{"id":7375,"date":"2018-09-07T14:46:58","date_gmt":"2018-09-07T14:46:58","guid":{"rendered":"https:\/\/sceptical.scot\/staging\/?p=7375"},"modified":"2026-04-18T19:34:32","modified_gmt":"2026-04-18T19:34:32","slug":"how-scotlands-premier-banks-crashed-the-economy-ten-years-on","status":"publish","type":"post","link":"https:\/\/sceptical.scot\/staging\/2018\/09\/how-scotlands-premier-banks-crashed-the-economy-ten-years-on\/","title":{"rendered":"How Scotland\u2019s premier banks crashed the economy: ten years on"},"content":{"rendered":"\n

With hindsight we should have seen it coming a long time before. But it wasn\u2019t until 15 September 2008 that the world woke up to the first shock waves of the biggest financial disaster since the Great Depression.<\/strong><\/p>\n\n\n\n

Ten years later the ripples are still spreading. Unfinished business<\/a> is what the Financial Times calls the crisis which broke banks, rocked governments, wrecked economies, ruined lives, unsettled national cultures \u2013 destabilised democracy itself. While corporations, communities and countries struggle in the slowest recovery in history, the poor have paid the cost of mistakes made by the highest paid figures in the banking world.<\/p>\n\n\n\n

To mark its tenth anniversary, Sceptical Scot focuses on home-made follies; the extraordinary mistakes made by two once revered and typically prudent Scottish institutions: the Bank of Scotland and the Royal Bank of Scotland.<\/p>\n\n\n\n

Starting today we begin a series of extracts from Hubris: How HBOS Wrecked the Best Bank in Britain<\/a> by Ray Perman. In October, as we move towards the anniversary of the downfall of RBS, we will publish extracts from Shredded: Inside the Bank that Broke Britain<\/a> by Ian Fraser.<\/p>\n\n\n\n

Both highly acclaimed, these two books reveal extraordinary complacency on the top floor (C-Suite) of two global institutions based in Scotland\u2019s capital city.<\/p>\n\n\n\n

Despite the collapse of Northern Rock in September 2007, to outward appearances business carried on as usual throughout the early part of 2008. Having led a consortium with Santander and Fortis that had offered a staggering \u20ac71bn for Dutch bank ABN-Amro, Fred Goodwin silenced concerns about RBS capital and liquidity. \u201cCapital doesn\u2019t matter. We are so profitable that capital doesn\u2019t matter.\u201d<\/p>\n\n\n\n

Storm clouds gathered through an unusually wet summer. Lord Stevenson told HBOS shareholders: “Armageddon may happen, and we should be prepared for it, and we are.”  History very quickly proved him wrong.<\/p>\n\n\n\n

Not everyone was so shortsighted. As Ian Fraser writes:<\/p>\n\n\n\n

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At the end of August, Darling gave a remarkably candid interview to The Guardian<\/em>\u2019s Decca Aitkenhead at his dynastic croft on Great Bernara, an island off the Isle of Lewis. The chancellor said the economic times \u2018are arguably the worst they\u2019ve been in 60 years\u2019. He also said, \u2018And I think it\u2019s going to be more profound and longlasting than people thought.<\/p>\n<\/blockquote>\n\n\n\n

Ten years on, and not over yet.  It is important to remember how and where it began.<\/p>\n\n\n\n

Ray Perman takes up the story in today\u2019s first episode (Apocalypse now and then…ten years on<\/a>). On 7 September the US government had announced it was taking Fannie Mae and Freddy Mac (now described by CNBC as Uncle Sam\u2019s cash cows<\/a>) into public ownership. A week later<\/p>\n\n\n\n

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On 15 September, a day the newspapers called \u2018Black Monday,\u2019 \u2018Meltdown Monday\u2019 or \u2018Panic Monday,\u2019 the FTSE 100 share index tumbled 200 points and HBOS shares went into freefall. The Financial Times described a macabre prediction game in progress: who will be next? The market had already decided: it would be HBOS.<\/p>\n<\/blockquote>\n\n\n\n

[October update:<\/span> Sceptical Scot financial crisis series this week reaches the conclusion<\/a> from Ian Fraser’s  Shredded: Inside RBS the bank that broke Britain. Our tenth anniversary review of the 2008 crash will end with a recorded discussion between Ian and Ray in the Library of Mistakes]<\/p>\n\n\n\n

Conclusion? RBS Shredded Part Four<\/a><\/blockquote>