The five biggest credit crunch cock-ups

Since the onset of the credit crunch, the authorities have been falling over themselves to make a complete hash of the recovery. John Fitzsimons looks at the worst offenders.

Things have never quite been the same since Robert Peston dropped the bombshell about Northern Rock, have they? 

The trouble is, as time goes on, it's easy to forget why exactly we're in this mess - and who's responsible for bringing us here.

So, in the lead-up to next week's report into the regulation of banks - which the Government hopes will stop what has happened from ever happening again - here's a list of five of the worst cock-ups that have taken place since the credit crunch began.

1) The nationalisation of Northern Rock

When you look back, just think how abysmally this was handled. The first failing of course was by the Northern Rock press office. By saying absolutely nothing, they allowed hysteria surrounding their security as a bank to be whipped up, which led to the infamous queues of savers wanting to withdraw their money.

But that was just the beginning. The actual process of taking Northern Rock under the Government's wing was ridiculously protracted - it wasn't until March last year that it was finally, formally nationalised, following failed bids from a number of consortiums, including one by Virgin.

That's six months from when the story first broke! It's utterly ridiculous that it took that long for something to be done.

Unfortunately the dithering and indecisiveness over the future of Northern Rock was just a precursor of what was to come.

2) Bonuses and pensions

Ah, the uproar over banker bonuses. Gordon Brown waggled his finger and said he was displeased, and so we had a brief ban on short-selling (once the bigwigs in Government had worked out just what it was).

There then followed a lot of moaning about the pesky bankers getting paid massive sums for gambling (badly), and a full YEAR later we had the Chancellor promising to curb their pay. Good work Darling.

Of course, the ultimate villain in all this was Sir Fred Goodwin, who did such a sterling job at Royal Bank of Scotland (RBS).

Fred the Shred has certainly attracted a fair amount of vitriol for a pension package that can only be described as obscene.

Once he had been identified as the villain of the piece, it heralded some frankly disgusting reporting - London's free morning paper, The Metro, went through his bins for a nonsense front page story about something he had thrown away.

It also gave Harriet Harman, a woman with fanciful designs on becoming Prime Minister, to declare that the Government would explore ways to force Goodwin to return some of his pension, as decided by "the court of public opinion".  

Of course, there are absolutely no legal grounds to force him to do anything, as his pension had already been approved and signed off by Government figures.

An utter farce.

3) Bailouts

A farce is also a word you could use to describe the handling of the bank bailouts, which made the handling of Northern Rock look like a text-book example of decision making.

As banks over the pond like Bear Stearns started to look shaky, our lot decided the best way to shore up their crippled finances was through a series of rights issues. RBS, Barclays, Bradford and Bingley, HBoS, they were all at it.

Funnily enough, many investors weren't daft enough to plough more money into our banks, so they ended up being bailed out by the Treasury on a scale never before seen. The Treasury then dithered and dallied, and forced through a merger of Lloyds and HBoS which broke competition rules, in a desperate attempt to get them up and running again.

And while a few veterans of the 70s got all bleary-eyed with nostalgia at the widescale nationalisation, the rest of us are left footing a bill that apparently could end up reaching £50bn.

Good work, everyone.

4) The pointless VAT cut

Hands up who noticed any difference when VAT was cut by 2.5% at the end of last year? Anyone? Didn't think so.

The whole idea was utterly daft. With people losing their jobs by the barrel load, was an extra 2.5% discount really going to get us shopping again? That telly you liked that was £100? Guess what, now it's just £97.50!

Give me a break.

5) The expenses row

OK, I know it isn't directly related to the credit crunch, but it has certainly exacerbated the irritation of the average man.

To know that while businesses are hitting the wall, and jobs are being cut, our politicians are on the make to quite such a scale has been astonishing. There would not have been this level of anger had we not been in the middle of such a massive recession, as it has amplified the chasm between our MPs in Westminster, and the people who put them there.

Lord knows enough has been written about the affair, by every man and his dog, so I won't go over old ground, except to say that of all the many mistakes made by the authorities since the credit crunch first hit, this is the one that has truly engaged - and enraged - the general populace.

It's been the mother of all cock ups, which is certainly saying something.

More: The biggest financial mistake of all | Reducing MPs' outrageous expenses