Degradation from knighthood

David Cameron has announced that Sir Fred Goodwin, AKA Fred the Shred, has been referred to a parliamentary committee to look into the stripping of his knighthood after banking regulator Financial Services Authority (FSA) wrote a report damming his performance as head of disgraced bank RBS.

Sir Fred was the target of a media campaign after he received a multi-million pound pay off after the failure of RBS and the subsequence multi-billion pound bailout.

I think this sends a good message that failure at the top will have consequences, even if it is just symbolic (jail would be more appropriate) but what about the other people who created the conditions for the financial crisis.

What about the FSA themselves?



The FSA was created by Gordon Brown when the Bank of England became independent. It took over the role of financial services regulator and ran the loose banking regulation framework that put the whole banking system at risk.

The FSA was led by Sir Callum McCarthy from 2003 until 2008, when he retired just as the banking system that he was responsible for regulating collapsed. He left just after Northern Rock needed to be nationalised and just before the systemic failure that led to Lloyds taking over HBOS and itself becoming a victim of the banking crisis.

Sir Callum was allowed to retire in 2008 at the end of his first term as FSA chairman with his reputation intact by the Labour government, because admitting failure by the FSA would have be an admission of failure by the Labour government and in particular Gordon Brown, who created the FSA.

Today even Labour leader Ed Miliband admits that there were mistakes made in the regulation of banks during the Labour years, although he does not name names.

Sir Callum left to re-join the private sector. Today he works for JC Flowers, a private equity company. JC Flowers was one of the bidders for the assets of Northern Rock, but they lost out to Virgin Money. Quite right too, because allowing one of the 'great and good' of the City of London profit from the remains of a bank that he allowed to implode through lax regulation would have been a national disgrace.

This year he was announced as the the figure head of JC Flowers' new property fund, Castle. This fund aims to profit from any new property boom, but given the state of the property market it is more likely to loose millions for investors while making millions for JC Flowers and Sir Callum in fees. It is basically a way to rip off uneducated investors looking for a return on their money. Castle is currently waiting for regulatory approval from... the FSA.

The move to take back Sir Fred's knighthood is a welcome step, but isn't it about time to admit what really created the banking crisis that led to the biggest recession since World War 2? Isn't it about time that Sir Callum was added to the list?

Historically removing a knighthood is called 'Degradation from knighthood'. Because the office of knighthood was treated with so much regard, taking on aspects of holy devotion, to be forsworn and stripped of knighthood was a purposefully traumatic experience.

The king could make the determination to remove knighthood from a man, as could certain courts.

In nearly all instances, the degraded man’s spurs were ‘hacked from his heels’, his sword broken (sometimes over his head), his cote of arms burned, and his shield hung upside down in a church or other public place. Often this disgrace was matched with a death sentence, for such knights were often charged with and found guilty of treason.

Sounds about right to me.

Treason, cowardice, and being forsworn were reasons often cited for the degradation, though it appears to have been rarely used. Maybe it is about time it came back into fashion.