The Co-op disaster has gone from bad to worse. It emerged last weekend that the former chairman of the Co-op bank, the Reverend Paul Flowers, had been filmed allegedly buying hard drugs. This week group chairman Len Wardle stood down. The stricken mutual is trying to raise £1.5bn to plug a hole in its balance sheet. City minister Lord Myners has said that the scandal could threaten the recapitalisation plan.
What the commentators said
But the regulator is equally to blame for the fact that he was in charge, as Nils Pratley pointed out in The Guardian. Northern Rock and Royal Bank of Scotland were two clear warnings of "the perils of allowing non-bankers to be chairmen of banks". What's more, said The Guardian, MPs should remember that "politicians cheered from the sidelines" as the Co-op attempted the takeover of 632 Lloyds branches, or trebled its high-street presence in 2009 by snapping up the Britannia building society.
They were trying to promote the bank as the answer to "the City fat cats that the taxpayers had to bail out". Now, not least because of all the bad debts in Britannia's books, the Co-op is "City roadkill", concluded The Guardian. The upshot, as Philip Augar noted in the FT, is that the mutual model in itself cannot save organisations from "the usual culprits in banking: bad management, nave governance and sloppy regulation".
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