Hubris
by Ray Perman

I've just finished reading Ray Perman's history of the Bank of Scotland, and in particular, its collapse in 2008. A 300 year old bank, with a reputation for probity and banking acumen, was destroyed in just a few years. It's a very sorry tale and is still relevant to us today. A good book.

I've not forgotten the 2008 financial crisis and how worrying things were. For a time, it seemed possible that the whole financial system would break. I also realised how far the Great Depression would have affected people long after things got back to "normal" (and long after the Second World War). Troubling times, and since our own banking crisis we've been flailing around in the aftermath.

In Hubris, Perman concentrates on the UK and the banking crisis here. The "Bank" (as it was known north of the border) was an extremely successful and trusted institution, founded in 1695. It was looked up to and very successful because it was conservative and boring. After all, who wants excitement in a bank?

As has been stated before, bank managers were considered boring and staid perhaps, but also the standard for honesty and decency. Think Captain Mainwaring in Dad's Army. Things are very different today, both the staff, management and the branch itself. Many problems have compounded over the years but a fundamental one might be the so called "animal spirits" so beloved of some economists, leading to a dangerous concentration on growth and profit at the expense of sound money. When globalisation comes knocking (post Big Bang in the UK), you are in "competition" with financial corporations worldwide and the pressure is on to "grow" and "perform". Banking became much more complicated and risks were poorly understood. When does "too big to fail" become "to big to exist"? I hope we learned some lessons but memories fade and human nature being what it is. We couldn't afford it befor. Even less now.