John Redwood versus Derek Draper

Take a listen here but thanks to University of Manchester Conservative Future here's a partial transcript from the Kevin Nolan show:

" Nolan: Derek Draper, the former New Labour spin-doctor, now a psychologist as well as a blogger with us tonight as well. Hello to you Derek.

Draper: Hello

Nolan: Lots of these leaders getting a good kicking today, thankfully not literally, by the critics who are saying “how on earth did they allow this to happen”, with up to 35,000 people on the street protesting against them today. Derek, what signal does that send out to those leaders?

Draper: Well, were the people really protesting against the G20? I don’t think so, I think they were protesting about the fact that the economy isn’t doing well and they want it to do better. The whole point is that that is what the G20 is designed to do. It’s designed to get the global economy moving. What does that matter? Because at the end of the day, that’s what’s going to protect jobs and allow people to keep their homes here in Britain.

Nolan: What a terrible job the G20 have done so far then.

Draper: Well, of course they haven’t done a terrible job so far, because they haven’t started yet. What you’re seeing so far is a series of meetings and negotiations and visits and Gordon flying round the world working like a dog to try and set up the situation where when all these world leaders arrive in Britain this week, they will actually be able to make some progress. There’s no magic wand, there’s no miracle cure. This is about really hard work, trying to get the world economy back on track.

Redwood: Why didn’t they take action earlier to tackle these things? I was calling for interest rate cuts over a year ago, when they might have had some kind of beneficial impact by now, why were they so slow, why were they asleep at the wheel?

Draper: There’s been a series of interest rate cuts…
Redwood: Yes, but far too late.
Draper: …I know, but listen. You’re talking as if we’re still in the old world. The fact is that because of the American banking collapse, especially Lehmann brothers, we have a knock-on effect around the world. And that’s something noone was prepared for…

Redwood: Northern Rock was a British bank lending money to British people under a British regulator and they got it comprehensively wrong. And they were warned by people like me not to get it wrong.

Draper: Yeah, well, the British banks, I’m not saying the British banks were perfect. What I’m saying is that the great shock to the system came from America. Now, what Gordon Brown’s been trying to do is to deal with that. And the British banks that are acting personally, I think that people were losing their deposits, losing their money, their life savings they have in Northern Rock and indeed Lloyds TSB, that didn’t happen…

Redwood: But why did the British government allow these mega mergers, creating these massive banks with these huge bonuses that then lost so much money and came with a begging bowl to the state?

Draper: Well, because at the time people felt that bigger…might be better. People thought that there was a strong financial system around the world that would keep these banks going, now we now know that there were actually hidden problems with these banks, especially Northern Rock, but it was in America where these banks had done these subprime mortgages, that was where the real flaw in the system was…

Redwood: But we did subprime mortgages over here as well, Derek. Get real, that’s why people are so angry. Labour have been so complacent about this.

Draper: Well let’s not get party political, because it’s not as if the Conservative Party had been standing up and saying let’s have smaller banks and more regulation…
Redwood: It’s exactly what I was saying in my report a couple of years ago Derek, if you bothered to read it.
Draper: …the Conservative party has called for less regulation.

Redwood: We were calling for tighter regulation for cash and capital which were the things that went wrong. You introduced all this petty mortgage regulation which didn’t stop anything…
Draper: The notion that the Conservative Party were in favour of little details here and there…
Redwood: Try reading the report, Derek, it was crystal clear. We said that your broken Bank of England wouldn’t manage to sort things out.

Nolan: Surely if you listened to yourself tonight, Derek, you would thing that Labour weren’t in power while all of this happened? You’ve been in power for a long time and you’re blaming America.

Draper: Look, the fact is, that however much people try to make party political points about it, voters at home can see on their television screens, that this is a problem that is affecting America, Japan, Iceland, Germany, France, all countries around the world. So voters come to the conclusion that actually this is not in any way something that can be laid at Gordon Brown’s door. The fact is that this is a global problem that started in America, and that Gordon Brown has actually been doing a very good job. People accept this all around the world, from President Obama down, it’s not about apportioning blame, it’s about doing something about it and moving forward.

Nolan: So help me understand this about the G20 summit, Derek. What criteria can we use, as members of the public, to determine whether this meeting has been a success or not?

Draper: Well, the criteria will be, have these countries come together, set forward a path to increase the global regulation of banks more effectively, maybe coordinate their economies a little bit better, maybe refocus things a bit more onto those bread and butter issues about homes and jobs that people care about…but that’s a hard thing to do. It’s a bit like herding cats. But I must say that I’m really glad, and this is not just a party political point, I’m really glad that Gordon, the man who has actually got experience of the financial system and who has the contacts and knowledge to make this happen, is in charge of this rather than a bunch of lightweights like David Cameron and George Osborne.

Redwood: But look, this is the man who has presided over the collapse of four major British banks, something that’s never happened in…
Draper: Collapse?
Redwood: …before under any other government.
Draper: This is the man who has presided over the prevention of the collapse of those banks, don’t be so ridiculous.

Redwood: Well he was the chief regulator of them, he was the Chancellor of the Exchequer running a tripartite regulatory system…
Draper: Of course he wasn’t the regulator, the regulation was at arm’s length.
Redwood: ….Derek you have to let me speak occasionally. He was the tripartite head, he put in a new regulatory system, and for the first time in British history five major banks got into serious trouble, because the new regulation didn’t work.

Draper: And you really think that that’s because of the regulatory system, do you?

Redwood: Yes, of course it was. Because they didn’t control the cash and capital…
Draper: Really?
Redwood: …they allowed the banks to borrow and lend…
Draper: You don’t think that perhaps…
Nolan: Hang on, hang on, let him finish!
Redwood: …huge amounts of money in a way in which we didn’t allow them to do.

Draper: We…you didn’t the Conservatives?

Redwood: We kept much tighter control over them in the 80s and 90s and…
Draper: Did you?
Redwood: …and they didn’t go bust on our watch…
Draper: I thought you were in charge of the big bang in the city of London, I thought you were in charge of this massive booming financial system? Look, the rest….
Redwood: We stopped the banks borrowing and lending on the scale they did in the last 10 years…
Draper: You’re interrupting me now. The idea, that the Conservatives were in favour, during this time, of more regulation, of more caution, of less remuneration of the city, is frankly fantastical. It just doesn’t bear a moment’s scrutiny.

Redwood: Well Derek you should read Hansard, you should read the reports we raised…
Nolan: Ok
Draper: Your report said there should be less regulation of the mortgage industry.

Redwood: It said there should be tougher regulation of cash and capital and that the process regulation of mortgages…
Draper: What did it say about mortgages…
Redwood: DEREK LISTEN for a minute, it said that the process regulation of mortgages wouldn’t work, never has there been so much regulation of mortgages, and never has there been such a mess. What we said was that you need to regulate cash and capital which is what would have controlled the banks, which is what we did in the 80s and 90s, which is why they didn’t go bust on our watch.

Draper: Did it say that there should be less or more regulation of the mortgage market?

Redwood: It said there should be less regulation, but that you should regulate the thing that matters, the thing that stops banks going bust. This is a bank going bust problem, Derek, not a mortgage process problem.

Nolan: OK, thanks very much"