A very apt post on greed in its worst form from Cityunslicker

Peter Cumming, formerly of HBOS

It is very lucky today that I am going to work early enough to avoid breakfast, otherwise on reading the paper I may have choked on this from the Telegraph:

“In a statement Mr Cummings said he rejected the FSA’s findings but would not be appealing the fine.
He said: “Many people must bear collective responsibility for what happened, including governments and regulators as well as the boards of the banks themselves. But the fact that I am the only individual from HBOS to face investigation defies comprehension. The decision to single me out for investigation is even more grotesque given that even the FSA has to admit in its notice that other senior people were involved in the critical decisions for which I am taken to task. This is tokenism at its most sinister, and has made it feel throughout like institutional oppression.“ 

Poor Mr Cummings, responsible in the main for signing off dodgy loans with markers like ‘approved for business development purposes’ when the Credit teams at HBOS had come back saying not to make the loans as they were deemed too risky. Mr Cummings, indulged in the ultimate ‘pig and pork’ banking whereby you lend equity and debt (senior and mezzanine) to a client who, if they go belly up, you will be all but guaranteed to be over-exposed and take a massive loss.

Real banking 1010 stuff. Lo and behold, HBOS lost so much money in 2008 a Government rescue via Lloyds was the only way out. Lloyds has not recovered, still writing off billions in losses on real estate loans, of which almost the whole book came from HBOS Corporate Banking wherein Mr Cummings was the boss.  Of course, he wants to blame the regulators (who actually could have sacked him) or politicians (who could have given backbone to the regulator) – but no one made him sign-off on these loans.

By my guess-timation he has ended up costing taxpayers a bailout of around £20 billion. A ban from working in the City and a fine is getting of lightly – in the US he would be looking at a long stretch, in China possibly the death penalty.  I generally am happy with the Government proposed reforms to the banking system, they will make it safer – but Mr Cummings did not do anything criminal under current or proposed laws. This should change, if it were me he would be done for treason.

Cityunslicker