Evasive, repetitive, unrealistic. Unless my old newspaper instincts have deserted me that description by Andrew Tyrie of Lord Stevenson’s evidence to the Parliamentary Commission, is what will make the headlines. And the former HBOS-chairman will find it hard to outlive the label.
It is difficult not to suspect that it was always Tyrie’s intention to make the news – partly because it doesn’t do any MP’s career any harm to have a good soundbite, but partly also to get the HBOS scandal back into the public consciousness.
Because of its size, the collapse of Royal Bank of Scotland was the biggest failure, but as the Commission has tirelessly pointed out, in some ways HBOS was worse. Forget “impairments,” “fair value adjustments” and all the other accounting euphemisms, in real money HBOS lost upwards of £45 billion – as a proportion of its total lending that was twice as bad as RBS.
As Tyrie pointed out, it is equal to two-thirds of the total corporate tax take of the UK, “down the Swanee.”
Stevenson, if anything, came off worse than Crosby. He looked naïve, increasingly rattled and, in the words of Lord Lawson, delusional. He clung to the belief that what did for HBOS was the collapse of Lehman Brothers and the closure of global wholesale money markets. The eye-watering losses on corporate lending, loans in Ireland and Australia and on buy-to-let, self-certified and 125% mortgages were, in his view, a secondary factor.
The Commission clearly thinks the opposite and believes the board, by not focussing on the inherent flaws in the fast-growth business model, was negligent.
I am amazed to find that Tyrie is an economist by training rather than a lawyer, because his cross-examination technique is superb. By means of the “competent/incompetent” trap into which he led Crosby the day before, he lured Stevenson into the sucker question: Are you a fit and proper person to be the director of a financial services company because “competence” is one of the tests the FSA applies.
Stevenson’s answer, that it was not a relevant question because he was more interested in spending time with his grandchildren rather than again becoming involved in finance, set him up for the coup de grâce – Tyrie’s revelation that until a week before Stevenson had been a director of Loudwater Investment Partners, a company run out of Stevenson’s own Westminster town house and regulated by the FSA.
How on earth did the regulator let that happen? And while we are at it, why is former finance director Mike Ellis still chairman of the Skipton Building Society?