Rewarding Failure

A few days ago the Financial Services Authority (FSA) released a damning report on the demise of Britan's biggest bank - the Royal Bank of Scotland (RBS) - in which both RBS and the FSA itself were heavily criticised.

Seee previous post dated 12 December 2011.

Yesterday the financial watchdog revealed that the head of the FSA at the time - Hector Sants - was handed a £144,000 bonus in the same year that RBS was allowed to buy the Dutch bank ABN AMRO.

A disastrous decision that brought RBS to its knees - a decision that was reviewed but not blocked by the FSA - and which triggered a £45 billion bail-out by the UK taxpayer.

Turns out that Hector Sants received the 'bonus' as part of his salary package -  which also rose by 37% to £662,000 in 2007-2008 - the same year Northern Rock collapsed.

The cost of buying ABN AMRO was an eye-watering £50 billion - slightly more than the £45.5 billion required to save RBS from collapse - and prevent a run on other UK banks.

The FSA was set up by Gordon Brown - who had been acting as Labour chancellor for almost 10 years at that point - and was given the task of regulating all UK financial institutions including the banks.

So is it any wonder that the public is scathing - because no matter what went wrong - the people at the very top could not lose.

The reality is that the people who were supposed to be protecting the public interest - were stuffing their mouths with gold.

While the politicians who were running the whole show - took no responsibility for the fact that the FSA was asleep on the job - the watchdog didn't even bark never mind bite anyone!

Years later the truth comes out - but by that time people involved have scarpered -  leaving the rest of us to pick up the pieces.

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