Abdication at the Royal Bank
The big story of how the Royal Bank of Scotland failed and needed £45bn of taxpayer funding has been told and re-told, by MPs and by journalists.
The Financial Services Authority has now added its own view of what went wrong, with more access to information than others.
It hasn't uncovered startling new elements to the story, but it has added some interesting detail.
For instance, it tells us that the UK government has had evidence since last February on which it could take action against former directors at RBS to ensure they can no longer hold company directorships.
It confirms that RBS had wholly inadequate due diligence on the risks it was taking on with Dutch lender ABN Amro for nearly £50bn at the peak of the market in 2007, largely based on "two lever-arch files and a CD".
It doesn't say what music was on the CD!
It says that, by applying today's rules, RBS had core tier one capital of only 2% by the end of 2007. Doesn't sound much? It's not. It's now required to hold at least 9.5%.
The FSA looked into the question of Sir Fred Goodwin's private life and the possibility that relations in the bank might have been a tad inappropriate - the subject of a super-injunction, partially lifted last May - and concluded the matter was "irrelevant to the story of RBS's failure".
But given that the big picture of RBS's failure is already fairly well known, the most interesting part of this report is the FSA's take on its own failings, and why it hasn't taken action against RBS and its directors.
The regulator concludes that its approval should be required for future major acquisitions in the banking industry.
And it says there should be fines and/or bans for bankers who lead to failure, with a requirement on board directors to prove they were arguing against the causes of failure.
That would put banks in a different position from other companies - having a special position, given their importance to the economy and the systemic risk.
And FSA chairman Lord Adair Turner asks the question: will that put talented people off entering banking, if they know they face far higher personal liability than they would in other sectors?
But it also points out that neither RBS nor the FSA were operating in a vacuum.
The rules for capital adequacy were set at global, European Union and United Kingdom level, and the FSA was required to work within them. Those rules were found to be "dangerously inadequate" and "severely deficient".
Probably of more significance in this report is the criticism of the FSA itself, helped to a robust assessment of its role by two independent reviewers of the review - an eminent banker and an eminent finance lawyer, appointed last May.
The regulator fesses up to "insufficient challenge" to the Royal Bank of Scotland, while it was paying more attention to regulation of conduct within financial services, and the "treating customers fairly" project.
It admits that it looked at its rules on regulating bank liquidity back in 2003, and concluded it wasn't good enough. But it chose not to prioritise that reform in 2004.
However, its defence is that it was under pressure to ensure regulation was "light touch".
The then chairman of the FSA wrote to Tony Blair in 2005, when he was prime minister, to reassure him of just how light touch it was, particularly when compared with regulation of US banks.
And if it had introduced tougher rules, it asks whether it might have been criticised for being heavy-handed, while "gold-plating" regulations, when there was cross-party agreement on that light touch.
'Bounds of reasonableness'
So why didn't it take "enforcement action" against RBS and its then directors, at least after things had gone so badly wrong?
Lord Adair repeatedly recognises that's what the public/taxpayers want to know. And having failed to give any detail of its thinking with a brief statement last December, it now has lots of reasoning.
The key part of that reasoning from its lawyers is that there is no sound basis on which to take that action against RBS. To take that action would require that RBS could be proven to be "incompetent, dishonest or lacking in integrity".
There isn't evidence - or there isn't sufficient evidence - of any of that. "Errors of commercial judgement" are not sufficient reason under the current rules to take action, so long as these decisions are taken reasonably.
You can sense the lawyers - from all sides - have been at work, when you read: "The fact that some decisions are described as poor or mistaken (either in retrospect or at the time) carries an implication that either RBS or any individual was guilty of any regulatory breach."
And here's the best bit of verbiage out of this very long report. RBS decisions and systems were found to be "not outside the bounds of reasonableness".
Shredding Sir Fred
Update 12:10: Despite being Public Enemy Banker Number One, Sir Fred Goodwin doesn't take quite as much criticism in the FSA report as you might expect, or some might hope.
There is a specific question mark over his appointment of Johnny Cameron to head up the investment bank division, when Cameron was not suitably qualified to do that job.
Should he have been upbraided by the regulator for taking that risk?
The FSA concludes it was a reasonable appointment when Cameron was surrounded by people who were qualified to understand the division's complexities - even if they weren't doing enough to control them.
Cameron, you may remember, is the only RBS executive to face formal enforcement action, but only so far as he backed off and promised never to seek a senior financial position again. The FSA didn't pursue the matter further.
But it turns out there were concerns raised at the regulator about Sir Fred, as chief executive officer, or CEO, long before RBS hit the rocks.
'Cold and unsympathetic'
You have to read to paragraph 608 to find them: "During 2003 and 2004, prior to the review period, the FSA had identified a risk created by the perceived dominance of RBS's CEO.
"While it was recognised that the CEOs of large firms tended to be assertive, robust individuals, the FSA's view was that, in the case of RBS, the challenging management culture led by the CEO raised particular risks that had to be addressed.
"The risks that can emerge where there is a dominant CEO are not merely ones of difficult relationships between the CEO and the board, staff, shareholders and regulators.
"More seriously, they can also result in a lack of effective challenge by the board and senior managers to the CEO's proposals, resulting in risks being overlooked and strategic mistakes being made.
"During interviews with the review team, RBS board members did not provide evidence to support assertions (referred to in some press reports) that they felt 'bullied' or unable to challenge the CEO. And their assessments of the CEO's style varied considerably.
"The review team heard that the CEO showed skill in his handling of board relationships, intervened infrequently in board discussions and reliably followed up on points raised by board members.
"Interviewees said that the CEO could be courteous and professional in meetings but also that he could come across as somewhat cold, analytical and unsympathetic.
"The picture that emerged was clearly more complex than the one-dimensional 'dominant CEO' sometimes suggested in the media."