So this HBoS thing. What kind of journalist could really have found out what was going on? None I think. Unless an Irishman, an Australian, an Englishwoman, an analyst (well maybe a US-based one who understood mortgage securities (scrub that actually), a former, reformed trader who had found God perhaps, a forensic accountant (any gender), a compliance expert (and a lawyer to deal with the privacy and libel stuff) got together and surveyed the whole bank to find out what was going on. It’s just not practical even with Google+ to hand out in and discuss matters. So it’s back to isolated journalists or news desks.
For example, UK journalists could question the lending policies or the market share. I did. No really. Many journalists did. Well we asked, but did we arm ourselves with the correct financial information beyond the blunt “What about the fact you have almost a third of the mortgage market?” Tricky you see, when institutions are so vast.
“Well, HBOS would say, we are managing that market share down a little bit, prudently of course. We are now building our share of investments and savings to our natural market share.” Blah. Blah. Etc.
So could we find experts to help – experts who understood mortgage funding and the quality of mortgage backed securities. You see we were told about that too but it was tricky to write. Some very small sub prime lenders were protesting the strength of their mortgage books days before they crashed, sometimes even after tranche one had hit the rocks, they were still protesting about how tranche two was different. Indeed, some journalists warned about overheating in the institutional market. But really was it anyone’s main business? Did any paper run stories on the front page? Actually I do recall Abbey getting a front page pasting for its lending policies but not HBOS though I could stand corrected on that. And imagine if any title had written even one tenth of what said by the Banking Standards Commission in its report today in a newspaper or magazine. Guess what. They would have published and been damned. Utterly damned. (Something Lord Leveson possibly missed while he was listening to Hugh Grant. Oh well.)
So journalism probably can’t catch this sort of thing. Not even outstanding journalists like Gillian Tett or Robert Peston. So it’s up to regulators or the market. Oh dear.