Fearsome: Lord Tyrie was the inquisitor in chief of the 2008 crisis
Andrews Tyrie is famous for being inquisitor-in-chief during the post-mortem on the last financial crisis. Owlish and headmasterly, with a quizzical and beady eye for detail, he gained a fearsome reputation for forensically skewering his victims as Conservative chair of the all-party Treasury Select Committee of MPs.
Now elevated to the House of Lords as an independent peer, the architect of a number of major regulatory reforms in the financial services sector takes a keen interest in the latest bout of banking turmoil.
The recent collapses of Credit Suisse and Silicon Valley Bank – and now the wobbles over Deutsche Bank – are ‘a warning to remain vigilant and not to let our guard down’, he says. ‘The main things we have to guard against are short memories, groupthink and surrender to vested-interest lobbying.’
As for the next crisis, he admits he has no crystal ball. ‘However, one prediction I will make is you can’t abolish the business cycle, which former Chancellor Gordon Brown suggested when he told us he had put an end to boom and bust.’
Tyrie, 66, is speaking in the Commons meeting room where he used to hold court – and where hours earlier Boris Johnson had given evidence to another group of MPs over claims he misled Parliament about lockdown parties in Downing Street.
Halfway through the former Prime Minister’s televised testimony, committee members and Johnson had to break for 15 minutes to vote on a new Brexit trade deal for Northern Ireland. Tyrie reckons Johnson was saved by the division bell during his lengthy but interrupted grilling because the pause gave him a breather from relentless questioning.
‘If a witness is avoiding a question, the only tool available is to point it out intelligently, and to press from different angles over a sustained period in a cross-examination,’ he says.
He believes ‘a decline in standards’ links the 2008 financial crisis with the state of political discourse today.
Tyrie also chaired the Parliamentary Commission on banking standards in 2012 which recommended a number of reforms in the way banks are run that were designed to prevent another blow-up.
The most significant of these was the introduction of individual responsibility, especially over the management of risk.
‘We were engaged in a clean-up operation on standards,’ he recalls. ‘Now the political community of both major parties is rightly engaged in a clean-up operation of political discourse.
‘Trust was one of the serious casualties in the banking crisis, which was caused by a lack of basic standards in business conduct. That is exactly what has been at stake in politics.’
‘Politics and political discourse have been damaged by a decline in standards.’
Tyrie had another – albeit brief – insight into how regulated sectors such as financial services work when he was the chair of the Competition and Markets Authority for two years until mid-2020.
His reformist agenda made him unpopular and he resigned in frustration at its limited role as a consumer protector.
But it was his part in the autopsy of the 2008 crash that made him as big a name in the City as he was in Westminster.
Born in Essex, Tyrie grew up in Southend, the son of a successful Basildon shopkeeper. He saw at first hand the damage done to his father’s business by the three-day week, power cuts and ‘extremely high’ levels of taxation in the 1970s.
He was a special adviser to two successive Chancellors – Nigel Lawson and John Major – and MP for the safe Tory seat of Chichester for 20 years before standing down at the 2017 General Election.
But he never served in Cabinet. Some senior Tories, said to be bored of his inquisitorial style, reportedly nicknamed him ‘Andrew Tiresome’. Others who saw him in action were more positive, praising his independence of mind. One of his most memorable and masterful eviscerations was of The Co-operative Bank’s Paul Flowers.
He famously asked the Methodist minister and former chair of the UK’s eighth largest lender to estimate ‘roughly’ the size of the bank’s balance sheet after a £1.5 billion hole in its accounts.
A flustered Flowers blurted out a figure of £3 billion. Tyrie archly reminded him that the actual number was £47 billion. ‘He seemed to know little about his bank,’ Tyrie reflects. A few days later in November 2013, The Mail on Sunday caught Flowers on film buying Class-A drugs from a dealer in Leeds, earning him the sobriquet ‘The Crystal Methodist’.
Tyrie compared the 2008 financial crisis to a runaway train that nobody saw coming because they were too busy examining their own bit of the track. ‘In the last crash everybody got it wrong,’ he recalls.
This time regulators are ‘better equipped to look at the bigger picture,’ he insists.
‘Regulation is less siloed but it defaults all to easily to a back- covering, box-ticking exercise. What’s required is an open frame of mind and qualitative judgment.
‘Regulation is in better shape than it was but regulators themselves need to be constantly watched as well.
‘Even if you don’t spot the crash, you can at least think through creatively how you’re going to handle the effects of it to mitigate the damage.’
But the response to the latest bank blow-ups from the Swiss authorities – arranging a shotgun marriage between stricken Credit Suisse and its larger rival UBS – has been to rip up the carefully crafted rule book and go back to bail-outs and back-stops.
‘Plan A didn’t survive first contact with the enemy,’ notes Tyrie. ‘But regulators have worked well together and at pace to try to stem contagion from Credit Suisse and they deserve a good deal of credit.’ However, the sheer speed of modern-day bank runs cannot be ignored either.
‘The panic phase in modern financial crises appears to have been concertinaed into an acute and very painful brief period which is particularly difficult to plan for,’ he says.
Tyrie admits that people say there is ‘an element of the disruptor’ in him but argues that he is most interested in finding solutions to problems. He believes better, more effective regulation is the key.
He says: ‘My impression of regulators is that in these organisations, the overwhelming majority of people are full of good ideas.
‘We have to find ways of releasing those energies and find a way of getting their ideas more seriously considered.
‘That’s something I have learned, scrutinising and working with regulators .
‘I recognise that whatever I’ve done over the years is only a drop in the bucket,’ he adds.
As with banks, he is guardedly optimistic about the future of the City.
He says: ‘Britain’s strength in financial services should not be taken for granted.
‘The current success of the sector came very quickly as a result of a small number of reforms in the 1980s.’
But he warns: ‘That success can disappear just as quickly as it arrived, and take much of the industry with it.’