Bankers and the Blame Game

The BBC Today programme today covered an interview between Robert Peston and John Varley, CEO of Barclays on the extent to which the banking industry should accept responsibility for the financial crisis and the collapse in lending. This clip includes a section of the interview - the full version will be on Panorama - but the real value is the follow up discussion between Evan Davis and Professor John Kay in which John makes a telling point about the nature of banking risk. The kinds of bank loans that most of us need - to finance a home improvement, or a student loan or an extended overdraft to tide us over unemployment or a period of difficulty were not the types of risk-taking by banks that got us into this trouble in the first place - excessive leverage built on securitisation is the root cause of the crisis.

Evan Davis used to be taught at Oxford by John Kay - it was a delight to hear their conversation on radio this morning as I headed into the final furlong of the Christmas shopping - but the streets of my own home town were strangely quiet even by 11am when I headed home. Was it the same where you live?

John has a new book coming out next month which promises to be timely and enlightening - the title is The Long and the Short of it: A Guide to Finance and Investment for Normally Intelligent People Who Aren’t in the Industry - and it is available for pre-order now on Amazon.