The new City watchdog was last night fighting to defend its chairman amid accusations he enabled HBOS to pursue its reckless lending strategy.
John Griffith-Jones, the chairman of the Financial Conduct Authority, faces mounting calls to resign for giving HBOS a clean bill of health while chairing KPMG, the Daily Mail reports.
The accountancy giant is also now facing a possible inquiry into its auditing of HBOS after accounting watchdog the Financial Reporting Council said it would ‘see whether there is a case for an investigation'.
John Mann, Labour MP and member of the Treasury Select Committee, last night called for Griffith-Jones, pictured, to quit.
He said: ‘He should absolutely resign. These grossly failed businessmen should not be in any senior positions in any organisation. Griffith-Jones played along with this Alice in Wonderland economics and the taxpayers are now footing the bill.'
Tory MP Brooks Newmark, also a member of the committee, has written to its chairman Andrew Tyrie calling for Griffith-Jones to resign.
HBOS's reckless lending strategy was described by the defunct Financial Services Authority in January 2004 as an ‘accident waiting to happen'.
Yet in a devastating report last week the banking commission highlighted how the regulator took ‘comfort' from a report by HBOS's auditor KPMG into the risks taken by the corporate lending division.
KPMG signed off on HBOS's decision to set aside just £370m for bad loans in May 2008.
Lloyds, which rescued HBOS in 2008, went on to rack up £25bn in losses from its corporate unit between 2008 and 2011 from bad loans made by HBOS, with £46bn in total. KPMG also sided with HBOS after former head of risk Paul Moore raised concerns about the bank's lending.
Last night, the FCA insisted Griffith-Jones will not be involved in their report into the demise of HBOS.
An FCA spokesman said: ‘John Griffith-Jones was subject to a rigorous appointment process by HM Treasury, and had an appointment hearing with the Treasury Select Committee.'
Read more: http://www.dailymail.co.uk/money/markets/article-2305883/Watchdog-chairman-Griffith-Jones-HBOS-collapse.html#ixzz2PwhdGLVS
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