On being pushed by the Treasury committee, Lord Stevenson, former chairman of HBOS, said the mistake the bank made was a failure to predict the credit crunch, which effectively froze access to new funds.
“The fundamental mistake of HBOS was the failure to predict the wholesale collapse of the wholesale markets,” he said.
I can relate the credit crunch chain of events to the Oyster Card system in London Underground when it fails due to a technical problem. It results in total chaos . There is no ticket checks since the system has failed and the gates where the card reader is installed kept open. Then there is no difference between passengers with tickets or without tickets and everyone takes a free ride.
I occasionally watch Jeremy Kylie show or Maury Show. The have gradually moved from lie detector to a DNA test to determine the truth. Today DNA test is a precise way to determine the paternity, solve crime and also trace the roots of the family.
What about the markets ? Is there no way trace the money where it has disappeared !!!
Mr Hornby conceded to the the Treasury Committee that the culture, where bankers can receive many times their salary in cash bonuses, did need to be looked at.
“The bonus system has proved to be wrong. Substantial cash bonuses do not reward the right kind of behaviour,” he said.
What has happened to the Corporate Governance Standard where there the remuneration committee decides on the pay of executive directors ? Who pays the price for the excessive risk that the executives take for the bank ?
In all the cases, these are best of banks or auditors !!!
The questions I would like to ask:
- Is the current laws and regulators geared to determine the source of the problem ?
- Do we require techniques and technology for the market as sophisticated as DNA Tests.
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You may also like to read
- Ethics on ACCA website 11-Feb-2008
- Combined of Corporate Governance UK 20-April-08
- Strategic Drift
- Are you following a tractor
- Corporate Governance and Audit in India – BS