Now here’s the bank disaster book you should read.

So I advised you not to read Iain Martin’s Making it Happen, but advised you to read Simon Carswell’s Anglo Republic. Reviews of books on bank failures seem to have become an occasional series, and at least it’s somewhat less depressing than Jimmy Savile, so here we go.

Yes, yes, you should absolutely read Ian Fraser’s Shredded: Inside RBS, the Bank That Broke Britain. This is probably the definitive work on the British and Irish banks in the Great Bubble and the ensuing Great Financial Crisis. The best thing I can say about it is that it stinks of work.

You should probably also read Ray Perman’s Hubris: How HBOS Wrecked the Best Bank in Britain, but it’s not essential.

Where Iain Martin skates over the surface, Fraser drills into the icy depths. Where Martin is glib, Fraser is forensic. Where Martin defers to Scottish Toryism, Fraser mauls anyone and any institution he sees. As the Glasgow Herald‘s business editor, he is a bruising hard news reporter rather than an opinionator, and this shows. He has simply done much more work – reviewed more documents, interviewed more people – and he seems to despise pretty much everyone involved, probably the best course.

He brings out the degree to which RBS was, in many ways, a sort of regional development bank/politicians’ pork barrel. For example, Lord Younger, who Fraser repeatedly points the finger at, intervened to keep it from being sold in 1981 specifically on the grounds that it was important to the Scottish economy and that it was necessary to reserve a sufficient number of major appointments for Scots. Jobs for the nobs, you might say. He follows Younger repeatedly dipping in and out of Tory politics and the Royal Bank’s board throughout the 80s. He makes a strong case that RBS was as much the Scottish Tories’ bank as Hypo Alpe-Adria, say, was Jörg Haider’s. Not that he spares Labour or indeed the SNP.

This wasn’t just pork barrel politics. Fraser argues that the Scottish Tories did have some ideas for the future of the Scottish economy, as expressed through the SDA, and RBS took the lead in financing them, especially because its CEO and then chairman, Sir George Mathewson, came directly from the SDA. To some extent, as Perman points out, it carved up the market with Bank of Scotland – RBS took on the engineering and semiconductor fab stuff, Bank of Scotland the oil. It was far from the first time they had come to an agreement.

He also points out that the relationship between the two banks, which swung between vicious rivalry and a quasi-cartel, was rooted in the depths of Scottish history, with the Royal being associated with the Whigs and the “Old Bank” with the Jacobites, the “Old Bank” with rural and provincial Scotland and RBS with Glasgow’s industries. One thing in which they were unanimous was sectarianism – neither bank employed a single Protestant Catholic within Glasgow before 1978. When you realise that, according to Perman, Scotland’s density of bank branches was so high that chequing accounts didn’t sell because nobody bothered when they could just pop into the bank, this is incredible.

Fraser also gets it, in that he is quite clear that financialisation, deregulation, and housing bubbles were a thing and that they were rooted in policy, policy that was decided by government, by ministers with faces and names. He puts the story directly in the context of Thatcherism and after, and he points the finger, again and again.

The finger points at Thatcher, but more directly, it points at Sir Steve Robson, architect of tripartite regulation, inventor of PFI, and RBS director. It points at Mervyn King for basically ignoring financial stability, and being a dick. It points at Bernard Jenkin, the Tory spokesman at the time of the creation of the FSA, who is quoted worrying about its terrifying over-might. It points at Alan Greenspan, for bubbles. It points at Gordon Brown, too, for sucking up to bankers generally, although it also accepts he wasn’t wrong about responding to the crisis.

Most of all, it points at Fred Goodwin, who it paints as a wanker, bully, and bungler of epic proportions, a sort of financial Iain Duncan Smith. One of my favourite details is that he specified the colour, trim, and upholstery of the RBS fleet of Mercedes to match the corporate identity by exact Pantone shade number. Another is that he persuaded 111 Squadron RAF to regularly take him up in the back of a Tornado F3.

But the best one is probably that in mid-2008, already 18 months after the top of the bubble, when RBS did its doomed rights issue, he stood up at the annual lunch for NatWest pensioners to badger them to buy more RBS shares. That failing, he compiled a list of executives who didn’t yet own enough RBS paper in order to mulct them as well. Anyone who put money in at this point lost 90-odd per cent of it.

And RBS, by 2008, was ruined in so many different ways. There was the US trading operation, Greenwich Capital, and its enormous pile of super-senior leftovers from US subprime CDOs. There was the merger with ABN-AMRO, which seems to have happened mainly because Goodwin was scared of his semi-mentor Emilio Botin, and which was a superb, fractal clusterfuck in every possible way. The Scotsmen blame the Dutch, and the Dutch the Scotsmen, but the truth was both that ABN-AMRO was in a terrible state and also that RBS had no idea what to do with it, like the dog that finally caught the car. And then there was the commercial property. Any one of these could have finished them, but as it turned out they did them all.

There is a huge amount of material here on RBS’s personnel practices, on its history of dubious dealings with some of its clients, on the pharaonic head office project, and on the surprisingly louche careers of some important people involved. Goodwin, for example, worked in his past career in accounting for a Touche Ross, later Deloitte, partner who was also censured and forced to pay a £40,000 fine by the accounting profession over his role in the Barlow Clowes fraud. He later shows up auditing RBS after Goodwin overruled the bank’s procedures to give Deloitte their business.

An important point in both books is the time factor. When Goodwin got up on the stage to sell the rights issue to the NatWest pensioners, the peak of the bubble in the autumn of 2006 was already 18 months in the past. But the RBS commercial property lenders were actually increasing the size of their book and taking on increasingly wild projects and dodgy clients. Similarly, across town, Perman makes clear that HBOS’s binge on commercial property didn’t really get going until after the bubble had burst. Both of them accelerated full tilt into the wall.

So the Dutch blamed the Scots and vice versa. Similarly, the Yorkshiremen blamed the Scots and the Scots the Yorkshiremen.

Perman gives some interesting insight about HBOS, which after all destroyed Yorkshire’s bank as well as one of Scotland’s. The Scots considered Halifax scary and a bit fast, thanks to its emphasis on sales. They called them the Haliban. Halifax had to be a bit like that because it was almost exclusively a retail bank, and Bank of Scotland wanted it precisely because it had so many retail savers on the books. This provided capital that the Old Bank could use in its commercial banking activities. The Halifax side saw it differently; rather than complementing Bank of Scotland, they wanted to turn it into a bigger Halifax.

So who won? The mortgage lenders in Halifax deliberately hit the brakes in 2006, changing their pricing and terms to retain existing customers and back off on growth. Although this was later, crazily, reversed and the executive responsible was sacked, by then it was too late to make any difference. In the meantime, the commercial lenders went absolutely berserk. Two-thirds of the total accrued losses at HBOS were attributable to commercial property lending, run out of the Old Bank. It may well be true that Halifax was more important as a contributor to the housing bubble, having led the charge early on, than as a casualty of it. But then, Andy Hornby seems to have responded to the slow-down in Halifax retail by egging the BOS commercial team on.

Also, apparently its board met the announcement of 125% LTV mortgages, self-certification, etc. with “mute astonishment”. Famously, the thing about dumb insolence is that they can’t do you for it. Mute astonishment has in common with dumb insolence that it looks a lot like saying and doing nothing.

In some ways, Fraser especially is perhaps too critical. So you get a blast against RBS for not being likely to make a profit these days, and then another against it for not shrinking fast enough. Which is it, then? But on balance, there is plenty of blame to go around.