Mannerisms

So far it’s only Barclay’s and Northern Rock who’ve had to trot along to the Bank of England to be given their hand-outs like naughty boys who’ve spent their week’s pocket money by Monday lunchtime.

The Barclay’s guy even had the cheek to complain that the Bank of England hadn’t kept his request for a bail-out confidential.

It reminds you of Barings after the Nick Leeson fiasco. The Bank of England guys were, by all accounts, staggered by the arrogant confidence with which the Barings boys assumed they’d be bailed out.

In the case of Northern Rock, it turns out they’d upped their mortgage lending by over 50 per cent in the year preceding their cap-in-hand plea to the Bank of England. They'd lent mortgages which were worth 125 per cent of the value of the property on which they were secured, and up to six times the borrowers' income. They’d been blindly pursuing market share in the mortgage market, apparently oblivious to the gathering storm-clouds over unrestrained borrowing.

The Northern Rock guy whined that his bank had a liquidity problem not a solvency problem. Both terms mean the same thing. They had no cash.

Meanwhile, it turns our that the banks which funded the take-over of Boots led by private equity kings Kohlberg Kravis and Roberts have managed to lay-off to anks a measly $750 million out of the bllion credit funding they gave the KKR-led consortium to pay for the Boots takeover. And the banks only got 95 cents on the dollar for the $750 million laid off.

As the credit crunch scenario unfolds, it seems the private equity guys were among those who egged on the bankers to ever greater extremes of stupidity, in the form of unconditional loans backed by non-existent, or dodgy, assets.

Private equity did the shearing of the silly banker-sheep. You can’t totally blame private equity for this, but if the banker-sheep ever trust the private equity people again, they deserve a lot worse than shearing.

Maybe send them to Wales.