Gotcha
Door old Johnson Matthey — what an 1. ignominious fate, to end up as a sort of financial Belgrano! To be sunk was bad enough, but the inquest that has followed . . . . Which way was she going? Was she of great strategic importance, a threat to all? Or was she just an imperfectly navi- gated worn-out armoured rust-bucket? Were the signals scrambled? Were the right people rescued? Who pays for the rescue, and who benefits from the pro- ceeds of the salvage? Did no one's radar screen pick her up until too. late? Is the official story the whole story? And so on, complete with stiff letters from David Owen. There are, as the Chancellor says, lessons to be drawn from the Johnson Matthey affair, and some of them are clear already. First, if the decisive factor in the rescue, as the Governor of the Bank of England has said, was the threat to the London gold market, it is time that market produced some evidence on which its importance can be judged. It is secretive and self-sufficient, it publishes no figures, we do not know what it contributes to the City's earnings, no new member has ever been elected. Second, no one should be surprised to find the big banks standing out for a share in whatever the salvaged bank may be worth. If they had done so in the fringe bank crisis of the '70s, it would have saved them all their losses. Then, it is time to look again at the auditors' responsibil- ity. Their duty is to shareholders. What is or should be their duty to depositors, or to supervisors? Then, do we need a banking inspectorate, which would be able to look at individual loans, and check whether they or the borrowers are what they seem to be? It is five years since the Banking Act gave the present system the force of law, and no one believes that it is cast in stone. But when you think what has happened in those five years — at home, the worst post-war recession, and abroad, the rumb- ling threat of an international banking crisis — if no British bank has been holed below the waterline until now, maybe we have been doing something right. But as with security, so with supervision, we only see the failures.
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