Amid collapsing banks, yo-yoing share prices and widespread insecurity it is natural to look for a culprit. The difficult bit is choosing the villain. Did the banks - particularly the de-mutualised building societies - completely lose touch with reality in their hunger to expand market share? Should their senior executives shoulder all the blame, or is there such a thing as political responsibility?
The merest hint that bonus payments might be made to anyone involved in weaving webs of financial derivatives out of absurd -risk mortgage lending makes me vibrate with fury. It is obvious that many remuneration packages encouraged executives to concentrate on short-term profit targets to the detriment of sustainability. In doing so they incentivised idiocy. I think the people responsible must face the consequences.
But moral hazard should not apply to bankers alone. As our political leaders compete to blame each other for a financial crisis that will damage every salary and pension in the land, it is worth remembering that none of them warned of apocalypse before it happened (not evenÂ Vince Cable, though he came closer than the rest).Â Former masters of the universe have been reduced to the status of beggars, but the MPs who should hold them to account have done no better.
I find it depressing that the House of Commons was not recalled in September to debate the crisis in emergency session, but perhaps such a recall would have been futile. Perhaps our ferociously whipped parliamentarians would simply have followed instructions from their leaders. They usually do.
I wish BritainÂ would adopt the American system of democratic checks and balances, an in particularÂ the independence from party it grants to Senators and Congressmen. Their work improved President Bush's financial rescue plan by subjecting it to ruthless scrutiny and amendment. It would be nice to see British legislators responding with similar independence of conscience. Until then their sanctimony about the banking industry smells like opportunism.Â Â Â