Blaming the right bankers is too tricky: let's just pick one

Andrew Bailey thinks it "more than odd" that CEOs have avoided blame.

So far, those at the very top of failing banks - chairmen and chief executives -  have for the most part avoided going down with the ship, and today the Prudential Regulation Authority's Andrew Bailey has called them out. It is "more than odd", he said, speaking at a conference in London, that people at the very top of the chain have avoided formal charges while those beneath them shoulder the blame.

It is to my mind a very striking observation and difficulty with the crisis that no formal action has been taken against any chief executive or any chairmen of a failed institution. Not because I have a personal vendetta against them but it is more than odd that action has been taken against people lower down institutions but not at the top.

The explanation he'd been given, Bailey said, was that there was a “problem with the trail of evidence”, which allowed bosses to “delegate responsibility as well as tasks”. This was evidence, he said, of a “flaw in the system” peculiar to banking.

Blaming your juniors is hardly a custom specific to a single industry - but in this case, over misdemeanors that seem to spring directly from company culture,  it seems particularly logical to blame those at the top. (This recently did happen at HBOS - and today Bailey said he "welcomed" Vince Cable's investigatation of a boardroom ban for the "HBOS three" at the top, Lord Stevenson, Sir James Crosby and Andy Hornby.) Follow this logic any further, however, and things start looking a little less clear cut. Here's the FT on some further causes of the collapse of HBOS:

Three accessories after the fact not named in the report are Westminster, the City and the financial press. HBOS’s board were buccaneering heroes to many in the Noughties. Sir James’s New Labour chums secured his knighthood in 2006. Gung ho investors pushed HBOS shares higher between June 2004 and 2007 than any bank stock, Standard Chartered excepted. Business journalists mostly bought the bank’s bullish story, including Lombards past and present.

But if the blame is to be so broadly spread, it becomes meaningless. Blame too few, though, and it becomes scapegoating. Here's Robert Peston:

Here's the thing: if the HBOS troika are to be blacklisted from the City, why not ban those who ran the other failed banks, RBS, Bradford & Bingley and Northern Rock?

The important thing, as Peston points out, is to mete out the cathartic punishment so necessary to the public without damaging banks too much. As the potential for blame stretches to an entire industry and beyond, there will be an element of scapegoating here, and it would be moral to place this scapegoating at the top. But we must be careful not to set off a domino effect - if we blame x - why not blame y? - and risk harming too many powerful players in too many institutions. Perhaps the solution is just to pick one banker and drive them into the wasteland outside the city (hackney marshes/Essex?), and then have done. Suggestions on a post-card.

Photograph: Getty Images
Photo: Getty Images
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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.