Why the events of the financial crisis will and should remain shocking
Sometimes you need a bit of space to get over an event either physically, mentally or spiritually or both.
Then there are those events that become no less or perhaps more shocking as we look back on them.
Ten years after the financial crisis from which the UK, and Northern Ireland in particular, are still struggling to recover, the US Department of Justice this week released what it termed a ‘statement of facts’ outlining the extent of wrongdoing at Royal Bank of Scotland in the run-up to that crisis.
Chiefly it covers the sale of sub prime mortgages to investors in which RBS, among others, packaged sub-prime mortgages - high risk morgages that carried a greater risk of defaulting - and sold them as highly attractive, high yield investments.
As the US invesitgation, published on Tuesday now reveals, some RBS executives were fully aware of the risks around their product and that it was acknowledged, discussed and even joked about internally.
The documents showed bankers at RBS admitted they were selling “total [expletive] garbage” to investors.
RBS’s head trader received an email from a friend that said: “[I’m] sure your parents never imagine[d] they’d raise a son who [would] destroy the housing market in the richest nation on the planet.”
The head trader answered: “I take exception to the word ‘destroy.’ I am more comfortable with ‘severely damage.’”
Along with the report came confirmation that RBS had reached agreement on a $4.9 billion fine covering activities between 2005 and 2008.
We are all too aware here in Northern Ireland of those who were caught up in the collapse of the global financial system that followed the sub prime mortgage crisis.
Some were well aware of the risks and eagerly borrowed for what they were convinced was a quick and easy reward, others were more naive or maybe just a little greedy.
In any case, RBS was given £45 billion of taxpayer’s money to keep it afloat while the rest of us sank or got on with it.
The DoJ estimates RBS underwrote and issued mortgage-backed securities that have so far resulted in losses worth more than $49bn (£38bn), and forecasts that another $5.6bn (£4.4bn) will yet be lost.
Meanwhile RBS, though it has agreed the fine, disputes and has not admitted the allegations...