.

But will it be? Big question:

Vince Cable, Andrew Tyrie, the Treasury Select Committee, the FCA, the PRA, Mark Carney, David Cameron, Ed Miliband, Nick Clegg – did you watch “Did The Bank Wreck My Business’? And if you did – what are you going to do about it? They certainly didn’t wreck your businesses so I understand that maybe you don’t understand the consequences of what banks do. However, I do and so do thousands of SME owners, employee’s, shareholders and creditors. We live with the consequences.

I also know Andy Verity and Jon Coffey have done extensive research to make this programme and could have used any number of totally outrageous cases because they interviewed loads of SME owners (or ex SME owners) – and I know some of those stories may have been a step too far for the Beeb. In my own case sub judice was a big problem. But I know they made the programme in the spirit of stopping banks abusing SMEs. So has it worked? Has it helped? Will anything change?

Well the Panorama team have done their bit. David, Ed, Nick, Andrew, Mark – over to you. You are the people who can make the banks behave – or at least you should be. If the reality is you’re not – then wow, we have a serious problem in our democracy.

Best quote of the programme, without doubt, has to be Austin Mitchell MP, talking in Parliament about the Keith Ross case and saying it how it really is:

“What I want to do today is tell the story of the theft of a profitable Yorkshire company and I don’t mean the criminal Mafia we often speak of I mean Britain’s dark suited Mafia which in this case is represented by Lloyd Bank and Price Waterhouse Cooper both acting in collusion….”

Here’s the link from Hansard to Keith Elliot’s case: http://www.theyworkforyou.com/whall/?id=2013-11-12a.212.0

Of course, living in Italy for nearly 20 years, Austin’s comments would strike a chord with me. Well said Austin – there’s not many MP’s who would draw Parliament’s attention to the similarities between the banks and the Mafia but I would just put you straight on one thing – our dark suited Mafiosi are, in many cases, criminal.

I’m posting this on my own blog site because this is my own view – but I believe many people in SME Alliance will appreciate this view and I have to give us a plug because the conduct exposed in the programme is one of the reasons SME Alliance was formed.

#SME Alliance – giving SMEs a voice. #nooneisabovethelaw