The smug interrogating the incompetent

Is it just me or was there something nauseating about watching a gang of smug, know-nothing MPs with their jackets over their chairs and their hands behind their heads grilling Northern Rock executives about a shocking practice (selling money market-backed mortgages) that they’d almost certainly never heard of six weeks ago?

If I’d been one of those executives I’d have been sorely tempted to ask the committee some questions myself. Like “if selling mortgages backed by wholesale debt is such a bad thing why have you never examined it before in the history of your committee?” or “when was the last time any one of you asked a question in parliament about money market-backed mortgages?” or even “since when has buying cheap, selling dear and pocketing the difference been a crime?”

Northern Rock’s ‘crime’ was to acquire debt cheaply on the International money markets and resell it at a profit to home buyers in Britain: a perfectly sound business practice and the logical outcome of the deregulation and globalisation of financial markets. The FSA obviously thought this an acceptable way of funding mortgage lending. Likewise the Bank. Neither had ever (as far as I can tell) run any kind of investigation of the practice and neither rang any alarm bells in the run up to the credit crunch.

Were Northern Rock’s management complacent? Even incompetent? Possibly. Should they carry the can for the damage to British banking’s credibility? Do they warrant a kicking from clueless point-scoring legislators? No.


  1. It isn’t just you.
    The first thing I thought was, the MPs want to go in hard to get their names in the news, so their constituents will go, “Ooh, that’s our MP, that is.”
    The NR board are an easy target, and very unpopular among people who don’t know what the hell is going on. I don’t see why they should be accounting for themselves in front of a select committee, except as a distraction exercise from everybody else’s equal responsibility (or lack of). Grrrr.

  2. While I agree with you about the MPs, must say that the board is British financial hierarchy at its best. The Chairman of Northern Rock, Matt Ridley, is the son of Toryboy Nick Ridley, who was himself the Chairman of Northern Rock. So how did Matt get this £300,000, 14 meetings a year job then, what’s his qualification and how hard would you fight to stay in a job that paid that much for that little work? I can just imagine him rubbing his hands and thinking that so long as the whole board has offered to resign he is safe – he should fuck off and let some working directors sort out the mess.

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