A couple of financial stories this week have made this observer delve back into his archive.
The ongoing success of Nationwide, by far the biggest of the UK's remaining building societies, was highlighted by the Independent newspaper, which compared its achievements to the miseries which have affected the banks in recent years. The paper rightly celebrated the fact that Nationwide, almost alone, had fought against the tide of demutualisations of the 1990s.
Back in 2006 I wrote a report for Parliament on the demutualisations and I, too concluded that Nationwide's independence was something to cherish – not only because, on balance, the building societies offered consumers not only a better deal on products and services but that the sector relied, to an unhealthy degree on Nationwide to show that mutuality was still sustainable at a large scale organisation. And I believe that it deserved, and still merits, praise for not joining the herd.
But it would wrong not to 'fess up to things which proved to be wrong. For which was the organisation I pointed to, as the 'main success story of the demutualisers' six years ago? A certain Northern Rock, which notoriously crashed 18 months later. At the time of the report, Northern Rock was growing exponentially and seemingly doing everything right. So I can join the massed ranks of pundits who did not see the crisis to come. Did anyone?
And just when banking regulation seemed to have left the front page, the crisis at JP Morgan has brought it right back again. In 2009, after the financial crisis had reached full speed, ACCA put together a report which looked at principles of good regulation. We argued that the 2008 crisis had sprung largely from poor governance in banks and the creation of over-complex giant organisations in which risk management functions did not have sufficient clout, and management too often had insufficient understanding of the financial products that were being sold.
Of course, we await the full story of the JP Morgan crisis. But from the outside it seems déjà vu. Regulation can usually be improved and, to work most effectively, we argued, have the buy-in of the organisations being regulated. But outright opposition to a regulator is rarely a good option. As the Independent rightly points out modern capital markets are complex places that require complex regulation. But if If JP Morgan chief executive Jamie Dimon reckons the Volcker Rule on proprietary trading is too complex to implement, it follows his bank is too complex too.