Under the Carpet
What the report doesn't spell out - in such detail at least - is that the Financial Services Agency - represents a devastating political failure as well.
The Agency was set up in May 2007 by the chancellor of the day - Gordon Brown - who was in the process of taking over from Tony Blair as Labour Prime Minister.
The job of the FSA was to oversee and regulate what was going on in the UK financial sector - nominally on behalf of the great British public.
But in an area so complex and so removed from most people's daily lives - such a big task could only be done by Ministers and Parliament.
As it turns out the FSA was not fit for purpose - not remotely up to the job - and the cost to the public purse is absolutely enormous - £45 billion alone in terms of the government bail out of RBS.
Some of the key findings in the FSA report are that the Royal Bank of Scotland:
1 Had too little in the way of capital reserves
2 Relied too heavily on risky short-term funding
3 Hid the truth about its trading position and financial health
4 Made a reckless decision in its acquisition of Dutch owned bank ABN Amro
The FSA report is scathing about the way the Royal Bank of Scotland was run - and scathing about the way the Financial Services Agency operated as well.
Apparently the FSA had just six staff overseeing RBS in August 2007 - whereas now it has 23.
The report also says that FSA officials were barred from meeting on a one-on-one basis - with RBS’s non-executive directors. Incredibly the report goes on to state that:
1 FSA was never given full access to RBS’s “Board pack” - containing detailed financial information on the bank
2 FSA warnings in a letter to the RBS board about its corporate lending risks - were removed by Sir Fred Goodwin, the RBS chief executive
3 FSA did not challenge strongly enough - the efforts of RBS to the regulator's oversight
I hesitate to say that you couldn't make this up - since lots of highly paid people clearly were making things up to suit themsleves as they went along - but it is a damning oversight of our political system.
Because not all banks failed - and those that did - did not operate inside a vacuum.
Sir Fred Goodwin - the media's favourite 'whipping boy' - was nominated for his knighthood by Gordon Brown - presumably while he was acting as Labour chancellor.
I've had some personal experience of the FSA - when I complained about one of our high street banks - and I have to say I found them about as helpful as a bag of broken spanners.
What galls me is that most of these people walk away - Scot-free - many with their reputations intact and/or drawing huge pensions.
Say what you like about America - but in the good old USA many of these characters would be heading for the jail - as happened over ENRON and the Bernie Madoff affair.
Sadly in the UK we seem inclined just to sweep these huge issues - under the carpet.
