Northern Rock and Banking Reform

The hon. Gentleman puts his finger on the problem. I want to say just two more things. The first is about regulation. I fear that we would see decent regulation as ticking boxes. Even after this crisis, I do not think that we have learned the lesson of decent regulation in this respect. No central banker—neither the FSA nor a central banker on the model of Greenspan—will be willing to regulate. Let me explain. We, the FSA and the Bank of England clocked the dangers with such securities. Our criticism was that they were not spoken about loudly enough and that no effective action was taken, either. That does not surprise me, because of the comment made by Greenspan. Northern Rock was not the problem. Securitisation was the problem, but, as we see from the losses, securitisation was making tremendous profits. It would therefore have taken a brave central banker to take the big step, which would have avoided the problems with Northern Rock and the worries that we are experiencing, of speaking out loudly and taking action against the contaminated securitisation that was going on. Greenspan put his finger on it: no central banker has that courage, or sees that as their role. It would be interfering in the market, and the market makes money, so people interfere at their peril. People watch and put on record a bit of what they see, but they let things run their course, and when things fall apart, they go in to pick up the pieces. That has been the history. When we speak about regulation, we are speaking about regulation at the margins, because the other type of regulation would be seen as interfering with the operation of the market. If the market is making great profits, it is a brave central banker who steps in. Lastly, I want to say a word about shareholders. I do not shed tears for them, and particularly not for the market hedge fund shareholders—the vultures who bought shares when they knew that Northern Rock was in trouble. They knew what they were getting into, and endangered the sympathy that people might have felt for the employee shareholders and small shareholders. The behaviour of the market hedge fund shareholders has been disgraceful. They forced an extraordinary general meeting, upped the ante and upset people. I fear that they may have caused a loss of sympathy for the shareholders as a group. If we could divide them, I would be all for a suitable payment being made to the small shareholders, in place of the shares that we have taken. To the hedge fund shareholders, however, I would say, ““Of all the shareholders, you were the people who knew what you were getting into, and you deserve nothing,”” but this is not a perfect world.