FSA exonerates RBS executives and itself
They may have been dumb but they weren’t dishonest.
That’s a one sentence summary of the FSA’s 450-page report into the failure of RBS, published today.
It also applies to the FSA’s judgment of its own performance in the whole sorry affair.
The UK regulator accepts that the cost of the bank’s collapse to UK taxpayers runs far beyond the £25 billion loss from injecting £45.5 billion of equity into RBS in 2008, which was worth £20 billion last week on December 6. That cost also extends to a sharp recession, unemployment and loss of income and wealth for many.
The summary of the report is that the bank’s failure was mainly down to the poor decisions, such as buying ABN Amro, of its executives, backed by the board. There is no update on if and when the FSA will publish the results of its exhaustive investigation into the likely religious beliefs of the pope.
To anyone hoping those responsible for RBS’s failure might yet face their day in court, prepare for disappointment. In his foreword to the report, FSA chairman Adair Turner points out:
He adds that:
Perhaps this is fair.
Those running big businesses, including banks, make commercial judgments – in other words, make bets – that go wrong from time to time. But the beauty of this, from the FSA’s point of view, is that it can apply the same logic to its own failure to prevent the bank’s management driving RBS into a wall.
Yes, the FSA failed to stop the disaster, but not because its staff did not follow the regulatory orthodoxy of the time, rather because they followed it with such integrity. The FSA’s staff put in an honest, competent performance in implementing a lousy regulatory system.
Euromoney wonders what the distinction is between light-touch regulation and self-regulation and whether or not the FSA should really be allowed to offer the final judgment not just on UK banks’ failures but also on its own.