News from the New Party

Getting real

"The present troubles have exposed the fact that very many of the best-regarded among the world's financial institutions had risk management which was not up to the expectations placed upon it," he said.

Banks must "understand the limitations, as well as the strengths, of ratings," he said, warning that they should also "recognise that failures to conduct due diligence will have a price."

Mr McCarthy's comments came as it emerged that Andy Hornby, the chief executive of the crisis-hit bank HBOS, is to receive shares worth almost £2 million in Lloyds TSB following yesterday's emergency takeover.

One wonders whether Mr McCarthy has consulted his colleague at the FSA, Sir James Crosby, who was Mr Hornby's predecessor at HBOS, and who left in 2006.  No doubt Sir James has learned plenty of lessons from his experience.