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Why are we in the mess we are? Is it because markets failed us, or did regulators? And are we, consumers and investors, immune from a share of responsibility? Here's a list of potential scapegoats, some obvious, others less so. Use the feedback form to nominate your own!
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The Fed: How long will it be before Ben Bernanke and his predecessor, Alan Greenspan, are spotted on the terraces at Upton Park? After all, like West Ham fans, they're forever blowing bubbles. Although Greenspan warned (back in 1996) of 'irrational exuberance' in stock markets, he did precious little to stop it. Time and again, critics say, the Fed has cranked up the printing press at the first sign of trouble - stoking the creation of an almighty debt-fuelled bubble.
City spivs: The red braces brigade have surged ahead of estate agents, double-glazing salesmen and possibly even journalists in the pantheon of the nation's most hated. Unregulated, unelected, unaccountable, they tear through the markets driven only by their own relentless pursuit of material wealth - and leave a trail of destroyed companies behind them.
Bank management: Empire-building has been rife in the banking industry for years, not just in terms of the number of takeovers transacted, but also in the frenzied push for market share - which led to proper risk management being thrown out the window. It was once thought heroic that Northern Rock could become the nation's fifth-biggest lender with just 70-odd branches. Now it's considered reckless. HBOS chairman Dennis Stevenson told shareholders that a £4bn cash call would see the bank right. Two months later, selling it to Lloyds for a song was "the right thing to do".
George Bush: Although it was Bill Clinton's administration that repealed the Glass-Steagall Act (separating deposit-taking from investment banking), George Bush is the president most detractors associate with business bungling. His administration has been stuffed with big business figures, yet on his watch we've had Enron, WorldCom, Tyco and now this. Critics say that Wall Street has been allowed to do whatever it wants - so long as the campaign finance kept flowing.
Gordon Brown: Where to start? He lauds the City in public, then stabs it in the back with initiatives like the infamous abolition of dividend tax credit. His government fiddles with piecemeal measures to help the housing market, instead of just simplifying the planning system so supply can respond quicker to demand. He creates a 'debt-is-OK' culture by making it easy to get an IVA, and allows a consumer boom to let rip. He strips the Bank of England of responsibility for banking supervision, only to hand it to an ineffective FSA. Now he wants to regulate City pay, even while MPs resist any public scrutiny of their own remuneration and perks.
The FSA: Barn doors? Horses? It clamps down on short-selling, but only after the nation's biggest mortgage lender has collapsed into the arms of a rival. It admits that its supervision of Northern Rock was below par. Not for nothing does Private Eye dub it the Fundamentally Supine Authority...
US homeowners: Let's face it, the US of A is hardly short of land. Yet for years, US consumers behaved as if house prices would rise to infinity. They borrowed money they couldn't afford to buy mansions they didn't need, then tried to blame someone else when it all went pear-shaped. The same is true to an extent here in the UK, although at least we have the dual excuse of being crammed into Europe's most densely-populated country, and stuck with a Byzantine planning process.
Carpetbaggers: Remember these folk, who wandered down the High Street opening accounts at every building society in the hope of windfall payments if they converted to banks? Well a lot of them did - and that was the end of building society prudence and lending based on deposit bases. Surely it's no coincidence that the big casualties so far - Northern Rock, HBOS, Alliance & Leicester and Bradford & Bingley - are all former mutuals. Hope you spent those windfalls before they evaporated...
Us: The media has been shameless consumer cheerleader one minute, doom-monger-in-chief the next. Precious few of Fleet Street's finest saw the credit crunch coming, and those that did were suffocated under the weight of all those glossy property and lifestyle supplements glorifying the (debt-funded) high life. Although, in our defence, we did turn sellers of Northern Rock long before the government gobbled it up - and we were sellers of B&B and HBOS shares long before those to hit trouble!
You: Meaning investors generally. Nobody paid much attention to risk management at banks when share prices were rising. The 'disgusting bonuses' paid out to senior managers are part of remuneration packages that are waved through annual general meetings year after year. Did those who invested in Northern Rock shares really understand how its funding model worked? And did the investment community lose sight of the fact that increasing reward only comes with increasing risk?
Who do you think should shoulder the blame for the crisis engulfing banks?
• "What about placing stamp duty on sells and removing it from buys?"
• "It seems to me that the people who borrowed too much and can't pay it back have got off very lightly..."
• "Lenders have failed to follow elementary principles...they allow four or five times combined salary"
Read more readers' views in Nous accusons!
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
