HBOS report: key quotes - Telegraph A failure of regulation "The picture that emerges is that the FSA's regulation of HBOS was thoroughly inadequate...From 2004 until the latter part of 2007, the FSA was not so much the dog that did not bark as a dog barking up the wrong tree." Qualities and experience of the board "The corporate governance of HBOS at board level....represents a model of self-delusion, of the triumph of process over purpose." "There was insufficient banking expertise among HBOS's top management. In consequence, they were incapable of even understanding the risks that some elements of the business were running, let alone managing them. "We are shocked and surprised that, even after the ship has run aground, so many of those who were on the bridge still seem so keen to congratulate themselves on their collective navigational skills." Downfall "The problems of liquidity were the occasion for the failure of HBOS, not the cause. If HBOS's difficulties were solely the result of funding and liquidity problems, their lasting effects would have been much more limited, including for the taxpayer. "The problems of solvency were a direct consequence of the strategy set by the Board and the failure of controls on the practices that were fostered by its commitment to an asset-led, high-risk approach to growth." "The primary responsibility for the downfall of HBOS should rest with Sir James Crosby, architect of the strategy that set the course for disaster, with Andy Hornby, who proved unable or unwilling to change course, and Lord Stevenson, who presided over the bank's board from its birth to its death." "The Commission considers it a matter for profound regret that the regulatory structures at the time of the last crisis and its aftermath have shown themselves incapable of producing fitting sanctions for those most responsible in a manner which might serve as a suitable deterrent for the next crisis." A manual for bad banking "This was a traditional bank failure pure and simple. It was a case of a bank pursuing traditional banking activities and pursuing them badly. "Prudential supervisors cannot rely on financial markets to do their work for them. In the case of HBOS, neither shareholders nor ratings agencies exerted the effective pressure that might have acted as a constraint upon the flawed strategy of the bank.