The Crosby no show

As bankers once again sat in the stocks today, grilled by the politicians who are also not above reproach for precipitating the crunch, one man from a third liable party fell on his silver-edged sword.

Sir James Crosby, deputy chairman of the City regulatory body, the Financial Services Authority (FSA), was handpicked by Gordon Brown to oversee a bull market – and presumably keep it that way. 30 minutes before PMQs today, he was forced to resign.

The allegations that Crosby sacked senior manager Peter Moore for expressing worries of unsustainable market trading may or may not be true. He may or may not have been right to do so.

Confidence is so crucially important in stock markets that saying a crash is coming can arguably make it so. It is thought by many to be best to keep saying things are swell, even when clearly, they aren’t. We need look only back to Roger Babson who said at the Annual National Business Conference on September 5, 1929, in New York:

Sooner or later a crash is coming, and it may be terrific.

We know what happened after that.

Crosby denies the allegations, but this will provide little comfort for Brown, who’s reputation for prudence must surely now be in tatters.