Much has been written about the banking crisis, from the credit crunch and ensuing rescue of Northern Rock in 2007 to the ongoing debate five years later regarding what to do about Royal Bank of Scotland. Thousands of pages have been generated on the economic boom and bust which paralysed leading industrialised nations. There is no shortage of books on how banks went on a lending binge till the music stopped and the the punchbowl of cheap credit ran dry.
The astonishing downfall of Royal Bank of Scotland has been well documented – Iain Martin’s Making it Happen is an authoritative account. The marriage of Halifax and Bank of Scotland and subsequent unravelling of the combined entity HBOS has been outlined by Ray Perman in his book Hubris. The Northern Rock fiasco of 2007 was chronicled the following year by Alex Brummer in The Crunch.
So why another book on the banking crisis? This is not an attempt to go through again in great detail the causes of the financial crash. It does not provide a blow-by-blow account of the boardroom upheavals at RBS and HBOS. But it does tell a hitherto untold story – how a small group of officials, advisers and ministers coped with the financial hurricane which battered the UK. Even five years on, the scale of the threat to the British economy in 2008 may still not be fully appreciated by voters and consumers. Britain was on the brink, standing alone, and somebody had to come up with answers. This book will explain who was there to repel the grave threat to UK plc. It was, arguably, the peacetime equivalent of 1940. Decisions made then have shaped the path of the economy since the darkest hour of crisis and affected millions of business and household borrowers.
The fact that a parliamentary Banking Commission was established in 2012, including the bishop who would subsequently become the Archbishop of Canterbury, is proof that interest in the taxpayer bailout of banks is not waning. Based on this author’s experience, there is still a strong public demand for information and explanations. This was a defining episode in postwar British politics and economic history.
I have talked to many of the participants in the Government and regulatory arena during the crisis, as well as highly placed sources in the banking industry. Most did not wish to be quoted but gave freely of their time and I can only thank them warmly for that. Their over-riding sentiment was that these once-in-a-lifetime events should be chronicled and analysed before memories faded. I hope they are not disappointed. When people are quoted directly, their comments come from interviews I carried out. Other quotations are sourced, with fuller details in the bibliography.
My sincere thanks are due to Stephen Rutt and Alana Clogan at Bloomsbury who always showed great faith in the project and their colleagues who helped take it through to publication. Thanks, too, are owed to my agent Andrew Lownie. Colleagues at the BBC Business and Economics Unit have been tolerant and patient as I took time off to research and write. Laurence Knight and Malcolm Balen were expert and very helpful critics.
My biggest vote of thanks must go to my family – to my wife Susan especially for her unstinting love and support, and Andrew, Jonathan and Kirsty. My brother William and his family (Claudia, Ambrose, Polly and Isaac) and my mother Caroline deserve thanks as well. They were very tolerant of my tendency to disappear with my laptop for lengthy periods of our holiday together. I hope they all feel it was worth it.