Peston reveals the true depth of Britain's bank crisis


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Often, Robert Peston's new book, How Do We Fix This Mess?, reads like a wildly implausible financial thriller. We all know the basic plot, of course, it's the detail you couldn't make up. At one point in the spring of 2007, for example, the BBC's business editor finds himself on a huge trading floor at Morgan Stanley, recording a piece for the Today programme on new-fangled financial products with names like "credit default swaps" and "collateralised debt obligations".

Peston asks the banker in charge to explain these products in a way his grandparents could follow. But after a while he realises: "I was actually finding it incredibly difficult to understand what the hell he was talking about." And if Peston, with almost 30 years' experience of City jargon, wasn't getting it, then who on earth was?

"If those guys on that trading floor were doing something that was marginal to the global economy, then of course it wouldn't have mattered," he says now, wearily nursing a coffee at his publisher's office on London's Euston Road. "But this was a huge global industry, with hundreds of trillions of dollars worth of these products being created. I know people who sit on the boards of banks and most of them have the same level of sophistication and knowledge of these things as I have... and it was at that point, a sort of Damascene moment, that I first realised the scale of this industry and started thinking how incredibly dangerous it might be."

Peston, 52, wasn't the only clueless observer back then: "More to the point, and this is obviously very worrying, chancellors of the exchequer didn't know about the existence of this industry and wouldn't have been able to explain it," he claims. "Finance ministers and central bankers all around the world didn't know about it and regulators, it turns out, didn't really understand the implications of it either. So this terrifyingly vast and seriously dangerous global industry grows up with really only the participants – who are pocketing enormous bonuses – knowing about it or understanding it."

The rest is horrible history: a downward spiral into credit crunch and recession, triggered by the collapse of the derivatives market and the taxpayer bailout of the banks. No one saw it coming because no one clever enough was looking.

Peston is dutifully promoting his book, but it is a horrible time for him personally, too. A month ago it was announced that his wife of 14 years, the novelist Sian Busby, had died after a struggle with lung cancer.

She was diagnosed almost five years ago, in the midst of the Northern Rock story, just as Peston was becoming a household name. They first met at school and you get the impression they were soul mates, both having spoken of the other in devoted terms. His book is dedicated to their son, his stepson, and to Sian.

For now, of course, work is not his main concern. "I'm having to manage things in a different way. We're a one-parent family now. My 15-year-old son is my priority and I have to be around for him. The BBC has been wonderful in allowing me to work flexibly. I can do a lot from home, so I'm easing myself back in."