The bank job

It suits a great many people to blame the banks for the financial crisis. It gets everyone else off the hook. How, asks Gordon Brown, was a mere Prime Minister to know that banks were doing such fiendishly complicated things? How, asks George Osborne, was an opposition expected to detect what the government could not? How, asks Mervyn King, was the Bank of England governor supposed to know that these bankers had been so wicked? For all of them, the bankers have been the perfect scapegoat.

In truth, all of them failed to spot the massive asset bubble that had deformed the British economy by 2007, a bubble blown by dangerously underpriced debt. Yet even now there is a worrying reluctance to admit that a bubble ever existed. The decision to blame the banks is not just lazy, but dangerous — because it means that the profound errors of the Labour years are neither diagnosed nor corrected.