Sir James Crosby: Downing Street refuses to back calls to strip man blamed for HBOS failure of his knighthood
The man branded as the architect of HBOS's disastrous strategy is set to keep his knighthood, it emerged today.
Officials said the Prime Minister would not get involved in calls for the former HBOS chief executive Sir James Crosby to lose the honour, and that this was a decision for the Forfeiture Commission. David Cameron also failed to back calls for Sir James to give up part of his pension.
The statements stand in contrast to Mr Cameron's actions in January last year when he told MPs that the committee would consider the case of Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland, which like HBOS needed a bailout to avert collapse. The committee duly stripped Mr Goodwin of his knighthood. Its chairman, Sir Bob Kerslake, later said the action had been taken following "a signal" from the PM.
Sir James was savagely criticised in a report on HBOS by the Parliamentary Commission on Banking Standards last week. It also found fault with the former HBOS chairman, Lord Stevenson, and Sir James's successor, Andy Hornby, who was in charge when the bank had to be rescued by Lloyds in a deal brokered by the then Labour government.
The commission's chairman, the Conservative MP Andrew Tyrie, branded the trio as "delusional", and the report said they had presided over the "colossal failure" of a bank which would have blown up even had the financial crisis not hit. All £20bn of the taxpayers' funds subsequently injected into Lloyds went to prop up HBOS.
When he left HBOS seven years ago Sir James was able to draw an annual pension of £572,000, but that sum is estimated to have grown to nearly £700,000 today. The Liberal Democrat peer Lord Oakeshott has argued that had HBOS been allowed to fail, Sir James would have received just £30,000 under insolvency rules.
Several MPs and MSPs, including Conservatives, have urged the Prime Minister to act, but the statements yesterday indicate that he has no plans to heed those calls, at least at present.
Mr Cameron's intervention in the case of Mr Goodwin sparked an angry response from business leaders at the time. They argued that Mr Goodwin had been "denied due process", that the decision to intervene would encourage "banker bashing" and was evidence of a perceived "anti-business climate" fostered by the Coalition Government.
Despite this, the Business Secretary, Vince Cable, has asked officials to investigate whether there could be grounds for disqualifying the HBOS three from acting as directors.
The only HBOS employee disciplined by the Financial Services Authority was Peter Cummings, who was fined £500,000 and banned from the City. The FSA's successor bodies, the Financial Conduct Authority and the Prudential Regulation Authority, would appear to be limited in what they can do. City watchdogs are required to bring a case within three years of wrongdoing being found. Therefore they would be able to act in the HBOS case only in the event of fresh evidence being presented. The FCA is preparing a report on the FSA's handling of the affair in conjunction with the PRA, although no date has been set for publication.
Simon Chouffot, a spokesman for the Robin Hood Tax campaign, said: "We must question whether James Crosby's 'services' to the financial sector have really been worthy of a knighthood. However, debates about individuals' titles are a distraction from the underlying problem – collectively the banks ran our economy into the ground. The real issue is how we make them pay to fix it."
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