Local rivalry

A bit more about RBS and HBOS. One thing that sticks out for me is that sense of two institutions with a bitter local rivalry, both with serious resources and ambitions, but perhaps not quite up to the standards they set for themselves, with an identity built on chippy bitterness. We’ve seen that somewhere before on this blog recently, and that was based on long-running class-based divisions too, and that ended up in utter degradation too.

I know, by the way, what you readers want. Going by the stats counter, you want more Jimmy Savile content. You love it. The data doesn’t lie. Here, a review of “Not the” Dan Davies‘s biography, and an interesting quote.

The wooden doors slid open, releasing a cloud of smoke and two large, unsmiling men in their 50s. “Frisk him,” barked Jimmy Savile, who had stepped out of the lift behind them and was wearing a blue shell suit with chevrons of red and white on the shoulders.

I was pinned to the wall and searched before Savile finally called the men off. He chuckled and extended his hand, introducing them as Mick Starkey, a West Yorkshire police inspector, and Jim “The Pill” Cardus, a retired pharmacist. “Meet the Friday Morning Club,” Savile trumpeted before ushering the men out of the front door to the flats.

So that’s a moonlighting copper…and a retired pharmacist. The Friday morning club was the coterie of cops he had breakfast with. Now I don’t think you usually look to pharmacists for private security services. Most of them seem rather retiring, mild-mannered sorts. You do, of course, look to them for the supply of drugs.

Now here’s the bank disaster book you should read.

So I advised you not to read Iain Martin’s Making it Happen, but advised you to read Simon Carswell’s Anglo Republic. Reviews of books on bank failures seem to have become an occasional series, and at least it’s somewhat less depressing than Jimmy Savile, so here we go.

Yes, yes, you should absolutely read Ian Fraser’s Shredded: Inside RBS, the Bank That Broke Britain. This is probably the definitive work on the British and Irish banks in the Great Bubble and the ensuing Great Financial Crisis. The best thing I can say about it is that it stinks of work.

You should probably also read Ray Perman’s Hubris: How HBOS Wrecked the Best Bank in Britain, but it’s not essential.

Where Iain Martin skates over the surface, Fraser drills into the icy depths. Where Martin is glib, Fraser is forensic. Where Martin defers to Scottish Toryism, Fraser mauls anyone and any institution he sees. As the Glasgow Herald‘s business editor, he is a bruising hard news reporter rather than an opinionator, and this shows. He has simply done much more work – reviewed more documents, interviewed more people – and he seems to despise pretty much everyone involved, probably the best course.

He brings out the degree to which RBS was, in many ways, a sort of regional development bank/politicians’ pork barrel. For example, Lord Younger, who Fraser repeatedly points the finger at, intervened to keep it from being sold in 1981 specifically on the grounds that it was important to the Scottish economy and that it was necessary to reserve a sufficient number of major appointments for Scots. Jobs for the nobs, you might say. He follows Younger repeatedly dipping in and out of Tory politics and the Royal Bank’s board throughout the 80s. He makes a strong case that RBS was as much the Scottish Tories’ bank as Hypo Alpe-Adria, say, was Jörg Haider’s. Not that he spares Labour or indeed the SNP.

This wasn’t just pork barrel politics. Fraser argues that the Scottish Tories did have some ideas for the future of the Scottish economy, as expressed through the SDA, and RBS took the lead in financing them, especially because its CEO and then chairman, Sir George Mathewson, came directly from the SDA. To some extent, as Perman points out, it carved up the market with Bank of Scotland – RBS took on the engineering and semiconductor fab stuff, Bank of Scotland the oil. It was far from the first time they had come to an agreement.

He also points out that the relationship between the two banks, which swung between vicious rivalry and a quasi-cartel, was rooted in the depths of Scottish history, with the Royal being associated with the Whigs and the “Old Bank” with the Jacobites, the “Old Bank” with rural and provincial Scotland and RBS with Glasgow’s industries. One thing in which they were unanimous was sectarianism – neither bank employed a single Protestant Catholic within Glasgow before 1978. When you realise that, according to Perman, Scotland’s density of bank branches was so high that chequing accounts didn’t sell because nobody bothered when they could just pop into the bank, this is incredible.

Fraser also gets it, in that he is quite clear that financialisation, deregulation, and housing bubbles were a thing and that they were rooted in policy, policy that was decided by government, by ministers with faces and names. He puts the story directly in the context of Thatcherism and after, and he points the finger, again and again.

The finger points at Thatcher, but more directly, it points at Sir Steve Robson, architect of tripartite regulation, inventor of PFI, and RBS director. It points at Mervyn King for basically ignoring financial stability, and being a dick. It points at Bernard Jenkin, the Tory spokesman at the time of the creation of the FSA, who is quoted worrying about its terrifying over-might. It points at Alan Greenspan, for bubbles. It points at Gordon Brown, too, for sucking up to bankers generally, although it also accepts he wasn’t wrong about responding to the crisis.

Most of all, it points at Fred Goodwin, who it paints as a wanker, bully, and bungler of epic proportions, a sort of financial Iain Duncan Smith. One of my favourite details is that he specified the colour, trim, and upholstery of the RBS fleet of Mercedes to match the corporate identity by exact Pantone shade number. Another is that he persuaded 111 Squadron RAF to regularly take him up in the back of a Tornado F3.

But the best one is probably that in mid-2008, already 18 months after the top of the bubble, when RBS did its doomed rights issue, he stood up at the annual lunch for NatWest pensioners to badger them to buy more RBS shares. That failing, he compiled a list of executives who didn’t yet own enough RBS paper in order to mulct them as well. Anyone who put money in at this point lost 90-odd per cent of it.

And RBS, by 2008, was ruined in so many different ways. There was the US trading operation, Greenwich Capital, and its enormous pile of super-senior leftovers from US subprime CDOs. There was the merger with ABN-AMRO, which seems to have happened mainly because Goodwin was scared of his semi-mentor Emilio Botin, and which was a superb, fractal clusterfuck in every possible way. The Scotsmen blame the Dutch, and the Dutch the Scotsmen, but the truth was both that ABN-AMRO was in a terrible state and also that RBS had no idea what to do with it, like the dog that finally caught the car. And then there was the commercial property. Any one of these could have finished them, but as it turned out they did them all.

There is a huge amount of material here on RBS’s personnel practices, on its history of dubious dealings with some of its clients, on the pharaonic head office project, and on the surprisingly louche careers of some important people involved. Goodwin, for example, worked in his past career in accounting for a Touche Ross, later Deloitte, partner who was also censured and forced to pay a £40,000 fine by the accounting profession over his role in the Barlow Clowes fraud. He later shows up auditing RBS after Goodwin overruled the bank’s procedures to give Deloitte their business.

An important point in both books is the time factor. When Goodwin got up on the stage to sell the rights issue to the NatWest pensioners, the peak of the bubble in the autumn of 2006 was already 18 months in the past. But the RBS commercial property lenders were actually increasing the size of their book and taking on increasingly wild projects and dodgy clients. Similarly, across town, Perman makes clear that HBOS’s binge on commercial property didn’t really get going until after the bubble had burst. Both of them accelerated full tilt into the wall.

So the Dutch blamed the Scots and vice versa. Similarly, the Yorkshiremen blamed the Scots and the Scots the Yorkshiremen.

Perman gives some interesting insight about HBOS, which after all destroyed Yorkshire’s bank as well as one of Scotland’s. The Scots considered Halifax scary and a bit fast, thanks to its emphasis on sales. They called them the Haliban. Halifax had to be a bit like that because it was almost exclusively a retail bank, and Bank of Scotland wanted it precisely because it had so many retail savers on the books. This provided capital that the Old Bank could use in its commercial banking activities. The Halifax side saw it differently; rather than complementing Bank of Scotland, they wanted to turn it into a bigger Halifax.

So who won? The mortgage lenders in Halifax deliberately hit the brakes in 2006, changing their pricing and terms to retain existing customers and back off on growth. Although this was later, crazily, reversed and the executive responsible was sacked, by then it was too late to make any difference. In the meantime, the commercial lenders went absolutely berserk. Two-thirds of the total accrued losses at HBOS were attributable to commercial property lending, run out of the Old Bank. It may well be true that Halifax was more important as a contributor to the housing bubble, having led the charge early on, than as a casualty of it. But then, Andy Hornby seems to have responded to the slow-down in Halifax retail by egging the BOS commercial team on.

Also, apparently its board met the announcement of 125% LTV mortgages, self-certification, etc. with “mute astonishment”. Famously, the thing about dumb insolence is that they can’t do you for it. Mute astonishment has in common with dumb insolence that it looks a lot like saying and doing nothing.

In some ways, Fraser especially is perhaps too critical. So you get a blast against RBS for not being likely to make a profit these days, and then another against it for not shrinking fast enough. Which is it, then? But on balance, there is plenty of blame to go around.

TYR Pub!

It’s been a while. How about a TYR Pub! meetup?

Update: OK, no point buggering about any further. Let’s say the 11th July. And let’s say 7.30pm at the Queen’s Hotel, Crouch End Broadway N8.


Sometimes you look around the Internet for just the right blog discussion and only then realise that it’s the one you will have to write.

Open newslist 6

OK, it’s time for one of these.

Books: I’ve recently read Mike Martin’s An Intimate War: An Oral History of the Helmand Conflict, Ian Fraser’s Shredded: Inside RBS, the Bank That Broke Britain, Agata Pyzik’s Poor Sexy East, and Phil Lapsley’s Exploding the Phone.

I’ve also got the MOD Lessons Learned Compendium on Iraq hanging about. It’s more like a “Lessons Not Learned in the Slightest” report.

I’d also like to compare LGI/Jimmy’s, per Savile report, and RBOS/Bank of Scotland, per Fraser, but someone will have to hold the bucket while I heave.

We might have a chat about what the hell a “systems house” is and what it has to do with Eric Pickles.

Tories and thugs (#Savile warning)

The Leeds post on Savile required subtlety; it dealt with things like culture and class that only work that way. So what about Broadmoor, the asylum where the Tories put the psychopath in charge? Well, Leeds was about the things nobody was willing to say. As we will shortly see, Broadmoor was about precisely the things people said right out there in the open. The report is here.

If you followed mainstream media or indeed this blog, you’ll know that the minister responsible for putting Savile in charge of Broadmoor Special Hospital was none other than Edwina Currie. Here’s what she has to say for herself, at paragraph 7.14 of the report.

“He’d had a look at everything he could use to blackmail the Prison Officers’ Association…I thought it was a pretty classy piece of operation. He knew how to pin people to the wall and get from them what he wanted

She wasn’t wrong.

What was it Currie was talking about? Well, Savile claimed per paragraph 7.13 to have discovered that the Broadmoor staff were fiddling their overtime, that some people who weren’t working there had managed to keep tied accommodation, and that some £5 million was missing from a construction project. The reference to blackmail is that he proposed to leak this to a newspaper if the POA didn’t cooperate.

As the report says, the corollary of this is that he, Currie, and senior civil servants were willing to accept the alleged fraud in exchange for cooperation. As it doesn’t say, quite, the government in the person of Currie was also OK with using Savile’s gangster tactics as well as putting up with the illegality. Currie thought this “classy”.

The motive was, per paragraph 7.13, as follows. It is what you might guess.

He intended to bring the POA to heel

In 7.14, Currie says:

The principal question was “how can [the government] break the hold the POA has on the hospital

She also (reference 7.20) says:

a racket run by the union was like manna from heaven

In a brief for ministers dated February 1989, reference 7.19, we get this:

As a direct result of Mr Savile’s determined and at times ruthless leadership, 15 militant senior nurse managers are set to leave the hospital

It seems only surprising they were not found in a ditch in Guatemala, going by the style and tone here.

But, you say – a racket run by the union is still a racket. The report repeatedly points to the fact that many Broadmoor staff lived in tied accommodation as a reason why Savile got away with it. They were scared of being evicted. The racket didn’t end – he muscled in on it. Clearly, he provided some service and that service was putting the fear of God into people who were after all just in a union. It’s normal. It was the thuggery that impressed so much.

By the way, in fact he made a pass at the minister herself; an annexe to the document contains a civil service note of the meeting in which she says he tends to kiss right on the mouth. We’ll break here to pass round the brain-bleach.

If the convulsions have passed, we’ll continue. One of the big issues in Broadmoor and in the NHS at the time was the emergence of “management” as a thing as opposed to “administration”. “General managers” were appearing and gaining influence as a new profession. In Leeds, this was almost certainly a good thing. Professionalisation removed niches in which the roots of his tolerance lay. Access was reviewed. Policies were drawn up for things like protecting patients from abusers. The dual hierarchy of consultants and nurses, neither of whom necessarily took responsibility for basic security, was subordinated to management.

In Broadmoor, though, Savile was the agent of the rise of the manager. His appointment occurred in the context of efforts to create a management structure for the special hospitals. DHSS officials who believed strongly in “entrepreneurs” were instrumental in appointing him. The launch of playing-at-shops internal markets was closely bound up with it. The man who pressed the button, Cliff Graham, did so over the summer while key civil servants were on leave, ministers were out of the country, and Edwina Currie, bless her heart, was “covering but doing most of it from Yorkshire”. Graham acted, and then informed the minister when the damage was done. It is surely interesting that the report quotes another civil servant describing him as “a thug”. Graham has since died.

I didn’t know, before reading the report, that Broadmoor played an important role in the foundation of the POA. As such, it was perhaps a sort of carceral Yorkshire coalfield. The changes going on there were socially complex. Part of the story was the movement towards a less vicious form of psychiatry, which implied that the role of the staff would be more therapeutic and less punitive or security oriented. This is clearly a good thing. However, an important social aspect of this was that it meant that they would cease to be a trade, organised in the POA, and become a profession with a chartered institute, the Royal College of Nursing.

I don’t know, but I’m guessing that the transition from a blue-collar ex-services culture to a pink-collar one probably came with a pay cut and not much future for non-graduates. Which would be why they wanted Savile and his merry gang from Leeds. Tellingly, the report says the most prison-minded old guard types were also the most successful at keeping him out of their wards – they weren’t likely to be bullied.

Which leaves us with a question I left hanging. Which newspaper was that again? It was, of course, the Sun. It goes without saying, really. And not much changed. Here’s David Hencke:

Matthew [D'Ancona] describes his [George Osborne's] view of Coulson as ”a street fighter who could take the battle to Labour and win in a media knife-fight.”

But Cameron comes over as besotted with Coulson. According to [D'Ancona] ” Cameron..was awestruck by his communications director, whom he privately described in lyrical language.”

” He treated Coulson as a red top shaman, a source of secret knowledge about the world of tabloids, Essex and kitchen- table politics..

Still far too keen on anyone who came across as: a thug.

Genuinely evil

I have been reading the Leeds Teaching Hospitals report on Jimmy Savile. Obviously, it couldn’t really be any more grim, and you’ll have heard the latest shocking revelations via the mainstream media and Jamie Kenny.

But what about really sick and perverted behaviour? Here’s some for you.

A hugely important theme in the report is the remarkably vicious competition between the consultant doctors for status, resources, and career advancement. At a higher level of abstraction, this appeared as competition between LGI and other medical institutions for prestige, high technology, and investment. The huge scale of NHS infrastructure in Leeds meant that this was a seriously big deal politically and economically. This was dramatised as a rivalry with St James’s across town, a rivalry that was rooted in class distinction, as LGI historically emerged from the university medical school and St James’ from the workhouse.

The 1960s-70s board of governors, who were personally closest to Savile, were especially exercised by the perceived need to keep up with the expansion of St James’s as the light of NHS investment shone down on the previously benighted casual wards. This was why they wanted the publicity Jimmy Savile drummed up so badly.

This had direct practical consequences for Savile’s MO. One of the reasons why there were so many people crammed into the Nightingale wards, and so many children mixed into the general population, under minimal supervision by a thin scattering of student nurses overnight, was because they were desperate to retain their accreditation as a teaching hospital and needed to save elsewhere, something of enormous financial and career significance.

As time went on, his engagement with the top management shifted, in their telling at least. Rather than being personally associated with the bigwigs, he was increasingly in touch with the ambitious middle layer who used his services as a kind of broker to contact private donors, thus getting around the NHS’s procurement rules. I suspect there is more than one sordid story about money in here*.

However, this narrative is somewhat tendentious, when you look at the astonishing attempt by cardiology professor Alistair Hall, PR director Karl Milner, and others to get their hands on Savile’s estate. To recap, Hall, who was Savile’s doctor as well as his friend, gave a eulogy for him at the preposterous pseudo-state funeral in which he claimed that Savile had left much of his estate to endow a heart institute at LGI. Savile’s will contained nothing of the sort. It turns out from the report that Hall, Milner, and company had a get-together between his death and the funeral to decide how best to get their (institutional, rather than personal) hands on his money, like some gang of scheming relatives in a 19th-century French novel.

Actually, many of the recent top management demonstrate huge amnesia about him, which is astonishing when you realise one of them (former CEO Stuart Ingham) remembered Savile directly threatening him, saying that he could have him “dealt with” by people he “knew”, although he also remembered nothing else.

Which reminds me. Far below this exalted social level, Savile’s only official role was as a volunteer porter, and he made a great deal of effort to be everybody’s best mate at that level. It’s not hard to see a parallel with his career in the Northern club trade. Famously, gangsters love to control the door staff because anything that goes in or out of the club goes through the door. Savile had his own door staff to ensure that he controlled the door. Similarly, influencing the porters and security guards gave him what he wanted: access. To put it another way, he muscled in on the door at LGI with the assistance of the new chief porter, his close friend and apparent accomplice Charlie Hullighan, in the same way as he might have imposed a new Lithuanian bodybuilder on an uncooperative dance hall.

In fact, it would probably make sense to break this post up into sections by social class, but there’s only so much Savile I’m up for wading through.

And making this an underworld story is interesting, but I think it’s worth pointing the finger firmly at the cynical and ambitious medical bureaucrats driving in from Harrogate or Ilkley. They thought they were using him; he was using them; now they remember only that he’d always been hanging about and it was somebody else’s problem. They are the Schreibtischtäter of the story, and there’s something frankly Prussian about the report’s description of LGI in the postwar era.

The parallel, not-quite-equal nursing hierarchy was as bad for different reasons. They were just as ambitious but even more authoritarian, and where their medical colleagues cared about their science, they cared mostly about whether any of the students had snuck a boyfriend into halls or been seen in a pub. Nobody seems to have cared about the patients, who were somehow beside the point. The world of Orwell’s How the Poor Die was still with us.

Speaking of How the Poor Die and workhouses, the one place in Leeds where you were relatively safe from Jimmy was…Jimmy’s. Out of thirty-odd allegations on Leeds Teaching Hospitals premises, only one is recorded at St. James’s. Clearly, he had fully entered into LGI’s tribal identity. A real LGI man didn’t set foot in Jimmy’s, and neither did he.

*One that didn’t happen was the appeal for an MRI scanner in the early 90s, where Savile made it a condition of the donation – which wasn’t actually his money or even money he collected – that the machine be procured from a specific Japanese manufacturer, not named in the report. The medics refused to accept that particular model and the deal fell through.

heywoood, always up to no goood

There’s a bit more on the war of Coulson’s Clearance here, from Robert Peston, who I seem to remember attracted attention back in 2011 as being oddly pro-Murdoch.

I know the answer to why Coulson was not given top level security vetting in 2010.

What happened was that Cabinet Secretary Sir Jeremy Heywood had decided that too many special advisers had access to the highest level of security clearance and wanted to reduce their number.

So he made a policy decision, without pressure from David Cameron, not to get Coulson cleared for access to such material. At the same time, Mr Cameron’s chief of staff Ed Llewellyn was given the most vigorous degree of vetting, because of his foreign policy role.

Sir Jeremy simply felt it was inappropriate for large numbers of SPADs – as special advisers are known at Westminster – to have access to this material.

He subsequently decided Coulson was a good egg and could have access to this top secret sensitive material, even though he had not been cleared. So if anyone is going to be embarrassed by the failure to vet Coulson, and Labour’s investigation into this, it will be Britain’s top civil servant, Sir Jeremy Heywood

We already knew, since July 2011, that there was a degree of pushback on vetting Coulson and others, supposedly for cost reasons. But I think the first 3 paragraphs here are probably accurate, although the tone Peston gives them is tendentious. I know the reason – closing out the story much?

Taken literally, Heywood didn’t think Coulson should have access to anything sensitive. Neither did he think other special advisers should have such access. This doesn’t, of course, reflect positively on Coulson.

Also, it sounds as if the civil service as personified by Heywood wanted to roll back the integration of the No.10 press operation with the political/operational staff. No.10 is where the wiring for the intelligence community, the civil service policy machinery, certain bits of MOD, and the prime minister’s media support come together. Revoking the spin doctors’ access to secrets would dramatically reduce their power, and increase that of the institutions.

The last paragraph must be read in parallel with the rest of the news. We know that Coulson was eventually put forward for his clearance, and we can reason that it happened in the autumn of 2010. Clearly, Heywood didn’t somehow neglect to have him investigated, because after all it happened. We also know that Coulson did indeed get access to high-level secrets – whether from the possibly accidental “strap one” mention or his own words.

So an exception was made for him. Some media actors will want to blame Heywood for granting it. Others will ask who requested it. The process requires that the department that employs you acts as “sponsor” and presumably pays the bill. Coulson’s sponsoring department would be…you guessed it. The Prime Minister’s Office is a thing these days, with a domain name and all. It sits in the Cabinet Office administratively, Francis Maude’s ministry.

Since the Tories’ re-org of the civil service, the roles of cabinet secretary and head of the civil service have been split up, and the new one of the No.10 permanent secretary added. Heywood has emerged as first among equals from this position. Therefore, I give you three options – Heywood, Cameron, or Maude. But Cameron is the customer for the communications director. It’s his interests that are served.

Interestingly, we learn from this that it wasn’t only Blair who gave such access to his press secretary; counting back from Coulson, doesn’t the statement that the last four No.10 press secretaries had it take us into the Major years?

The problems of Puffin Party security

Here’s an interesting story of a Russian military intelligence officer deployed into Ukraine, apparently under plausibly-deniable cover, whose communications were meant to hide in plain sight among the chaotic noise of the Internet. Specifically, he’s a gamer and re-enactor in private life and he tried to use the channels of this subculture.

Unfortunately for him, it only cuts both ways up to a point. You can’t operate in the apparent anonymity of the Internet without also accepting its distinctive threats, and Anonymous got into his e-mail account with hilarious consequences. What appeared to be a trivial and frivolous subculture providing nonthreatening space turned out to expose him to everything Putin hates in the form of a genuine security threat.

I have just been reading Danah Boyd’s fine It’s Complicated: The Social Lives of Networked Teens, and an important point that sticks out is that a working definition of privacy is the ability to choose your audience.