Sue the auditors

Former Chancellor Nigel Lawson and 'semi-house trained polecat' Lord Tebbit have both suggested that the auditors of failed banks might be sued by the government. If they did so the auditors would doubtless rely on the defence that they reported the fair values of the assets held by the banks. It would be an interesting case and well worth arguing in court in order to clarify the role of the auditors.

The FSA report on the current crisis is likely to make some interesting observation of the pro-cyclical nature of banks' accounting.