 Yeah, the whole sort of system that was operating inside banks, the way they were being, I think I summed it up quite well in my evidence to the Treasury Select Committee. Pied pipers, emperor's new clothes, and lemmings. And I think we all know what those metaphors mean. And if you combine that with other things that we've known forever, like power corrupts and absolute power corrupts absolutely, and pride comes before a fall, that kind of summed it up. In essence, you've got a system. Look, the ordinary people in Halifax Bank of Scotland are perfectly decent people. The woman in the scum thought branch who summed it up beautifully, 23 years old, who said, we'll never hit our sales targets and sell ethically. Now if I sort of challenged her on what she meant by ethically, she wouldn't have really known. But in her heart and in her soul, her conscience was clear. People were overselling. Now the system worked like this. You've got investment analysts over here who demand short term results from executives. So executives come up with systems to generate profit as quickly as humanly possible, ignoring potentially the long term risks or consequences of that. The strategy inside HBOS, which at first had some real good about it, which was lower price, simplified products, broad and access seemed like a good idea. But of course, the quid pro quo of that was that you had to have a strategy which in supermarkets would be stack them high, sell them cheap. Now in banking, that doesn't work because of the essence of a bank is prudence. Prudence both in terms of people who put their money into the bank, the depositors and the shareholders, as well as prudence in terms of who you actually provide that money to. But in the environment in which you've got a stack them high, sell them cheap culture, you have very low, lower margins. Guess what you have to do? You have to develop a sales culture. What did they do? They recruited an amazing guy, lovely guy, Andy Hornby, who came from Asda, to turn the bank into a supermarket retailing operation. Now, I personally believe that Andy had a good culture himself, but he set very, very hard targets. Actually, let me just sort of back up. They bored set the targets. They said, we want another 11% sales growth. They didn't really consider the consequences of that. A customer would come in needing a short-term overdraft to fund them for a few months to pay there for their summer holiday. This is what would happen because the sales targets drove the culture and they knew if they didn't hit the sales targets, they'd get hit over the head with the blunt instrument. They put the criteria in. The client had never asked for a loan and said, oh, by the way, do you realize you could have a £5,000 personal loan? And obviously, ordinary people, when faced with the opportunity to get money, it's very different than to resist. That's why you have to be prudent towards them. You have a fiduciary duty to your customer. The customer would then be persuaded that they could upgrade their kitchen or do anything with that money they like. Then the PPI policy would be sold alongside the loan. The branch member of staff, when the customer started in one place needing one thing and ended up with something completely different and Andy would go about doing what he did while drumming up the energy around sales. What he didn't realize was that in between him and the people who actually had to do the work, the lady in the scum thought branch, were a lot of people who had a culture of fear. They were bullies. In fact, the chief operating officer's nickname was WACA, which tells you almost everything you need to know. The automated credit risk management systems, which by the way, just like any mathematical model, are only as good as the mathematical model. The head of global research, one of the biggest mathematical model providers for banking said to me directly, head of global research said, one of the major courses of the crisis was excessive reliance on mathematical models, the assumptions for which could not be validated. The fact that it was automated doesn't make the actual credit risk management right. Somebody somewhere else did it. Somebody up there decided, if we raise the limits on what they can have and what they can't have, we can hit our sales targets more easily. The whole thing was one system to help, some of the subprime lending, QED. The whole system was about selling. It didn't matter whether it was credit or corporate bond funds or creditor insurance, PPI is what we all said. That was systematic misselling. When we did our review of sales culture, which when I reported on it led to me being dismissed by James Crosby, the head of risk himself in the retail bank said that they pay no attention whatsoever to risk management. He told us a story of the way they wouldn't allow him to put provisions for loan losses in the books because it would affect the numbers and a whole range of other things. He actually, because he'd had the lid put on him for so long, at one point he actually said, and you know, they're all animals around here. Now, you know, you can, you know, it's not the sort of thing you'd expect a professional to say, but the point was that nobody could speak up. The system required the banks, the whole, and I don't personally believe the way banking currently works in the current corporate law environment with the current regulatory system is going to allow us to do anything else than what we did before. It's essentially trying to get us back to business as usual. Of course, the other thing is that banks don't really do what they're supposed to do, which is fuel both ordinary families and businesses, because the vast majority of their lending has been property based lending. The numbers are literally staggering. Now, if you can't get a bank to operate in the way that it should do in the current structures, you've got to do something completely different. Incentives are all about sales. It's as simple and as straightforward as that. And he who pays the Piper calls to, it doesn't matter what it says in the competence framework about ethics or anything. By the way, at HBOS, one of the top requirements of top leaders was courage, which was to speak up about things when it may lead to unpopularity or criticism. Well, I spoke up, look what happened to me. You want to read their ethics statement. You wouldn't believe that they say one thing and do something else. So the business about compensation is it's all related to sales. You know, if you want someone to do a, you pay them to do a. Well, pay them to sell, and that's what they'll do. They won't really care about the ethics of it. They'll get on and offer that matter the prudence of it. As I said, you know, you don't need to know anything about credit risk management to know that if you lend money to somebody who hasn't got any income, hasn't got a job and hasn't got any assets, it's a very high risk. Ordinary people know that. You don't need to know anything about, but they did it. They did it in their, in their billions loads, didn't they? This is a very important point. The politicians really, really need people with deep, long-term practitioners experience to help them to understand what the real issues are and what needs to be done. You know, I'm not a policymaker or a politician, and I'm not politically aligned, but I do know what goes on inside the financial sector. I've been in it since 1984. Yeah, and it's not just investment banks. It's not just banks. It's insurance companies. We still haven't sorted out our financial sector, but I do believe that to the business of full reserve banking demands a thorough, detailed policy look at it because I think it's a, I personally think it's the right way to go. Not really. I mean, it's one of these things that it's a bit like the hamster in the cage, isn't it? Again, there's lots of stuff going on and it looks like lots of stuff's been done. Turner review, Basil this and, you know, ICB and it looks like, but fundamentally, it's all been about, to a large extent, getting back to business and bankers bonuses as usual. And that's not the way to approach this thing. By the way, I'll just say a few things. You can calculate capital till the cows come home, but it never saves you from a financial banking crisis caused by major conduct of business failures caused by bad cultures and bad corporate governance. It doesn't, you know, the new capital would never have saved the current crisis. That's not the point. And it's not the way to go. So far as retail ring fencing is concerned, I have to tell you, I sort of think of it as a bit of a red herring. It might be slightly sort of heretical after all the work that's been done on it. But because you've had just as much bad things done in retail banks and stupid things done in retail banks as you've had done in investment banks and investment banks, as I've said before, the key thing there is is not the banking stuff they do where they're raising capital for people of all sorts. That's fine or doing hedging for banking treasury operations. That's the sort of reasonable thing. But it's where they're actually taking bets themselves with other people's money. That is not banking business. It doesn't fit within the definition of banking. And so, yeah, so there's, and the other, there's lots of other points about accountability of regulator. You know, at the moment, the regulator is immune from any real accountability. We've got to solve that one. Do the top people who are making the key strategic and policy decisions inside banks understand and thoroughly consider their impact on the wider economy? I don't ever remember in all my time of being a partner at KPMG or anywhere else, any discussion anywhere about that in any bank that I've ever been in. They do consider or appear to consider whether the economy will impact the bank, but they consider whether the bank affects the economy. Because the company law system drives them to consider, actually the fiduciary duties of a director is to the company, not to the shareholders. The shareholders is only one part of the company, but it has been interpreted as if and has been enforced as if the only stakeholder is the shareholder. And who represents the stakeholder? Investment analysts. So what do they want? Short-term growth. The system in so many respects needs to be revising. And it's a huge shame that we didn't use the banking crisis as the opportunity really to investigate thoroughly exactly how decisions were made. You know, at a very micro level, what happened in that boardroom when RBS decided to buy ABN AMRO? What happened inside those policy decision committees when deciding to make loans to people who didn't have any income and didn't have any jobs and didn't have any assets? Because I think if we got into that detail, we'd have had the foundation of facts on which to sort of almost rebuild the way we think about the economy. An economy without ethics ultimately destroys wealth and creates poverty. By the way, the banking crisis drove more than 100 million people back into poverty. The mortality statistics of people who go into poverty rise hugely for a whole range of reasons. So the banking crisis isn't just about becoming poorer, it was about killing people as well. And guess what? We haven't really got to the bottom of it. We never held anybody to account and we haven't done the radical reforming job that we really needed to do because we mistakenly thought if we destabilise the position any further, it'll make matters worse. And guess who took the decisions for the people who were there in the first place? I think the top people must understand that but I never heard anybody talk about it in the context of either a strategic or policy making decision or for that matter in relation to any oversight activity that took place. Yes, you can change the culture and it's not just a question of having the right person at the top at the time. You can put mechanisms in place to make people do things that they must do. And that's about appropriate regulation and actually supervising an understanding culture. And Hector Sanz has said that that's what he's going to do. And so you can do it. It's not easy. So if there was one thing that I could encourage the politicians and the regulators to do, we haven't quite finished yet with what happened at Royal Bank of Scotland and what happened at HBOSS. And I encourage them to be as rigorous and forensic about those investigations as they possibly can be and as transparent as they can be. And if people have not acted in accordance with the principles, it is vital that they should be held to account. A firm must act with integrity. A firm must act with due skill, care and diligence. A firm must have adequate systems and controls and in particular risk management systems. A firm must pay due regard to the interests of its customers and treat them fairly. The inference within both of those organizations and the direct evidence from my own case in relation to HBOSS is such that there is without doubt a clear case to answer. Now, what's the reason if you don't take action when people are in breach of things? How can you expect other organizations to recognize the really serious personal risks of behaving inappropriately? And apart from anything else, by doing it forensically and in detail, you will get a lot of information that will help you to decide what to do next in terms of other policy matters. So I've come up with a practitioner's perspective on what would make a very big difference very quickly. Understandably, it hasn't got a lot of policy traction because it takes a lot of power away from the executive. By the way, I'm not talking about smaller companies. I'm talking about societally important companies that have balance sheets. I mean, many of the events have balance sheets the size of sovereign governments. They're huge. So the old way of corporate governance doesn't work. This has been my idea. Have a dedicated expert halfway house between executive and non-executive who is an expert in oversight and assurance and all the technical stuff. And all the control functions, risk, compliance, internal reporting to that person, they never report into the executive. Then they can speak up whenever they want to. None of them can be fired except with a full meeting of the non-executive with proper representatives. So these people are not whistleblowers, but it is their job to blow the whistle. That's their job sometimes. It's a bit like the telemetrist in the Formula One team is supposed to say to the driver, if you carry on that way, you'll run out of fuel before the end of the race. But they don't get fired, do they? So unless you put in those checks and balances and then unless you get the auditors doing a better job, the shareholders doing a better job, the regulators doing a better job, all of those systems need to be connected with one another in a seamless system that recognizes that powerful executives who are not subjected equal power on the other side of the table will do what they have done in the past. It's just human nature. Forget about blame to them or anything like that. It's just the way humans are. By the way, greed and the love of money and power and pride, the two most powerful deadly sins the world has ever known. We ought to know that by now. By the way, why was it that there was a court jester? Because the only way to speak true to the king was to dress up like a lunatic. Well, because I was presented as if I was a lunatic after I did speak true to power and I probably was really, but there we go.