David Cameron should beware taunting Ed Miliband over the Co-op Paul Flowers affair


Be careful what you wish for. David Cameron  should heed this warning as he lashes out at Ed Miliband  over the Labour Party's close ties to the Rev Paul Flowers, the "Crystal Methodist" former chairman of the Co-op Bank who was arrested on Friday for alleged drug-dealing.

Slinging mud - like cocaine - has a habit of coming back at the thrower. Labour has much to answer about the Co-op affair; the disgraced Flowers was appointed chairman under Labour's reign in March 2010 and vetted by the City's watchdog, the Financial Services Authority. However, it was under Cameron, and the two new regulators created specifically by the coalition to tighten banking supervision - the Bank of England's Prudential Regulation Authority and the Financial Conduct Authority - that Flowers was allowed to run riot at the bank.

So Tory MP, David Davis, is on the money to ask what due diligence done by the Treasury at a time when the Co-op's bid for 632 Lloyds branches was being encouraged. Not much is the answer; and here's why. Remember, this was just after the financial crash and everyone, led by the Chancellor, George Osborne, was championing the Co-op over rivals as they wanted a shiny, ethical knight in armour to help challenge the high street's big banks.

Now the story gets murkier. Lord King, the Bank of England's former Governor, is said to have warned Lord Levene, the boss of a rival bidder, there was a "political push" for the Co-op to win, and Levene warned Lloyds over the Co-op's dire finances. It didn't suit them to listen. That the Chancellor's knight has turned out to be a dirty old man sacked for having pornography on his computer as recently as 2011, fiddling the expenses of the charity he worked for and now at the Co-op, is as uncomfortable for the coalition as it is for Labour. You couldn't make it up.

Yet the culprits are the regulators. They have many questions to answer: how did the old FSA, chaired by Lord Turner and led by Sir Hector Sants, let Flowers through? We know the regulators were worried enough about his lack of banking experience that they insisted on two deputy chairmen. If this is true, a few background checks by the FSA's ex-coppers should have shown up his colourful past as a Labour councillor in Rochdale and Bradford.

Or did the FSA never look out of its Canary Wharf glass-house and only tick boxes? And how did the FSA's Graeme Hardie, who vetted Flowers, get a non-executive job at the Co-op? Should John Griffith-Jones, the ex-head of KPMG, which audited the Co-op, HBOS and Bradford & Bingley, stay on as FCA chairman? And why did the ex-FSA boss, Sants, resign so suddenly from Barclays a few weeks ago?

Rather than waste time taunting Miliband, Cameron must ensure the new inquiry he has launched answers these questions. More pertinently, those involved must be punished and held accountable. It would be beyond irony if Flowers went to jail for drug-dealing but not punished for blowing up a bank and causing hard-working people to lose their savings.

Banks are dead: the new technology predators

Don't worry about the banks; they're on their way out. If Thomas Power, the top technology thinker, is right the world's big banks will be smashed to pieces by the end of the decade. Their predators? Technology giants such as Amazon, Google, Facebook, Apple (right) and Twitter, as well as China's Alibaba.

Here's how: these giant beasts already have the payments and billing systems in place - Amazon has 1-Click, Google has its new debit card, the Google Wallet Card, Apple has the payment system for iTunes, eBay has Paypal and so on. They also have the customers with mobiles - a billion people use Google's Android phone and around 600 million people have an iPhone. Amazon is close to launching a free phone to its customers - 67 million customers use its site daily. These lords of the clouds also have everyone's personal details; so at the slip of a mouse, they can offer you home loans, insurance, banking, credit cards as well as your mobile service. Now you see why Amazon disclosed on Friday it's in talks with Transport for London about offering collection points at redundant Tube ticket offices.

If this sounds sci-fi, read the brilliant new biography of Jeff Bezos and the age of Amazon - The Everything Store - by the US reporter, Brad Stone, which won the FT-Goldman Sachs Business Book of the year last week, for a feel for the scale of Bezos's ambition. Barnes & Noble didn't get what Bezos was doing - and nor do today's bankers. What they need to know is that Bezos is not a simple retailer - he's a disrupter of anything.

When Amazon and the other internet beasts have gobbled up the banks, they'll most likely spread their claws into other utilities such as energy. But there will be anti-trust issues to deal with. By then, Bezos will most probably be the next US president. Why else would he buy The Washington Post?

The new girl's network

What I love about Birgitte Nyborg, Denmark's ex-prime minister in the Borgen television series, is her boldness in plotting her comeback. There's no sulking, no moaning about the old boy's network; she just sets up her own party. But that's easy, you say, it's fiction, but life has a funny way of imitating art; a real Danish MP - a Conservative - recently introduced a bill of rights for prostitutes inspired by Borgen.

Has the Tory MP Nick Boles got the Borgen bug too? You might think so after his suggestion last week that the Tories can only get the young on side by disinfecting the party brand with a new name such as the National Liberal party. Like Boles, Theresa May is another MP who bravely dared talk of detoxing the brand, and has made a big play for making big business more accountable and public life cleaner. Maybe Boles and May should talk more; Boles could be Bent Sejro to May's Nyborg or vice versa.

Mandelson's makeover

Here's a tale that needs no spin. I'm told the reason Lord Mandelson was so keen to appear on early morning TV shows while Labour's spin-doctor was because he liked getting his make-up done professionally for the day. The make-up lady of the big US broadcaster who used to powder him for the shows says he was always particular about how she applied the eye-liner.

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