"There appears to be a yawning gulf between the evidence the committee heard today from Mr Richardson and the evidence we heard previously from Mr Bailey," concluded Andrew Tyrie, chairman of the Treasury select committee. You bet, there's a chasm.
Andrew Bailey, head of the Bank of England's Prudential Regulation Authority, has said that poor loans inherited with the 2009 takeover of Britannia Building Society were the "main issue" behind the Co-op Bank's £1.5bn capital shortfall.
Neville Richardson, former boss of Britannia and then chief executive of the combined business, reckons impairments from his old shop account for only one-third of Co-op's charges in the past 18 months. He maintains that he left the Co-op Bank in decent shape in 2011 and blames his successors for taking their eyes off the ball and the Bank of England for being heavy-handed.
Both men cannot be right. The good news is that it ought to be a simple matter to determine whether Britannia injected a dose of toxin into the Co-op Bank, or just a mildly unpleasant collection of commercial property loans. The Co-op, or Bailey, merely need to put more facts on the table in the form of detail on the composition of the loan book and the impairment charges.
The blistering response from the Bank − "we strongly disagree with Neville Richardson's view regarding the Britannia loan book situation" − indicates it is up for a fight. So it should be: the word and judgement of one of its most senior officials is being challenged. The necessary response is a comprehensive destruction of Richardson's version of events.
guardian.co.uk © Guardian News and Media Limited 2010