The following is by Paul Cotteril and first appeared on Liberal Conspiracy and is reproduced here with permission:
The leftie blogosphere has been somewhat taken up recently with coverage and analysis of the student protests, and rightly so.
But in so doing this potentially huge story of rank corruption at the heart of the world’s banking industry risks being relegated to the obscure inside pages of the financial press, when it could do with being on the front pages of the papers that the occupying students hopefully get given by helpers from the outside.
It’s certainly educational, and may help with the formulation of demandsâ€šÃ„¶â€šÃ„¶
Auditors misled investors in the lead up to the crisis by supplying UK banks with a clean bill of health after being told taxpayers’ money would be used to bail them out, a House of Lords Committee has heard.
The Lords’ Economic Affairs Committee criticised auditors for signing off on banks’ accounts on the basis the UK Government would prop up the banks.
“Your duty is to report to investors the true state of the company. You were giving a statement that was deliberately timed to mislead the company and mislead markets and investors about the true state of those banks and that seems to be a very strange thing for an auditor to do,” said Lord Lipsey.
Debate focused on the use of “going concern” guidance, issued by auditors if they believe a company will survive the next year. Auditors said they did not change their going concern guidance because they were told the government would bail out the banks.
“Going concern [means] that a business can pay its debts as they fall due. You meant something thing quite different, you meant that the government would dip into its pockets and give the company money and then it can pay it debts and you gave an unqualified report on that basis,” Lipsey said.
Lord Lawson said there was a “threat to solvency” for UK banks which was not reflected in the auditors’ reports.
“I find that absolutely astonishing, absolutely astonishing. It seems to me that you are saying that you noticed they were on very thin ice but you were completely relaxed about it because you knew there would be support, in other words, the taxpayer would support them,” he said.
Hats off to Nigel Lawson, the closet revolutionary. Get it? The auditors didn’t say the banks might go bust, because they knew the taxpayer would bail them out anyway.
The riches of bankers, the bankers would have us believe, are in keeping with their roles as go-getting risk takers and entrepreneurs who bring wealth. This is a lie.
And why didn’t the auditors do their job?
Well, just like the Credit Rating Agencies, the way they make their money best is by not doing their job, because they depend on those same banks for their lucrative contracts.
As Francine at the brilliantly forensic Re The Auditors blog says:
Their complacency is calculated. They are much too tied into the work, and the millions in fees, that have been generated by the aftermath of the crisis.
You hear that, you students?