Morning Line: Banks enjoy the fruits of their own recklessness

It is a glorious testament to the power and influence money can buy.

Having almost single-handedly plunged the developed world into its worst financial crisis for more than half a century, one might reasonably expect the banks to be subject to some serious sanctions and rule-tightening from governments and regulators.

But no.

Nearly a year on from the start of the current crisis, senior bankers continue to enjoy the financial fruits of their misdeeds, safe in the knowledge they will never be called to account for their actions. Indeed, more evidence emerges today that the banks have been able to persuade regulators to loosen the rules even further, to allow them to make even bigger profits at our expense in the future.

Take, for instance, HBOS's high profile rights issue, which came to an ignominious end last Friday with an official take up rate of just 8%. This should have meant a serious loss for the banks who underwrote the issue, in what was the worst rights issue failure in more than two decades. Even after successfully unloading a further 30% of HBOS stock on institutional investors, the two lead underwriters Morgan Stanley and Dresdner should have been left with some 62% of the bank's remaining rights issue stock, equivalent to some £2.6 billion.

Exceptwe discovered yesterday that Morgan Stanley had placed a 'short position' equivalent to 2.4% of the stock, in effect hedging its losses against further falls in the HBOS share price. These, of course, are the kind of underhand bets that banks squealed about so loudly back in March when their shares were in freefall their complaints eventually persuading the FSA to change its disclosure rules.

Best of all for MS, though, and as the BBC'sRobert Peston points out, it was allowed to take the position on Friday, three days before the official result was declared. In other words, when they alone knew the result of the rights issues, which they rightly guessed would send HBOS shares spinning downwards when made officially made public on Monday.

In effect, it appears MS was able to make massive trades on the basis of privileged information information known only to a handful of individuals, and certainly not to you and me. This in turn allowed it to pare losses that it would have otherwise suffered yesterday when the result was officially announced. And this was all done with the blessing of the regulator.

So much for free markets, then.

Talking of which, yesterday's FSAannouncement on new secrecy rules for banks seeking emergency funding surely deserves more comment than it has so far attracted. Such a move was predictable in the wake of the Northern Rock affair, which was a political disaster for Labour. Indeed, Alistair Darling and Mervyn King both announced their preference for such a rule change with indecent haste, just a few weeks after last year's run on the bank.

And yet, who does this move ultimately protect? No-one wants to see a repeat of Northern Rock, certainly, but don't we as bank customers have a right to know when a bank is in such a mess that it requires 'lender of last resort' support? The move appears to open the door to banking behind closed doors, to decisions being made at the highest level supposedly in our best interests, but without us ever knowing.

Until, of course, a bank finally does hit the skids, at which point we might ask why we weren't told any earlier, to allow us to withdraw our money into safety. That, surely, was one of the biggest lessons of the Equitable Life affair. The government and us for that matter can't have it both ways. The new rules seem to have been created to protect banks from the consequences of their own behaviours.

And finally, to top it all, news from the US that Goldman Sachs banker Ken Wilson has beenhired by the US Treasury to advise it on the best way to sort out the banking crisis. That's right the US government has turned to a senior banker to advise it on the best way out of crisis that was caused by the banking sector.

As I said, in what other sector, really?