Linus Torvalds to probe accounting irregularities at the Bank of England

Ok, I lied. The truth, however, is no stranger than fiction. The Financial Conduct Authority, replacement for the spectacularly ineffective Financial Services Authority and hence desperate to prove itself, has decided to investigate the recent (short-lived) IT meltdowns at RBS, NatWest and the Royal Ulster Bank:

The Financial Conduct Authority (FCA), which took over regulation of financial services companies at the start of April, said it had begun an enforcement investigation into the breakdown, which affected accounts at RBS, NatWest and Ulster bank; the latter two are also part of the RBS group.
The authority said it would "reach its conclusions in due course and will decide whether or not enforcement action should follow that investigation". If it does find that there were systemic failures behind the technology problems, the bank could face a fine, or individuals could be censured and banned.

They've got no idea what they're doing, have they?

There are almost always systemic failures behind any publically visible technology problem. Such problems are not random - to be so visible, they have to be the result of significant infrastructure failures. Examples might include:

• locating all the serving infrastructure within one physical location, which loses power due to an external failure (power company error / overly curious cat in the transformers / large bird in the overhead lines);
• multiple locations for the serving infrastructure but a failure in the software which routes queries to the best location;
• rolling out a software change to all locations at once, or at least without a suitable gap between locations to detect problems;
• employing inept monkeys to write business-critical software;
• anything involving words from the list "Capita", "Fujitsu", "Accenture".

What intrigues me is how the FCA thinks it's going to improve matters by "investigating" the problem. Believe me, RBS / NW / RUB have already gone over the causes of these incidents with a fine toothcomb - even if the IT management didn't care about the systemic problems which led to these outages, the odds of the FCA employing actual experts in the area are painfully low. If you're a very talented software engineer, or (better) a software engineering project manager with decades of experience and knowledge of fsck-ups, why the heck would you work for a government salary for the FCA? If they brought in known experts on risk and critical systems to lead the technical aspects of the enquiry, such as John Rusby or Anthony Hall, I would listen to what they had to say. Chance of this happening? Zero.

I do like - in principle - the idea of "banning" individuals from future involvement in UK bank IT, but fear that the chance of actually identifying the truly dangerous individuals - every large company has several at least - is negligible. Every experienced software engineer has joked about revoking someone's licence to code/commit code to source control/write documentation, but that kind of constructive dismissal would never fly with management. I don't see the FCA changing this. If anything, they'll be directed at programmers whom the current management wants to get rid of anyway. It's a great idea to let them fire the programmers with cause ("the FCA blamed you for the outage!") and hence avoid vesting the programmers' contractual restricted share units.

I would bet £100 (my limit on sure bets) that the final FCA report will a) contain a number of platitudes about general software engineering practice and risk management and b) repeat near-verbatim the contents of already-existing RBS, NW, RUB reports into the incidents. Total amount of new information: epsilon (as near to zero as makes no difference).

I'm hoping against hope, however, that the FCA has the testicular fortitude to publish at least substantial subsections of the internal bank reports into the failures, despite no doubt inevitable cries of "security risk" from the executives involved. It would make no difference to the public, but it would give the critical systems community a fascinating set of data points on current practice in retail banking IR systems and the failure modes thereof.

Sir Hector Sants, CBE

Dear Hector from the FSA has got his knighthood:

Hector Sants has been an outstanding leader of the Financial Services Authority during the most challenging of times. Following the failure of Northern Rock, he launched a fundamental transformation of the FSA's approach to prudential supervision and enforcement, with a far more robust use of civil and criminal powers to achieve credible deterrence. He is also a former member of the Board of the Nuffield Orthopaedic Centre, Chair of the Board of the Said Business School, University of Oxford and a benefactor of a number of Oxford based charities including the Art Room, a charity providing art therapy to children with behavioural and learning difficulties.

Whatever happened to "no rewards for failure"? "Credible deterrence", don't make me laugh.

Banks as IT firms?

Mr. Worstall is arguing that banks are just IT companies with more money than the average:

But there is a very real sense in which a consumer bank should not really be regarded as a financial institution at all. It's a computing system which happens to do finance. Which means that the computing guys should probably have a great deal more influence over the management of the bank.

It's an interesting idea. I can see a couple of flaws but they are in the practice rather than the theory.

Mr. Worstall quotes the collapse of the RBS branch sale to Santander as an example of how pivotal IT is to whether banks can make their business work. It's certainly true that modern banking floats on computing, and in particular having robust (and secure) interfaces to data feeds, exchanges, other financial entities, and various web-based consoles for customer operations. If any of them go down for an hour or so, the bank can be looking at a big crimp in its operations.

The biggest difference between a bank and an IT firm, however is regulation. IT firms can do more or less what they want, modulo respecting privacy and data protection laws. Banks are regulated by their host country's government, various quasi-governmental financial regulators (Bank of England, FSA in the UK or Fed, SEC, FDIC in the USA for instance) and additionally local regulations in each country or market in which they operate. A good deal of bank IT beyond interfacing to other systems will comprise tracking, logging and measuring to ensure, and to be able to demonstrate, that the bank and its staff are complying with these various restrictions. There's also accountability to shareholders, which is much more direct in the case of a bank - they can lose huge sums of money in a very short time, either via incompetence or fraud, and so the major shareholders will want good visibility into the risk carried by the bank at any one time. By contrast, money loss in IT firms generally comes via poorly negotiated contracts and appears relatively slowly.

The major problem with turning a bank into an IT entity, however, is the matter of who's in charge. The financial rainmakers who rise towards the top of banks are notorious for having huge egos, brash personalities and a robust approach to inter-personal relations. Successful IT CEOs tend to have something of the introspective geek left in their personality. Those are two very different personalities, and there's only going to be one way that the reporting relationship will end up (well, OK, 3 if you count 'dismissal' and 'harrassment lawsuit'). Banks are always going to end up headed by obnoxious bankers, and IT are always going to be their whipping boys one way or another.

Which, incidentally, is why banks are so often victims of IT screw-ups - bankers are generally unable or unwilling to build and work with the IT department structure that actually aligns their interests. They end up getting IT yes-men who can play the political game but don't get the job done, or regular geeks that could make things work but can never persuade the bankers to part with enough money and power to make it happen.

Insufficient power is not the FSA's problem

Following the LIBOR scandal - which, let's remember, happened on the FSA's watch - the FSA has made a submission to the Parliamentary Commission on Banking arguing that they need more powers:

...the FSA suggests exercising an appointment power over bankers whose information helps to calculate Libor, by adding them to its "approved person" register.
The agency would assess whether they were "fit and proper" people who had "honesty, integrity and reputation" before they took the role.

Really? They would have spotted that Bob Diamond was the kind of manager under whose direction a firm could have undertaken the rigging behaviour that happened with LIBOR? Is the FSA recruiting gypsy fortune tellers?

Let's read about their most recent successful public prosecution: Peter Cummings of HBOS:

However, the FSA has judged Cummings to be personally culpable in breaching Statement of Principle 6 of the FSA's Code of Practice for Approved Persons, by failing to exercise due skill, care and diligence in managing HBOS’s Corporate Division during this critical period.

Oh look! Peter Cummings was an FSA-approved person. So they signed off on his role. Good job, guys. That "approved person" register is really working out for you.

I'm being a little sarcastic. Really, though, all the FSA can check with their approved person register is that you're not a convicted criminal, don't have significant financial problems in your past (e.g. CCJs, directorship bans etc) and haven't admitted to connections with companies and people that are known to be dodgy. It's far from a panacea. All this Parliamentary Commission on Banking submission is intended to do is mark the FSA's intended territory. It will have no practical improvement on the financial system. At all.

That's not the only change they're trying to make:

The watchdog has called for "exemplary sanctions" and "forceful punishment" of bankers who are caught breaching regulations to make them an example in an industry where investigating malpractice is difficult.

So the known problems are with finding and proving malpractice, and the solution is to increase the punishment of malpractice? Sorry, chaps, I'm not seeing it.

[Incidentally, Telegraph subs, it's "LIBOR" not "Libor". LIBOR is an abbreviation for London Inter-Bank Offered Rate. "Libor" is not an English word. How's that English Literature BA working out for you?]

Taking your job title too seriously

What would you expect Lloyds bank's Head of Fraud to do?

Jessica Harper abused her position at Lloyds Banking Group over a four-year period between 2007 and 2011.
The former head of fraud and security for online digital banking submitted false invoices to claim £2,463,750.88 before laundering part of the proceeds buying property for her family.

Oopsie. Bit of a black mark for whoever promoted her, then.

Strangely, the article is silent on any consequences for Lloyds management letting this lady roll in the trough for four years.

Sue Patten, head of the Crown Prosecution Service, Central Fraud Division, said: 'Jessica Harper has today been convicted of the type of crime the bank employed her to combat.
'The evidence in the case was clear and left Harper with little choice but to plead guilty. In doing so, she has admitted to a huge breach of trust against her former employer.

Wonder if Lloyds has ever heard of "Trust, but verify"?

For those demanding more regulation in the financial sector...

...read Jackart's screed on the increasing and pointless admininistrative burden imposed by the FSA on individual brokers. Go read the whole thing.

I would wholeheartedly endorse Jackart's blog on this subject. Having myself taken exams from the Chartered Institute for Securities and Investment in the past, they are clearly designed to force the student (or the financial institution for which they work) to purchase the textbooks and attend their taught courses in preparation for the exams, because the pointless minutae and badly phrased questions mean that even a background in financial services won't help you that much in the exam. They had some of the worst course material I've seen - and believe me, I've seen some pretty bad things. (For reference I passed first time, but I'm good at memorising pointless crap. I have no illusions that this made me a better financial advisor.)

As Jackart notes pithily:

It [the Retail Distribution Review] will virtually ban those on average earnings from receiving decent financial advice. They will be driven instead into the arms of the Banks who will sell them "products" whose performance is utterly opaque, larded with fees which will be virtually impossible to get out of. The banks will call this "advice", but you will never see or hear from the hair-gel and bri-nylon school-leaver who sold you the "product", ever again.

This was a perfect example, and sadly far from the first, of the insecurities and political position of the FSA being shamelessly used by the vested interests (the CISI, for instance) to drive trade to themselves. It'll be interesting to see if the Bank of England can regulate any better, since at least they should be a little bit less insecure. I don't hold out much hope, however.

A derivatives trader says what we're all thinking

If you're not following Joris Luyendijk's excellent Banking Blog in the Guardian, you should rectify that oversight post haste. This week's episode covers a derivatives trader who is forthright on the subject of the FSA:

The trouble is, regulators are idiots. I am sorry to put it so bluntly but you can't expect it any other way. If an investment bank hires a graduate, two years later they will be making over £100,000. Meanwhile at the regulators you are getting £30,000. Why would a smart, aggressive, competitive 22-year-old decide to work for the Financial Services Authority?

He's right. The other end of it is when a banker puts in a number of years but doesn't rise far or accumulate much wealth because he's not great at his job; the only real option for parlaying his position into another finance-related job with a better sweat/bread ratio is for him to head to a reasonably senior position in the FSA on the back of his "experience".

The trader seems to have a refreshingly clear perspective on his work:

"Banking is very honest, you can measure performance and keep score. On the other hand there are so many elements contributing to your performance that you do not control (market conditions, what product you trade, how interested clients are in what you offer them). So sometimes it feels like a very expensive prison term.

Personally I'd be happy to put him in charge of whatever organisation in the BoE takes over the FSA's role, and pay him a salary comparable to his current compensation, rather than the likely parade of "yes men" and professional civil servants that are the likely candidates in reality. We can dream.

Cutbacks at the FSA

So at this point http://fsa.gov.uk/ is failing to resolve, but http://www.fsa.gov.uk/ works fine.

After all, why would the FSA employ anyone who knows about networking? It's not like it's relevant to their mission of regulating financial institutions with a highly connected network infrastructure.

bash-3.2$ dig fsa.gov.uk

; <<>> DiG 9.6-ESV-R4-P3 <<>> fsa.gov.uk
;; global options: +cmd
;; Got answer:
;; ->>HEADER<<- opcode: QUERY, status: NOERROR, id: 1312
;; flags: qr rd ra; QUERY: 1, ANSWER: 0, AUTHORITY: 1, ADDITIONAL: 0

;; QUESTION SECTION:
;fsa.gov.uk.                    IN      A

;; AUTHORITY SECTION:
fsa.gov.uk.             1740    IN      SOA     ns0-f.dns.pipex.net. hostmaster.uk.uu.net.
    2012040701 28800 7200 2678400 1800

;; Query time: 37 msec
;; SERVER: 67.218.104.1#53(67.218.104.1)
;; WHEN: Fri May 11 17:58:29 2012
;; MSG SIZE  rcvd: 100

bash-3.2$ dig www.fsa.gov.uk

; <<>> DiG 9.6-ESV-R4-P3 <<>> www.fsa.gov.uk
;; global options: +cmd
;; Got answer:
;; ->>HEADER<<- opcode: QUERY, status: NOERROR, id: 48099
;; flags: qr rd ra; QUERY: 1, ANSWER: 1, AUTHORITY: 0, ADDITIONAL: 0

;; QUESTION SECTION:
;www.fsa.gov.uk.                        IN      A

;; ANSWER SECTION:
www.fsa.gov.uk.         810     IN      A       194.176.221.146

;; Query time: 60 msec
;; SERVER: 67.218.104.1#53(67.218.104.1)
;; WHEN: Fri May 11 17:58:47 2012
;; MSG SIZE  rcvd: 48

Merv the Swerve is not amused

There must be something in the air (besides the rain); just over a week ago we had the outgoing head of the FSA, Hector Sants, blasting the financial sector for causing the financial crisis, and now outgoing BoE head Sir Mervyn "Swervin'" King weighs in with a similar polemic against the banks.

On one hand, since both these august figures are about to leave their jobs, we should listen carefully to what they have to say; neither of them has any particular financial interest in their current position, so they are moderately free to say what they like. On the other hand, they are clearly keeping one eye on the history books and trying to ensure that their actions in one of the worst financial crises in UK history aren't damned to hell and back. So what do we learn?

Merv is clear that the FSA needs to shoulder a lot of the blame in the handling of the run-up to the crisis, and that the BoE was essentially impotent:

However, he claimed the Bank was hamstrung by the decision to move regulation to the Financial Services Authority (FSA) in 1997 – a reform "that would return to haunt us". It left the Bank with the limited power of "publishing reports and preaching sermons". Regulation is now being moved back to the Bank.

but as regards the root cause of the crisis he's still pushing the Glass-Steagall Act:

"We don't build nuclear power stations in densely populated areas, nor should we allow essential banking services and risky investment banking activities to be carried out in the same 'too important to fail' bank," Sir Mervyn said on Wednesday. "It is vital that Parliament legislates to enact these proposals sooner rather than later."

Well, Merv, many of the notable failures in the UK included Northern Rock, Bradford + Bingley and other building societies that came a cropper over their funding model. That doesn't sound very investment-banking-related to me. RBS came a cropper due to a demented acquisition strategy and a board who followed the "all in favour, bleat like sheep" strategy. HBOS overstretched itself in mortgage lending, thanks to the Halifax (ah, who remembers the Howard Brown adverts?) and was handed like a poisoned chalice to Lloyds TSB by Gordon Brown. I note that the big investment/retail hybrids in the UK were Barclays and HSBC, and they seem to be doing just fine (modulo shareholder revolts over pay at Barclays).

Hector, by contrast, weaseled, using the "true but irrelevant" strategy:

He said: "Ultimately, management are responsible for running firms and ultimately firms fail because of the decisions taken by their boards and their management. These decisions are made within a firm's corporate governance framework.
"The crisis exposed significant shortcomings in the governance and risk management of firms and the culture and ethics which underpin them. This is not principally a structural issue. It is a failure in behaviour, attitude and, in some cases, competence."

That's right, Hector; financial firms are not perfect, often greedy and they take sometimes excessive risks. That's why we pay large amounts of money to fund the regulators who are supposed to spot this happening and act on it. Sound familiar?

Mervyn at least was honest about the fallout:

As well as moving regulation back to the Bank and ringfencing retail banking, the Bank will have new powers from next year to "prevent a hangover by taking away the punchbowl just as the party in the financial system is getting going".
Some of those powers, such as possible loan-to-value caps on mortgages, "won't make us popular among bankers, politicians and even at times some of you [the public]", he warned.

About bloody time, I'd say.

Free the banks - problem solved?

An interesting post in The Atlantic on how to fix the banking system by Pascal-Emmanuel Gobry. He argues that one of the basic reasons for the financial crisis was the principal-agent problem: many of the people involved knew that what they were doing was going to lead to a blow-up, but their incentives were such that continuing as long as possible made financial sense. No argument here.

His proposed solution is to re-introduce the partnership model in financial firms, removing the public shareholder financing of their activities in order to insure that those with skin in the game have a direct mechanism to rein in excesses in risk of their firm; that this necessarily restricts the size of firms (and hence increases their number) is regarded as a feature, not a bug. Having considered this at length, I think I'm sympathetic. It will of course increase costs to some extent (loss of economies of scale) but it will be very interesting to see the degree to which this happens. I have a sneaking suspicion that there's a lot of "the customer will pay what we ask" going on currently.

He does assume that available credit will reduce massively, which seems like a fair assumption: less risky behaviour means less attractive returns means less money available. But perhaps this is merely a consequence of investors realising that they will bear their risks alone:

I think it was The Epicurean Dealmaker who said on Twitter that the mandatory disclosure/warnings for anyone who signs a financial document should be a slap in the face and the phrase "CAVEAT EMPTOR!" shouted into their face drill instructor-style.

You can just imagine it, with apologies to R. Lee Ermry:

Are you quitting on me? Well, are you? Then quit, you slimy fucking walrus-looking piece of shit! Get the fuck off of my SIV! Get the fuck down off of my investment ve-hi-cle! NOW! MOVE IT! Or I'm going to rip your balls off, so you cannot contaminate the rest of the S+P 500! I will motivate you, Mr. Smyth-Jones, IF IT SHORT-DICKS EVERY CANNIBAL ON THE CONGO!

CSC and Lorenzo's Oil Slick

My thanks to the Grauniad for a heart-warming tale of Computer Sciences Corporation (CSC) admitting that it might have to write down a cool £1bn as a result of the ongoing epic saga of failure that is its Lorenzo software for the NHS.

To be scrupulously fair to CSC, Lorenzo was originally developed by iSoft, whom CSC acquired in August 2011 (after the FSA had given a well-deserved kicking to four directors of iSoft whose accounting practices turned out to be somewhat more murky than is considered proper). By my reading of the many threads in the story, Lorenzo was a key element in CSC's delivery which it had subcontracted to iSoft; once the latter was holed below the waterline, CSC's only real option was to acquire iSoft and hope to make the damn thing work well enough to at least approach the project milestones.

In another warm and fuzzy development, CSC itself is being sued by the Ontario Teachers' Pension Plan due to alleged concealment of the disasterous financial results of its participation in the NHS National Programme for IT.

The Guardian notes a whistleblower's mail to the CSC CEO:

"The project is on a death march where almost as many defects are being introduced as are being fixed."

For those of you who have not read Ed Yourdon's Death March, you really should. In essence, once a project is on a death march, the chance of completing it is essentially zero unless a) you can hold your engineers' families hostage or b) you have a near-infinite amount of money to hose at the problem. Looks like CSC has neither of those options.

If CSC writes down 40% of its market value, that really screws the pooch for all its management and senior engineers who no doubt have a very substantial equity and/or equity options holding. Then the OTTP's legal action drags the share value down further - if not curtains for CSC, it's certainly the end of the world as they know it.

This situation of a Government IT supplier actually getting its come-uppance is tragically rare, but I intend to enjoy it while it lasts.

The FSA was out of its depth, who knew?

Tony Shearer, who saw the incompetence of the FSA first hand, writes of how they regulated minutae and completely missed the big picture failings at RBS, HBOS and Kaupthing Singer & Friedlander. He was chief exec of Singer & Friedlander as it was acquired by Icelandic behemoth Kaupthing in 2005 - three years later, after to Kaupthing's implosion and seizure by the Icelandic FSA, everything went foom and the FSA was forced to step in.

As Shearer notes of then FSA chairman Callum McCarthy:

I invited him to visit Singer & Friedlander to see at first hand how the FSA regulated what I called "trivia and minutiae" and paid no regard to the possibility of "systemic failure of the banks" (which was one of only two of the FSA’s objectives).

It was, in hindsight, inevitable. If you staff the FSA with moderately intelligent but unimaginative drones and then micro-manage them, they're going to focus on the ticking or crossing of many small boxes on pages and pages of forms, with a short summary essay at the end. They're not going to take the time to look at the big picture and ask "what if" despite the fact that this is exactly what a national-level financial services authority should be doing. Where's the personal job security and professional advancement in that? They have no skin in the gain. After all, no-one was going to be fired even if half the UK banking sector went "kablooie".

If you want effective regulation you need to hire really good people, pay them very well, but defer most of their pay over 5-10 years and have it at risk in the case of failure or significant fraud in the institutes they regulate. Maybe even pay them in restricted share units of the institutes they regulate. I want very sharp regulators who feel that their testicles are on an anvil, and that the taxpaying public is nearby with a large hammer. In the case of Hector Sants, I'd like this to be literally true -- assuming that he can find the organs in question.

My friends at the FSA

The clowns at the FSA have published their latest report on borderline criminal financial advice given, in this instance, by HSBC advisors to elderly retirees in nursing homes.

You'll note that it's the HSBC entity paying the fine, not any of the scumbag advisors who were, presumably, paid on commission and have now moved on to non-HSBC jobs safe from retribution. You'll also note that all of the advisors would have to have been FSA-certified as fit and proper persons to offer investment advice.

As the summary says:

The advice and sales were unsuitable because in a number of cases the individual's life expectancy was below the recommended five-year investment period. As a result customers with shorter life expectancies had to make withdrawals from these investments sooner than is recommended. The combination of withdrawals and product charges led to faster reduction of capital than should have been the case if customers had received the right advice. A review by a third party of a sample of customer files found unsuitable sales had been made to 87% of customers involving these types of investments.

An unsuitability rate of 87% isn't accidental. That's a planned and focused campaign. It may not have been HSBC management planning the details, but they sure as heck didn't do much checking on suitability as the money rolled in. The entity doing the dirty deed was NHFA - acquired by HSBC but separately regulated for most of the period in question.

The Companies in the UK website helpfully lists the directors of NHFA up to 2010 showing the office in Eynsham just outside Oxford. Picking one scumbag at random, it seems that Andrew Cheesewright is now at First Direct Investments and one can only speculate at what guidance he is giving to the sales force there.

For all the sound and fury of the FSA's announcements, there are still 2000+ pensioners who have been ripped off by NHFA (and, by proxy, HSBC) with no comeback to those who made the mis-selling. It is hard to see how, in the circumstances, the FSA can claim to be an effective regulator of financial advisors. One wonders how much further their performance could degrade given, say, a 40% cut in their funding and immediate ending of any final salary pension scheme for their members.

Update: (6/11/11) the Daily Mail actually performs a public service and goes after the directors of NHFA. Good on them

A modest proposal to the FSA

The UK Financial Services Authority has been on the receiving end of a fair amount of abuse over the past few years, much of it justified. Being a kind-hearted soul, I have a modest proposal to get my mate Hector back in the good books of the public and government.

You may be surprised to learn that the strict standards in the railway safety industry (if your company is on a contract for Network Rail, they can turn up at your workplace and demand you submit to drug or alcohol testing) do not apply for FSA-registered individuals. Banks may tell their FSA-registered employees that they are subject to random drug or alcohol tests, but I assure you that this doesn't happen in practice. Heck, why would it? If as a bank you feel you can adequately monitor an individual's trading performance, why would you want to rock the boat by testing that employee unless he's making a loss and you're looking for additional grounds to fire him?

So let's have the FSA declare that a random drug and alcohol testing regime will apply for FSA-registered individuals at any UK-located branch of a financial institution with over 25 registered employees in that location, from Jan 1st 2012. The testing unit turns up having given 1 hour notice and get witnessed (yes, watched wizzes) pee samples from randomly selected 2% of the registered employees. The employer gets the results. Anyone with significant intoxicant samples goes straight to a board where they can appeal the pending loss of their FSA registration. Operating costs come out of existing FSA operational funds, so no additional operating costs to existing firms with unintoxicated employees.

The FSA gets to do something useful and popular; the programme gives a significant boost to the UK drug testing industry in time for other events; the government gets to point at something concrete being done to counter the drug-addled dipshits depicted in popular culture renditions of the City; the City gets something to point to and deflect such future criticism of their employees. What's not to like?

[It may strike the reader as incongruous that we don't similarly test Civil Service and Government members engaged in decision making of equal import compared to the railway and financial services domains. Your correspondent can only invite the reader to draw the appropriate inference for future action.]

Accountability - are you really sure?

Seems like that nice Mr. Barroso wants to make individual criminal responsibility for financial players recognised in European law. I think that this is a fantastic idea, but suspect that Barroso has not fully thought this through.

I'd start off with anyone involved in accepting Greece's national accounts for the purpose of approving their entry to the Euro. I'd add in the French, German, Italian and Spanish governments for repeated and aggravated crimes of kicking-the-can-down-the-road, blaming-the-messenger and failure-to-do-basic-arithmetic. Olli Rehn gets a special mention here. Within the UK I'd happily indict Adam Applegarth of Northern Rock and Andy Hornby of HBOS in addition to the infamous Fred the Shred; but let's not forget the senior staff members of the FSA who did such a sterling job in supervising these institutions.

Any more suggestions?