Last year, the UK had its first bank run in over a century. Meanwhile, the government agency charged with ensuring financial stability - the Financial Services Authority - gave its directors pay increases of around 22 percent.
I just loved the quote from Hector Sants after receiving his 37 percent increase. (He is now on a slightly-above-the-national-average wage of ₤661,000 a year.) "I am determined that the FSA will not be defined by the Northern Rock incident, but rather by our response to it."
What exactly was that response? The FSA gave supervisory responsibility for NRK to a couple of people working in their insurance department. Afterwards, it produced a report outlining a litany of appalling supervisory failures. Once the bank collapsed the Bank of England had to pile in with ₤35 billion to save the bank from total destruction.
The worst isn't over. With NRK's balance sheet deteriorating, and arrears rising, the UK tax payer is now bracing itself for massive losses. In other words, the FSA failed miserably, forcing the Bank of England to stabilize the situation and leaving the Treasury to clean up the long term mess.
What kind of collective failure would it need for FSA directors to pass on their bonuses? Would the total collapse of the UK personal lending market be sufficient? Do we need a couple of further bank failures? This kind of "paying for failure" is so deeply ingrained into public life that no one cares any more.
Where is the outrage?