During the acute phase of the Great Financial Crisis, I coined the term Opacity Protection Team to describe all of the market participants who acted to allow bankers to operate in the shadows where they are free from both judicial and market discipline.

Ruth Sunderland, a UK journalist, wrote a terrific article showing the Opacity Protection Team in action.  This highlighted team member is the UK’s Financial Conduct Authority.  What the FCA was and still is engaged in doing is not releasing a report which shows how RBS, a Too Big to Fail bank, has been engaged in systematic looting of its small business customers.

Why on earth has it taken so long to reveal the full contents of an investigation into the maltreatment of small businesses at RBS?

For those who have not been keeping up, a report was produced three years ago into GRG, which was the provisional wing of Royal Bank of Scotland.

It was accused of whacking businesses for its own gain…

The public – which has been propping up the bank – certainly has a right to know how it has treated the small firms upon whom we rely for our prosperity.

Yet the Financial Conduct Authority, even as late as yesterday, has been resisting pressure from all sides to publish the report in full.

And who does delaying publishing the report favor?

Ex-bosses trying to protect themselves, and, of course, the legal profession.

The risk of slighting a well-rewarded former executive who was involved in a bank collapse, is deemed to trump the rights of the public to know what went wrong.

One lesson of the financial crisis is that British regulators have a propensity to try to keep far too much a secret, for far too long. [emphasis added]

Please reread the financial crisis lesson.  I would take it one step further.  Financial regulators the world over have a propensity to keep far too much a secret for far too long.

The entire policy response to the Great Financial Crisis would have been different if financial regulators had not been keeping secret the true condition of the banks.  If market participants had access to each bank’s current exposure details, the banks would not have been bailed out without first having to absorb all of the losses on their bad assets.  This in turn would have ensured the financial crisis did not spread to the real economy and the real economy could have quickly resumed self-sustaining growth.

Of course, had the financial regulators not been keeping secret the true condition of the banks, market discipline would have ensure the Great Financial Crisis didn’t occur in the first place.