Commentary: Bank bosses blinded by arrogance

Elsewhere, in the US especially, a bank runs into trouble and the chief goes. Not here. Until Sir Fred Goodwin's departure the only bankers of note to have walked were Adam Applegarth at Northern Rock and Steven Crawshaw at Bradford & Bingley (and he went on health grounds).

While customers worried about their savings and government ministers and officials, who earn a fraction of what they receive, mounted rescue bids, they clung on believing in their own invincibility.

It was breathtaking and infuriating final proof, surely, that this generation of bankers had ceased to make the connection between the people who populate their branches and their swanky, over-the-top lifestyles. Like modern kings, they were surrounded by fawning, loyal entourages. To question them was to risk their wrath and be excluded from the court. A glance at the boards of RBS and HBOS finds them chaired by people who were not equipped to tackle the chief executive. At RBS, Goodwin, who had steered RBS's transformation from Scottish bit player to world-conquering dynamo that at least was the intention was supposed to answer to Sir Tom McKillop, the chairman who hailed from the pharmaceuticals industry. Sir Tom presumably could run a good meeting and host a top-class lunch but he couldn't oversee a would-be global bank.

At HBOS, the chief executive was Andy Hornby, ex-Asda. He could talk marketing and retailing as well as any superstore executive but he wasn't a banker. He didn't have a feel for the traditions and ways of the past traditions and ways that were often there for a reason. Assessing risk wasn't something in his armoury.

The HBOS chairman, Lord Stevenson, is what's known politely as a polymath. Less decorously, that can mean jack of all trades and master of none. A consummate networker, he was able to schmooze his way round the corporate world and at Westminster. There's nobody he doesn't know. But when push came to shove, was he able to rein back his bank, to tell Hornby to shape up or get out? The fact his bank has had to succumb to a bid from Lloyds TSB and there will be no place for Stevenson or Hornby in the new set-up says it all.

They assumed they knew best, and so did those around them. It wasn't only their boards who climbed on the gravy train. Every bank employed teams of advisers who racked up fees galore telling them just what they wanted to hear. In all this, the distance between bank chief and customer grew.

Their weapons to make them more efficient also had the dual effect of broadening that gap: so branch closures, call centres, outsourcing and slick advertising all took them further away from the people they were meant to serve.

Something came over these men. It was a red mist, a blindness to where their bank had come from. The one benefit to emerge from the taxpayers' bail-out, in the peasants moving in (make no mistake, that is how it will be seen in lofty banking circles), is that banks may now return to how they were. Yes, they may become boring institutions but they will be safe. No harm in that.