Corporate governance

It all started at one of the Prime Minister’s monthly press conferences. Suddenly, in answer to a question, Gordon Brown named Sir Fred Goodwin, the now notorious former chief executive of Royal Bank of Scotland, as the man who broke the bank. After the conference the press machine of Number 10 must have gone into action, for the next morning’s papers were full of pictures and stories of Fred, naming and shaming him as the father of the credit crunch. The publicity machine continued remorselessly day after day, as time went by and he and the other hapless chairmen and chief executives of failed banks were hauled before Commons committees to make abject apologies. It was a circus not seen since the days of the Soviet show trials.

The coup was worthy of Peter Mandelson, and perhaps it was actually his. At a stroke, all attention went from the government, whose primary responsibility the economy was, to a few individuals who ran banks. As for Fred, people forgot that he had also been the chairman who transformed the Prince’s Trust, and was a hero of the banking world until he entered into a deal too far. Of course he must take a large part of the blame for the ABN-Amro takeover, made after the market peaked, that brought down the Belgian banking giant Fortis as well as RBS. But do he and his fellow chairmen and chief executives deserve the entirety of the blame? There are two parties who have kept very silent over the last few weeks, but whom we should not forget.

The first, obviously, is the man who was Chancellor of the Exchequer for the decade before he became Prime Minister. Forget his boasting that he had ended boom and bust; forget his flirtation with Prudence in the early years; but remember that this was the man who was responsible for bank regulation ‘with a light touch’.