Fraser Nelson - psychic, Gordon Brown - incompetent

The whole Lloyds/HBOS merger had me worried at the time and incredulous now as Gordon Brown and his team try and pretend that it was nothing to do with them. Just looking through some old Spectator articles reminded me of this from 17 September 2008 - "HBOS-Lloyds, as arranged by Gordon Brown?", Fraser Nelson wrote:

"Is Gordon Brown trying to take credit for the HBOS-Lloyds merger? Sounds implausible, but the blog of Robert Peston, Brown’s biographer, has this snippet:

“I am hearing that this deal has been negotiated at a very high pay grade level, with the Prime Minister, Gordon Brown, talking to Sir Victor Blank, chairman of Lloyds TSB, about how helpful it would be if Sir Victor could bring himself to end the uncertainty hanging over HBOS by buying it.”

If this is true, I’m amazed the takeover went ahead, given that Brown tends to be 180 degrees wrong about any financial deal – whether it be selling gold at the bottom of the market or selling British Energy shares before they skyrocketed.

The truth, I suspect, is that Brown somehow got wind from the Bank of England that the deal was happening – or maybe he needed to give formal assurance that the Competition Commission would turn a blind eye. Then he’d have wanted to attach his name to it, so made the call to Victor Blank (ex-chairman of the Mirror Group) and then leaked it.

UPDATE: Ben Brogan has more: It wasn’t a phone call. Brown met Blank at a reception in the City on Monday and expressed his support for a takeover then (promising to keep it all secret, of course). NB, Blank is non-executive chairman (amongst his eight other jobs) and would have been in the business of approving, not negotiating, the takeover of HBOS. So his exchange with Brown would have had minimal significance."

Here's some excerpts from Robert Peston's blog as referenced at the time: "UPDATE 10:32AM: I am hearing that this deal has been negotiated at a very high pay grade level, with the Prime Minister, Gordon Brown, talking to Sir Victor Blank, chairman of Lloyds TSB, about how helpful it would be if Sir Victor could bring himself to end the uncertainty hanging over HBOS by buying it.

It was not in the government's interest for there to be the faintest risk that it would have another Northern Rock on its hands"


"UPDATE 12:34PM: I now know more about how the competition obstacles to this deal will be surmounted. The government will announce that in the interests of financial stability it will legislate to over-ride the powers of the Office of Fair Trading and the Competition Commission to block the deal.

And it won't be long before the formal terms of the takeover are announced. Both boards met this morning and are meeting again tonight to give their approval."

And whilst I am on Robert Peston's blog, here's just two comments of many that proved rather prescient:

"67. At 10:21am on 17 Sep 2008, U9461192 wrote:

Oh God.

Gordon Brown has got involved? Jonah Brown? That's HBoS doomed then. And possibly Lloyds too."

"86. At 11:33am on 17 Sep 2008, YummyCarolKirkwood wrote:

The main focus on the reporting of this story is completely wrong. I see that a few posters on this blog (sherwoodbandit, the_nutty_dragon, wykhamist) have picked up on the real issue that is at stake: if HBOS is too big to fail, what will be the case for a Lloyds-HBOS entity? We are only just at the beginning of a major recession and the collapse of the UK property market, so HBOS will be facing HUGE losses in the coming years. Lloyds would struggle to ride it out on its own, but I very much doubt the combined entity will be able to shoulder those losses, and we will simply end up with our own Fannie Mae/Freddie Mac situation. The eventual result: a massive bail-out from the UK taxpayer.

The saying "don't put all your eggs in one basket" has been around for a very long time.

And for very good reason.

Creating ever larger financial institutions does not lower risk - it INCREASES it. Such a merger between Lloyds and HBOS might be some sort of botch-job, quick-fix short-term solution to the immediate problem but - irrespective of the competition issues - it is a recipe for disaster in the longer term: very Gordon Brown indeed. No wonder his sticky paws are all over this deal.

IMHO Lloyds shareholders would do well to vote against such a deal, rather than saddle themselves with HBOS' problems."

"Crash" Gordon strikes again and the whole UK economy may collapse because of his mismanagement of it. If it does, then there will be a lot of very angry people out there and they will not stand for Gordon Brown running away to the US lecture circuit (joke) or an EU position. They will want him here and they will want him to pay for his recklessness.