Thought you knew everything about the reckless lending, aggressive funding arrangements and delusional boardroom thinking at HBOS? Luckily, the commission on banking standards is on hand to provide exhibits that can still shock four years after HBOS's failure.
Here is the bank's former chairman, Lord Stevenson, writing to the head of the Financial Services Authority on 18 March 2008, two days after the collapse of Bear Stearns in the US, an event that provided firm evidence that the credit crisis was intensifying and far from over: "The bottom line is that without wishing to be the slightest bit complacent, we feel that HBOS in this particular storm and given its business characteristics is in as safe a harbour as is possible while at the same time feeling commercially rather frustrated!"
Ho, ho! Six months later HBOS was a crock, awaiting rescue by Lloyds TSB and the UK government. Frustration became humiliation.
As Lord Lawson put it on Tuesday, Stevenson was either being dishonest or delusional when he wrote that letter. It was a mischievous remark because the "cloud cuckoo land" theory is clearly the one to prefer since it is all too easy to believe that Stevenson lacked the imagination to consider that wholesale markets could freeze, as they did after Lehman failed in September that year. The chairman was even buying shares himself as the HBOS ship listed.
Several times during Tuesday's session, he mentioned that his role as chairman of HBOS was "non-executive" and "part time." Do not be misled. The labels don't matter. When you are being paying paid £708,000 plus £113,000 of taxable benefits – the sums recorded in HBOS's annual report in 2007 – you are hands-on, or at least expected to be.
In his case, he was also being incentivised like an executive since he enjoyed share awards worth 100% of salary every year. That was highly controversial, even at the time, since chairman are meant to be independent. Did it also contribute to the delusional group-think on the HBOS board? If the commission decides to recall Stevenson, as chairman Andrew Tyrie threatened to do, that's another useful line to explore.
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