What really went wrong at RBS? And how can it be put right?

A sound banker is one who, when he is ruined, is ruined in a conventional and orthodox way.

-John Maynard Keynes

Given that current state of affairs it's hard to say whether or not Sir F fits the bill.

“we are not building on sand here. We are building on rock.”

Yeah, Northern Rock.

"No one calls Sir Fred an idiot. Words like genius, bully, dictator, autistic and superhuman are used."

As a British taxpayer who has had to bail out the bank because of fred the shred I can think of a few more choice expletives to use!

What went wrong at RBS and at HBOS has much to do with the fawning attitude of this Government. The lack of regulation of the banks gave organisations who were just waiting to exploit every possible situation and who have no other interest than profit building to the exclusion of any social consequence, the perfect opportunity to run riot over our entire economy. Add to that some overwhelmingly egotistical characters and the recipe for disaster was well set.

I'm not sure at exactly what point the banks decided to detach themselves from the rest of humanity but that is what happened and the fundamental change in policy, certainly from 2002, is perhaps one of the biggest contributors to the credit crunch - which, in my opinion, has been given the blame for many internal bank catastrophes that were entirely independent to a global economic situation. By de-humanising the banking process and bypassing social responsibility with the aid of computerised decision making, the bankers eliminated morality in their sector. Computer says no - sorry. At the same time, the computer said yes to any number of virtual atrocities because the numbers keyed in made the balance sheets look very good.

Not only did banking policy at the top levels and implemented all the way down to the bottom, start dictating how every other form of business in the Country was run, they then decided that they, the banks, should actively be running them. We've been particularly savaged by the Scottish banks, who appear to have used economic penalty as a revenge for Culloden and who rampaged into England. They did it in the guise of super banks, in what looked like a mass support for SME's and entrepreneurs and which used the Government's own Business Link as a marketing tool. But they rapidly exposed themselves as all controlling, all consuming monsters, with the ability to manipulate business and consequently jobs, everywhere.

As we've all now seen, the bankers were not even capable of running the banks (which at least have the core purpose of making money) and their avarice and determination to build empires allowed them to persuade themselves it is justifiable to sell not only dubious product but also debt and virtual debt based on virtual dubious product, over and over again. People who have the mentality to do that are not interested and cannot possibly understand any creative or productive business, so that when their own core business fell to bits through their own mis-management, they felt no compunction in blaming their customers for the disaster they created and for putting hundreds if not thousands of SMEs out of business in order to claw back even pathetic amounts.

Looking at the bigger picture (which we will never be able to see) the destruction of SMEs is small fry compared to the many multi million or billion pounds the banks have lost through their investment deals. God knows how many dodgy arms deals, property deals or even global political deals our banks have lost billions on but the demise of the entrepreneur in this country shouldn't be underestimated and the unemployment figures can only keep going up while bank lending in the part state owned banks doesn't comply with figures they agreed in order to get the bailouts. What little hope Globalisation left the entrepreneur has now been totally wiped out by the banks.

Saddest of all is the fact no one has been brought to book for their actions and that has sent out the message to bankers that it's all right to repeat the whole process because nobody gets the blame. If the worst you can expect for being a key figure in the ruination of an entire nation is a handsome pension pot, what have you got to lose? Not one of the senior executives of RBS or HBOS has paid any kind of price for the chaos they oversaw but their customers, their shareholders, many of their staff and certainly the tax payer, will be paying the price for what these masters of the universe have done, for many years to come.

And by the way, didn't the Board of RBS threaten to resign en mass if they couldn't pay out £1.6BN in bonuses? And didn't the Chancellor put his foot down and say he wouldn't let them pay this enormous sum out, in light of the fact they've made losses of almost £28BN in two years? No? I must be imagining things.

"It is necessarily part of the business of a banker to maintain appearances, and profess a conventional respectability, which is more than human. Lifelong practices of this kind make them the most romantic and least realistic of men." - John Kenneth Galbraith

If the business model was sound and there was only a need to step up capital adequacy, why did RBS have to take such large speculative positions and why did it have to participate in such a large take-over, both of which turned out disastrously, even as the world economy was falling off a cliff ? To reverse conventional logic, some financial institutions - and RBS was dying to join that league -are not too large too fail, they are so large that they are bound to fail.

Any one who has worked with Fred Goodwin as i have knows he was brilliant but extrmely arrogant. Hubris was what killed this bank, and we the British taxpayers are now picking up the cost

Hehe hehe ... he said "clusterfuck."

bpai, that was John Maynard Keynes, not Galbraith (though he was a Keynesian).

This RBS fiasco can only drag the already muddy British economy further down, cracking and crushing the hard rock it was purportedly to have built upon.

Remember Mary Poppins? When Bank of England goes, England goes.
(vzc43)

Despite losses, these bankers also demand big bonuses and bailout money.