The governor of the Bank of England is Mammon's archbishop. So what was he doing at the Chelsea Flower Show as guest of a bank that has been involved in a huge scandal?

Sir Eddie George, governor of the Bank of England, made a misjudgement the other day, I believe. No, he didn't accidentally cut interest rates. He wasn't discovered bonking a financial journalist on the carpet in Threadneedle Street (unlike one of his past deputies). He didn't smoke an illicit gasper in the bullion vaults.

All he did was accept an invitation to be guest of honour of Merrill Lynch, the world's biggest securities firm and the main sponsor of the Chelsea Flower Show. At the most fashionable event of the season - invitations to Chelsea these days are even more desirable than to Glyndebourne or Royal Ascot - Sir Eddie and Lady George were guests of the Merrill boss Stan O'Neal.

Nothing wrong with that, you may think, except that only five weeks ago, Merrill Lynch, along with Citigroup, Goldman Sachs and other top firms, were together fined $1.4bn because of what is probably the worst embarrassment to afflict Wall Street in a generation. The banks were accused of routinely persuading their clients to buy shares that they knew were rubbish.

The fines in themselves were peanuts. Citigroup alone makes $1.4bn in profit every four weeks. But the public shame and humiliation, some argued, would persuade the securities industry to clean up its act. Investment bankers would hang their heads. They wouldn't want to show their faces in polite society.

It isn't working out like that. At a New Yorker breakfast the other day, Eliot Spitzer, the New York State attorney general, who brought the banks to book, was asked how much shame on Wall Street his settlement had produced. "I see none," he had to admit.

Most bankers show no remorse whatsoever. Philip J Purcell, chairman of Morgan Stanley, which was fined $125m, has shown astonishing complacency or bluff, announcing at a recent conference that he did not see anything in the settlement that should concern investors. William Donaldson, chairman of the US Securities and Exchange Commission, accused him of "a troubling lack of contrition".

Sandy Weill, the chief of Citigroup, who was personally accused of pressuring staff into giving biased advice, still hoped to join the board of the New York Stock Exchange even after the settlement. It didn't occur to him that it might not be seemly, though he yielded after seeing the outrage.

And Sir Eddie's Chelsea host Stan O'Neal, chairman of Merrill Lynch, which was fined $200m, criticised the settlement in the Wall Street Journal, writing: "To teach investors . . . that if they lose money in the market they're automatically entitled to be compensated for it does both them and the economy a disservice." This wilfully misrepresented what the scandal was about.

Spitzer's subsequent, public rebuke to O'Neal was savage: "If I were you I would reflect as to what your company did and what we have alleged about your company. It committed fraud. That is not risk."

This side of the Atlantic, things are much the same. Investment bankers are in denial - or pretend to be in denial - about their sins and some regulators, sadly, are doing nothing to counter this comfortable self-delusion. No one can be in much doubt that the same fraud on a lesser scale was happening here.

Sir Eddie's appearance at the right arm of O'Neal amid the biggest hitters in the City can only have strengthened the view that Merrill Lynch's disgraceful behaviour, if it ever mattered, has already been forgiven and forgotten.

Time was when the merest waggle of the eyebrow from the governor could destroy the reputation of any City firm. Those days are gone. The Bank no longer has responsibility for City regulation.

Even so, the governor remains Mammon's archbishop. By appearing at Merrill's bun fight, he was giving the firm his blessing. If the securities industry is really to reform itself, it needs a decent spell of sackcloth and ashes.

Merrill's rehabilitation is also being helped along by the BBC, which gave hours of coverage to Chelsea. Alan Titchmarsh (now rapidly achieving the status of national treasure) repeatedly referred to the show as "supported by Merrill Lynch", in the admiring tones he usually reserves for clematis and water features. The company also got a mention in the closing credits.

I called the BBC, which assured me that the plugging was "within producer guidelines". But does our public service broadcaster really have to abet this blatant advertising?

Sponsorship of nobby events seems to be the favourite PR trick for City firms in the soup. The backer of the Oxford/ Cambridge boat race is Aberdeen Asset Management, the firm at the centre of the split capital trust scandal.

Patrick Hosking is deputy City editor of the London Evening Standard

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