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Session 2012-13
Publications on the internet
Backbench Standards Committee - Minutes of EvidenceHC 606
JOHNNY CAMERON, JOHN HOURICAN and PETER NIELSEN
Evidence heard in Public
Questions 3870 - 4055
This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
The transcript is an approved formal record of these proceedings. It will be printed in due course.
Oral Evidence
Taken before the Parliamentary Commission on Banking Standards
on Monday 11 February 2013
Members present:
Mr Andrew Tyrie (Chair)
Mark Garnier
Baroness Kramer
Lord Lawson of Blaby
Mr Andrew Love
Mr Pat McFadden
Lord McFall of Alcluith
John Thurso
Lord Turnbull
The Archbishop of Canterbury and Rory Phillips QC also attended as Specialist Advisers with power to examine witnesses.
Examination of Witnesses
Witnesses: Johnny Cameron, former Chairman of Global Banking and Markets, RBS Group, John Hourican, Chief Executive Officer of Markets and International Banking, RBS Group and Peter Nielsen, Chief Executive Officer, Markets, RBS Group, examined.
Chair: Good afternoon. Thank you very much, all three of you, for coming to give evidence today. We are going to begin this session with some cross-examination by Rory Phillips, QC. After that, there will be an opportunity for colleagues to chip in with further questions.
Q3870 Rory Phillips: I will ask you all some questions about the manipulation of LIBOR and other benchmark rates over a number of years, which is revealed in the FSA's notice and the CFTC's orders of last week. In particular, I will ask you about what that episode reveals about the culture, controls, oversight and management of the bank.
Can we start, please, by getting the chronology clear? The period with which we are concerned extends from January 2006 to March 2012. That is correct, isn't it, Mr Hourican?
John Hourican: That is the period.
Q3871 Rory Phillips: Within that period, the FSA shows that LIBOR manipulation occurred until November 2010 and that manipulation of the other rates occurred until August 2011. Again, can I ask you to confirm that, please?
John Hourican: Those are the facts.
Q3872 Rory Phillips: You all had managerial responsibility for the units of the business in which the misconduct took place, at the time at which it took place, didn't you?
All witnesses: Yes.
Q3873 Rory Phillips: Mr Cameron, can I start with you? You were the CEO and then chairman of global markets until, I think, December 2008, when you left the bank. Is that right?
Johnny Cameron: Yes. Just to be clear, global markets encompassed two divisions. Therefore, I was only chairman of the global banking and markets business.
Q3874 Rory Phillips: You were also a member of the board.
Johnny Cameron: I was.
Q3875 Rory Phillips: You left, of course, in the immediate aftermath of the failure of the bank. As we know, there was a bail-out, using taxpayers' money, to the extent of about £40 billion. Is that right?
Johnny Cameron: That is correct.
Q3876 Rory Phillips: Mr Hourican, is it still right that about 80% of the bank is owned, in effect, by the taxpayer?
John Hourican: 83% is, I think, the number.
Q3877 Rory Phillips: Mr Hourican, you rejoined RBS during the same period of crisis, didn't you? In October 2008, you became the CEO of markets and international banking. Is that right?
John Hourican: That is correct.
Q3878 Rory Phillips: You are a member of the executive committee and the management committee of the bank.
John Hourican: That is correct.
Q3879 Rory Phillips: You report, I assume, to the group CEO, Mr Hester. Is that right?
John Hourican: Correct.
Q3880 Rory Phillips: He was appointed in November 2008.
John Hourican: He and I were appointed, I thought, on the same day; we certainly arrived at the bank at exactly the same moment.
Q3881 Rory Phillips: Before your return in October 2008, you had been employed by RBS between 1997 and 2005. Is that right?
John Hourican: I remained an employee of the group from 1997 continuously. For the one year prior to my joining in this job, I was the CFO at the ABN AMRO group for the consortium of banks that acquired it.
Q3882 Rory Phillips: Am I right to say that, for several years, you were finance director of corporate banking and financial markets?
John Hourican: In the early 2000s.
Q3883 Rory Phillips: In that job, did you report to Mr Cameron.
John Hourican: Yes, I did.
Q3884 Rory Phillips: Mr Nielsen, you have been with RBS, or the group, at any rate, for many years. Is that right?
Peter Nielsen: Yes.
Q3885 Rory Phillips: From 2005 to 2009, you were global head of rates, local markets, currencies and commodities. Is that right?
Peter Nielsen: That is not quite correct. The position I held from 2005 onwards was running the currency options business, the local markets business and the equity derivative business. I took over the responsibility for rates in late 2007, early 2008.
Q3886 Rory Phillips: During your period as head of rates and the job you have described before that, did you also report to Mr Cameron?
Peter Nielsen: No, I did not. I reported to Brian Crowe.
Q3887 Rory Phillips: Since his arrival at the bank, have you reported to Mr Hourican?
Peter Nielsen: Yes, I have.
Q3888 Rory Phillips: You were appointed in February 2009 to be global head of markets. Is that right?
Peter Nielsen: Yes.
Q3889 Rory Phillips: At about the same time, Sir Philip Hampton, the now chairman, was also appointed to that role. Is that right?
Peter Nielsen: I believe so.
Q3890 Rory Phillips: You are a member of the management committee of the bank.
Peter Nielsen: Yes.
Q3891 Rory Phillips: I would like to ask you now about the management structure immediately below you. Does the head of short-term markets and financing report directly to you?
Peter Nielsen: Yes, they did.
Q3892 Rory Phillips: What about the head of money markets trading? Did he report to the head of short-term markets and financing?
Peter Nielsen: We had a variety of structures over the time period that you are asking us about. The people who occupied those roles, at various times from 2006 until 2009, did report to me. From 2006 until I took over rates, the head of money markets reported to me.
Q3893 Rory Phillips: Again, to be clear, the people who are quoted and referred to in these notices are at levels of the organisation below the two officials I have just mentioned.
Peter Nielsen: That is correct.
Q3894 Rory Phillips: So far as you are concerned, Mr Hourican, I have one further question about the structure of the bank, which is this: where did the group treasurer fit in? To whom did-does-he report?
John Hourican: The group treasurer reports to the group finance director.
Q3895 Rory Phillips: He is also a member of the management committee. Is that right?
John Hourican: Yes.
Q3896 Rory Phillips: Finally on the bank's structure, who in the bank is ultimately responsible for dealing with the regulators-the FSA and, in this case, the CFTC?
John Hourican: I think we were all responsible for dealing on a day-to-day basis with the regulators. In this instance, it was dealt with through our general counsel.
Q3897 Rory Phillips: Does any particular committee of the board have responsibility for those dealings?
John Hourican: I believe, and I would need to check this, that the group risk committee and the group audit committee both had engagement with the ongoing investigation and how we were dealing with the engagement with the CFTC and with the other regulators.
Q3898 Rory Phillips: In the statement that you made to staff on the day of your departure, you said: "The conduct of those involved was disgraceful and has brought shame on our company. Although the attempts to influence Libor submissions started before I took this job, it continued whilst I was in charge of the division. The continuation of this behaviour during the company's darkest hours, when so many of us were fighting to ensure its survival, makes it all the more shameful. The people involved have left RBS and there is no place for that kind of behaviour in this company."
To start with you again, I do not think that anybody in this room would disagree with the description you gave there of the behaviour outlined in these reports as disgraceful. It is true also, is it not, that it has indeed brought shame upon the bank?
John Hourican: Correct.
Q3899 Rory Phillips: And the reputational damage is no doubt considerable and will continue to be so.
John Hourican: Yes.
Q3900 Rory Phillips: There is obviously, is there not, a risk of loss of confidence and trust in you both on the part of your customers and on the part of the public?
John Hourican: Absolutely.
Q3901 Rory Phillips: It is also true, is it not, that as you said, Mr Hourican, this misconduct continued for over two and a half years after you and, indeed, Mr Hester, took up your posts?
John Hourican: It is the case that the 21 people referenced in this investigation, or some of them, continued their subversive and secret actions in the bank during the time that we were trying to fix it-absolutely.
Q3902 Rory Phillips: But it goes much broader than that, does it not, Mr Hourican? The management failures identified in the FSA report, for example, extended until March 2012, did they not?
John Hourican: Yes, they did, as characterised in that report.
Q3903 Rory Phillips: And you were part of that management for that period of over two and a half years?
John Hourican: Yes, I was.
Q3904 Rory Phillips: As were you, Mr Nielsen?
Peter Nielsen: Yes, I was.
Q3905 Rory Phillips: The period that we are concerned with-after you arrived at the bank, Mr Hourican; or came back to RBS, I should say-is also a period in which, as I have said, the bank was in receipt of a gigantic amount of public funding, is it not?
John Hourican: That is correct.
Q3906 Rory Phillips: And that makes it even more disgraceful, does it not?
John Hourican: Yes, it does.
Q3907 Rory Phillips: Thank you. I would like to look today at some particular aspects of the managerial failings that are described in those reports, but first, can I ask you this, Mr Hourican? Do you, by your resignation, accept responsibility for those failings over the period that we have just discussed?
John Hourican: I do accept responsibility for the behaviours of our staff, and therefore, I accept responsibility for the failings that were found. It is important that we don't talk about accepting responsibility, and then not do so in our actions. That is why I resigned.
Q3908 Rory Phillips: Thank you. That means there is an obvious question for you, Mr Nielsen, because you were one level closer to the coal face. The question for you, during all of this period, is whether you also accept responsibility for those failings.
Peter Nielsen: I do accept responsibility and I am accountable for those failings.
Q3909 Rory Phillips: Yet you remain in your post.
Peter Nielsen: Whenever you get an incident of this seriousness and this magnitude-of course, I contemplated resigning. In fact, John and I talked about it. We talked about both of us going, and we talked about myself going instead of him. I can't comment on John's actual decision, but from my point of view, I believe that we have accomplished a great deal since attempting to right the bank in 2009. I have appreciated being able to play a part in that, and I think I have got some more to offer.
Q3910 Rory Phillips: Is this decision something that you discussed with Mr Hester, the group CEO?
Peter Nielsen: I have not specifically offered my resignation to Stephen. I had that conversation with John.
John Hourican: May I add something to that? This has been a long and considered discussion between myself and my group chief executive, Stephen Hester. It was my considered opinion that the bank would be worse off and that the stakeholders, shareholders, employees, and indeed, our customers would be better served by Peter remaining at the bank from here. It is important that we acknowledge the responsibilities that each of us has for the people and their actions beneath us, and we are not here to excuse. We are here merely to provide some level of explanation, to help the Committee understand it, but it was my representation to Stephen and my recommendation to our board, through him, that Peter would be better serving all stakeholders were he to remain in post.
Q3911 Rory Phillips: I understand that, Mr Hourican, but you will understand also, I hope, that some observers see that Mr Nielsen, for example, was the global head of rates-the very area of the business that went so terribly wrong-he was there throughout the relevant period, in a position of important management seniority, and he apparently is to remain. Do you understand that?
John Hourican: I do understand that. The only explanation I will provide is that I have spent a very considerable amount of personal time thinking about this. At the end of the day, I felt that the right thing for the bank and for all of our stakeholders was that I would take the ultimate responsibility for this issue-for the behaviours of our people-and I am very sorry it happened on our watch. But I feel, in the round, given all of the achievements and the tasks ahead, that Peter's staying at the bank is, in my view, the better outcome for all stakeholders, even if that may be difficult to understand in part.
Q3912 Rory Phillips: Can I ask you about the other senior managers I mentioned earlier? The head of short-term markets and financing, and the head of money markets trading-are they still with the bank?
Peter Nielsen: Depending on which period of time you are referring to, we had a variety of management structures. In 2007, the head of short-term markets reported up to the head of rates, as well as the head of money markets, and that individual reported to me. Those individuals are no longer with the firm.
Q3913 Rory Phillips: Is their departure connected with this LIBOR business?
Peter Nielsen: In some cases, no, they retired; and in one case, that is the case.
Q3914 Rory Phillips: So the people immediately below you in the management chain have gone. The man above you, Mr Hourican, has gone, but you remain in your post.
Peter Nielsen: That is not quite accurate, if you look at the management chain that has been in situ for the last several years. For the last 18 months or two years, underneath me there have been co-heads of trading. Underneath them have been the heads of short-term financing and of rates. Of those individuals, one has actually, unrelated to this, decided to retire, and the head of trading remains in situ.
Q3915 Rory Phillips: So far as the future of this part of the bank is concerned, it looks from Mr Hourican's answer earlier as though it remains your responsibility to sort out the mess and ensure that the bank now complies with the very stringent requirements imposed on it as a result, for example, of the CFTC order. Is that correct?
Peter Nielsen: That is correct.
Q3916 Rory Phillips: The bank is effectively under some form of supervision for a period of up to five years, isn't it?
Peter Nielsen: That is correct.
Q3917 Rory Phillips: Do you at least understand that some observers, seeing the way you were involved throughout this period, and realising that it now falls to you to head up the part of the bank that is under supervision and required to comply with the stringent requirements of the CFTC, will wonder whether it is likely to happen? Do you see that point of view?
John Hourican: If you do not mind, can I add one thing? Peter is being asked to co-head the markets with Suneel Kamlani, who is the current deputy of the wider banking and markets business. Their responsibilities are very clearly delineated in that co-headed structure. I have confidence that the combined co-chief executive jobs will provide all stakeholders with better confidence.
Q3918 Rory Phillips: Can I ask you a final question about your statement, Mr Hourican? You commented that all 21 individuals involved have left RBS. Am I right in thinking that some of those 21 individuals are still employed at firms within the group?
John Hourican: No, I think an accurate reflection of that is, of those 21 individuals, 14 have left the group and seven either have been through disciplinary processes or are currently going through them. That is an internal note that has ended up in your hands, but I was trying to ensure that there was a clear statement of record for our staff that we must send a cultural shudder down our organisation's spine and begin to act on the words about taking responsibility, which I am not sure we always have.
Q3919 Rory Phillips: Can we then turn to the conduct complained of? Mr Cameron, I am going to ask you a question at last. It is clear from the FSA report, which I am sure you have read for obvious reasons, that the primary motivator for those involved in LIBOR and other benchmark rate manipulation was profit.
Johnny Cameron: Yes.
Rory Phillips: We do not have more up to date figures, but we have found numbers for the rates business as a whole for the first half of 2006. It seems-perhaps this accords with your recollection-that it was, by some margin, the biggest generator of revenue for GBM. It brought in about £500 billion, as far as we can see. Is that the sort of picture that continued for as long as you remained at the bank?
Johnny Cameron: Yes. You will have to forgive me because I left the bank over four years ago and I have not been able, in the time available, to look back at all the records. But the rates business was a very important business throughout that time. The rates business includes many things. For the avoidance of doubt, the LIBOR-linked activates, as Peter will know, are just a part of it.
Q3920 Rory Phillips: To be clear, the failings that were identified as misconduct in the FSA and CFTS reports were by no means limited to LIBOR. There was manipulation of a number of other benchmark rates, wasn't there?
Peter Nielsen: That is correct.
Q3921 Rory Phillips: As far as you are concerned-and you continued at the bank after Mr Cameron left-did the rates business as a whole continue to be a significant revenue generator?
Peter Nielsen: Yes, it did.
Q3922 Rory Phillips: Are you able to assist the Commission with this question: what proportion of the revenue was LIBOR-related?
Peter Nielsen: To answer that question, I need to break it down. To give the Commission an idea, in 2008 the rates revenue was somewhere between £2.5 billion and £3 billion. That excluded the STMF income, which at that time was of the order of £1 billion or £1.25 billion. By definition, most of the short-term markets business was composed of the short-end foreign exchange business, the short-end derivative business and the money market business. Many of those instruments were related to LIBOR.
Q3923 Rory Phillips: Obviously that leads to the question that is on the minds of everybody in this room, which was not answered by the FSA. How much money did RBS make as a result of this manipulative activity?
Peter Nielsen: It is a very important question. We have spent quite a bit of time looking at it and we have had outside people looking at it as well. I would not want to say to the Commission that our examination is complete, but from what we have looked at we can find somewhere between a minimal and an impossible-to-see effect of the reprehensible and wrong rate rigging that was going on in LIBOR, and the actual P and L that was derived in that business.
Q3924 Rory Phillips: You are saying that it made no money for the bank at all?
Peter Nielsen: We can't say no. The work has not been completed, but in many cases some of that errant request by these individuals would have had an effect that we cannot say benefited the bank. It may have benefited one trader's portfolio at the expense of another one and, in fact, the bank might well have been worse off.
Q3925 Rory Phillips: So when the FSA says that everybody was motivated by profit, the traders were motivated by their individual profit and, no doubt, the influence that that would have on their individual bonuses, for example, as opposed to an overall profit for the bank. Is that what you are saying?
Peter Nielsen: That is correct.
Q3926 Rory Phillips: Presumably, Mr Hourican, when this started to emerge-you were, by then, very much in charge of the ship-that is one of the things that you wanted to know: how bad, at least in terms of money, is this?
John Hourican: Absolutely.
Q3927 Rory Phillips: And that was quite early on, wasn't it? No later than 2010, I assume?
John Hourican: In April 2010 there was the first indication we had of issues that were in our LIBOR area.
Q3928 Rory Phillips: To be clear for everybody, that was when the American regulators insisted that you put in independent counsel to conduct an audit of what was going on in LIBOR in the US dollar.
John Hourican: Yes. We were going on a US dollar LIBOR, looking specifically at suppressions, and it involved a very extensive review of documents, taped records and all the other things that are in the documents in front of you. That investigation went on and concluded, in favour of the bank, that there was no suppression going on in the US dollar by RBS, and there was no evidence of such. It was not until we had a question from the European Commission in April 2011, when we began an investigation into Japanese yen LIBOR, and in May, one month after being asked to look at it, that we found some issues. We acted very swiftly on those traders and to ensure that we changed our processes to accommodate.
Q3929 Rory Phillips: We will come back to that, but on what you have said about being aware of what now appears to be the problem sometime in 2011, you will accept that that was about four and a half years after the relevant period as outlined by the FSA?
John Hourican: Yes. It was, in fact, after the manipulation that we subsequently found had, in fact, stopped.
Q3930 Rory Phillips: And it suggests, does it not, that at the very least there was a wholesale failure of systems and controls in relation to the submission process?
John Hourican: That is correct.
Q3931 Rory Phillips: Thank you.
Can we look at three aspects of management failure? First, for you, Mr Cameron and Mr Nielsen, because you were there at the time, there was co-location issue, described by the FSA in considerable detail-the decision taken by senior management to put the derivatives traders and money markets traders, some of whom were also LIBOR-submitters, on the same currency desks. A simple question first: Mr Cameron, were you involved in that decision?
Johnny Cameron: No.
Q3932 Rory Phillips: Mr Nielsen, were you involved in that decision?
Peter Nielsen: I was aware of that.
Rory Phillips: Were you involved in making the decision, Mr Nielsen?
Peter Nielsen: The people who made that decision, which would have been a joint venture between rates and money markets-the head of STM came to me and said that this was what they were doing. I was aware of this.
Q3933 Rory Phillips: And this is the person who has now left the bank?
Peter Nielsen: Yes, one of them.
Q3934 Rory Phillips: Is it the same person who, from February 2008, was a member of the BBA's FX and MM committee?
Peter Nielsen: No, that was a different individual.
Q3935 Rory Phillips: So far as the decision to co-locate was concerned, were you not aware, Mr Nielsen, of the potential for misconduct identified by the FSA in their report that that would create?
Peter Nielsen: To be very frank with you, no.
Q3936 Rory Phillips: You should have been, with hindsight, shouldn't you?
Peter Nielsen: With hindsight, yes.
Q3937 Rory Phillips: What did you do, once the co-location had been done, to monitor the situation to see how it was working out?
Peter Nielsen: The same set of processes and procedures, which were inadequate and did not work-
Q3938 Rory Phillips: The FSA says there were none, so can we take it that the answer is no, there was no attempt to monitor what was going on on the co-located desks?
Peter Nielsen: There was no attempt to monitor with regard to the independence of the submission between 11 o'clock and 11.10.
Q3939 Rory Phillips: There was nothing to check that the risk that the FSA describes-
Peter Nielsen: That is correct.
Q3940 Rory Phillips: And as they explain in the report, it did not take very long for the traders and the submitters to work out exactly how to go about their business. That is right, isn't it?
Peter Nielsen: That is correct.
Q3941 Rory Phillips: So are you saying that at no point during your time as the relevant senior manager were you aware of what was going on?
Peter Nielsen: I was not aware that in the yen and the Swiss, the derivatives traders were making these requests.
Q3942 Rory Phillips: The impression given in the reports is that they were not making any attempt to cover anything up. This is all very blatant-that is the word that the FSA uses. Are you saying that none of the management, including you, were aware of what was going on on the trading floor day in, day out for years?
Peter Nielsen: I think we were aware of what was going on on the trading floor-
Q3943 Rory Phillips: What did you do about it?
Peter Nielsen: One of the features that we see here is that we had issues-very serious issues-in the submission of rates for Japanese yen and Swiss francs. It is also significant that we did not have issues in the larger currencies-US dollars, sterling and some of the other currencies. I think the senior management felt that it was almost a mathematical impossibility for somebody to have affected the LIBOR submission, because of the arithmetical nature of the topping and tailing. Obviously, that was a mistake.
Q3944 Rory Phillips: Let me ask you a very direct question. Did you know that the derivatives traders were routinely asking the submitters on the desk to submit rates favourable to their positions?
Peter Nielsen: No, of course not.
Q3945 Rory Phillips: Who should have known that in the management structure below you?
Peter Nielsen: The supervisors of the individuals.
Q3946 Rory Phillips: Really? No higher than that? No higher up the management chain?
Peter Nielsen: No. Obviously, those supervisors and potentially the people supervising them.
Q3947 Rory Phillips: If you think of the damage that this has caused to the bank-the amount of money it has cost and all the other things we have just been through-it is perfectly obvious that somebody much more senior in the structure should have been monitoring what was going on and putting a stop to it.
Peter Nielsen: I agree.
Q3948 Rory Phillips: What was risk control doing in this part of the bank?
Peter Nielsen: This was not viewed to be a significant risk.
Rory Phillips: Quite mistakenly.
Peter Nielsen: Mistakenly.
Q3949 Rory Phillips: Did nobody worry-for example, Mr Cameron, you were there at the time-that the primary submitters' bonuses were linked in part to the profit and loss figures on their money market trading books? Did nobody think about that?
Johnny Cameron: I would not know if they did think about it or they didn't, quite honestly.
Q3950 Rory Phillips: Because you were too elevated to be concerned with that?
Johnny Cameron: They were several levels below me. Their bonuses and so on would be fixed by their bosses.
Q3951 Rory Phillips: What we have been discussing here is a management failure. In the end, surely you must accept, as the senior manager in this enormous chain, responsibility for that failure.
Johnny Cameron: Absolutely. I agree with what John said earlier in that respect. As captain on the bridge, one has to take responsibility-accountability-for these awful events.
Q3952 Rory Phillips: The culture that was embedded in the co-location continued, did it not, Mr Nielsen, after they were in fact separated-the derivatives traders and money market traders-in late 2008?
Peter Nielsen: That is correct.
Q3953 Rory Phillips: The separation, by the way, was not for compliance reasons, was it? It was for purely business reasons.
Peter Nielsen: For business reasons, yes.
Q3954 Rory Phillips: So it continued, as we have heard, until-in relation to LIBOR-the end of 2010.
Peter Nielsen: That is correct.
Q3955 Rory Phillips: And in relation to the other currencies, until the late summer of the next year, 2011.
Peter Nielsen: That is correct.
Q3956 Rory Phillips: Can I now ask you, Mr Cameron, some questions about management and culture? It is back to profit. The systems-as the FSA described-that worked in these currency desks were actually very good for profit. Does that sum up the culture of the bank as it was when you were in charge of it-in other words, a quick route to profit; don't worry about the corners cut?
Johnny Cameron: No, I do not believe it does. I do not think that would be fair to the bulk of the people in the bank. As to the culture of the bank, at the very top we tried to set a tone of high ethical and moral standards. For example, I appointed Brian Crowe as the chief executive of the investment bank; at the time he was a lay preacher and he is now a fully fledged vicar. I led a team to build a set of values, and we established what those values were-moral, ethical and cultural values. I spent a lot of time walking the talk and trying to instil those values. The compensation structure was changed by me so that part of the compensation was based on how people lived up to those values, as judged by 360° peer reviews. I appointed both John and Peter in their posts at one time or another, and I think they are good people. It is shattering to us, because we try to hire good people, appoint good people and lead well, but with 15,000 people, you cannot impose moral standards on people who do not wish to be moral.
Q3957 Rory Phillips: Just picking up a couple of points from that, if I may: first of all, you will understand that this Commission has now heard a very large number of people saying roughly what you have just said-that from the very top of these organisations, you tried to instil the right culture and the right tone. The reason we are here is, I am afraid, because you were-importantly-very unsuccessful.
The conduct, as I have said, was described by the FSA as "deliberate, reckless and frequently blatant", so these are not people hiding in corners, doing their best to cover up what they are doing; they are talking to each other and communicating on the internal systems in an utterly unrestrained way. What was it about your management that failed to pick this up at all?
Johnny Cameron: I have read many of the transcripts of submissions to this Commission, and I agree with what you say. One observation I would make, if I may, on the back of that is that almost every bank in the world, if the reports are to be believed, had been involved in some way in this. A possible observation-I won't go so far as to say lesson-would be that it is as much about the culture of traders and the people who trade things as it is about the culture of any one bank. It would be my contention that traders are more similar across banks than they are alike with other people in the same bank. The relationship managers, the credit managers, the straightforward bankers in RBS are totally different to the traders in the bank.
Q3958 Rory Phillips: Certainly the behaviour described suggests a culture in which nobody saw any particular need to cover up what they were doing. That suggests a pretty widespread and embedded culture in that part of the organisation, does it not?
Johnny Cameron: I agree with that, but it is within a small number, in the context of 10,000 or 15,000 total employees in the investment bank, who are, if you like, part of the trading culture.
Q3959 Rory Phillips: But it is improbable, isn't it, that that sort of culture would not have been perfectly well known by any competent manager in the various layers of hierarchy, which we have now been through, above the traders? They are not working in a separate world or a separate business, and it is your job to manage them.
Johnny Cameron: I could not agree more.
Q3960 Rory Phillips: You must surely have known, then, what was going on and what their culture was, at its most general.
Johnny Cameron: No. That is why traders need very tight, close management. In the particular case of LIBOR, as Peter has outlined, the risk managers, control managers and so on and so forth completely missed the point, because everybody thought that the way LIBOR was fixed was that there are however many banks it is and the bottom quartile and the top quartile are excluded. It just did not occur to anyone-and this is me reading reports as much as anything-that this was a rate that could be fiddled, but then it turns out that there was a cartel of people across a number of banks who felt they could fix it. I don't know to what extent they were successful. But yes, there are a number of things that have come out in this Commission and other committees where, with hindsight, dreadful things happened because the risk managers missed the potential risks that we are now talking about.
Q3961 Rory Phillips: Mr Hourican, you came in as part of the new broom, as you have explained, in October 2008. Presumably, one of the things you were there to do was sort this failed bank out. One of the ways in which it now seems obvious that that should have been done was to sort out the endemic culture that Mr Cameron has described, but you do not seem to have got to grips with it at all.
John Hourican: If I may, I will add some context and then answer the question more directly. At the time we took control of the bank, the bank had had a cardiac arrest; it was effectively over-levered and under-capitalised. It had far too many risk concentrations and was barely into the integration of the world's largest ever hostile cross-border break-up of a financial institution. The violent arrest that this bank suffered was the first cultural shudder that was sent through this organisation. It is utterly reprehensible that people at that moment felt that they could continue with the behaviours that they were doing, and we did not find it.
It is the case that we prioritised the existential existence of this bank for the first months and years of managing it. It is not an excuse; it is an explanation of where we were. We had the world in financial reverse. We took half a trillion pounds off the balance sheet of this bank from its peak. We did in fact stabilise the customer base. We removed 14 countries and we sold or closed a commodities business. We ultimately took an equities business out of it as well. We saw thousands of our colleagues leave the bank in an organised way and we still managed to deliver a positive contribution, as you will see from my note which you have in front of you, of £12 billion to the remedy of some of the things that had occurred in the predecessor banks, both ABN AMRO and RBS. While I would not take exception to the idea that we did not deal with culture, we started with a very broken bank and we started to resolve it.
If I may add one or two other things, culture is strands of activity and how you create the character and the tapestry of the company going forward. We dramatically increased the bringing in of graduates to the bank, even while we were taking vast numbers of people out of the bank. We tried to change the type of people we were bringing in. We hired 1,000 graduates over the past four years directly into the investment bank while we were shrinking it. We tried to focus on our engagement in the community in a different way than we have ever done in the past. We tried to be a very transparent, honest and open management in how we went about it.
I will give you one example of how we have gone about moving from trusting people excessively to trusting and verifying what they do. In the past year I have sat with traders on the desks, unannounced, and said, "Take me through what it is you do that gives me comfort that you are doing your job well." That is not a culture that would have existed in this industry or this bank in the past.
I will finish with the types of things we would have asked them: "Show me what you flashed as your profit and loss on a daily basis. Show me how that was verified by finance. Tell me why there were differences. Show me how you make sure your people take their annual leave on a two-week consecutive basis and tell me how you have done it. Show me who had access to this office after hours and show me what you did to confirm that it was appropriate. Show me who was on our systems when they shouldn't have been. Show me whether you have signed off the access to all the systems they have and how often you do it." That is a list of things that I personally will have run through with a number of traders around the world. That is the type of thing that over time changes the culture of an institution.
Q3962 Rory Phillips: But presumably now you wish that you had done that much, much earlier?
John Hourican: Yes, I do.
Q3963 Rory Phillips: Because, although as you described, you did indeed come into the accident and emergency department of this bank, as it were, that does not work, does it, once you get into 2010 and 2011-2012, even-when management failures are highlighted by these reports.
John Hourican: Absolutely.
Q3964 Rory Phillips: You should have been acting to deal with these problems much earlier, shouldn't you?
John Hourican: Yes.
Q3965 Rory Phillips: Can I look at another example of the cultural problem-the wash trades? The FSA highlights them-corrupt payments, for no good reason; there is no commercial justification. They described them as readily detectable. They were mirror trades to no purpose, other than to give backhanders to those who were involved in the manipulation process, and yet nobody, apparently, and none of the systems at RBS detected them and they were first detected by the FSA. Is that right, Mr Hourican?
John Hourican: In this case, yes.
Q3966 Rory Phillips: That shows, does it not, what a complete failure there was in this area of your business of all risk controls, compliance monitoring and other systems. Those trades, which were not hidden and were absolutely blatant according to the FSA, went undetected until the regulator pointed them out to you.
John Hourican: We did fail to pick up the wash trades.
Q3967 Rory Phillips: And wasn't that, again, another good indicator of the sort of culture that pertained at the bank? People did not think they needed to bother to disguise the bribes that they were paying to others involved in manipulation outside the bank.
John Hourican: We are revolving this conversation around the same 21 people who are in this-
Q3968 Rory Phillips: Are you saying that your evidence to the Commission is that nobody at the bank was aware of these activities at the time?
John Hourican: I have no evidence that anyone else was aware.
Q3969 Rory Phillips: That is not quite the same is it? Are you sure that we are only talking about 21 people out of your employees at the time?
John Hourican: Of the 11 million documents and 66 million pages of review that has occurred, of the 1,800 hours of listened-to tape, of the 100 interviews that have been done across our traders and managers, I have no other evidence that anyone else was aware of this. If I did, I would have acted on it.1
Q3970 Rory Phillips: The third aspect of management I would like to look at is the much more recent period when you, Mr Hourican, and you, Mr Nielsen, were in your posts. The BBA and the media were expressing concerns about the manipulation of LIBOR from the time of the financial crisis in 2008, weren't they?
Peter Nielsen: Yes, they were.
Q3971 Rory Phillips: And you had a representative on the relevant BBA committee, the FX and MM, didn't you?
Peter Nielsen: Yes, we did.
Q3972 Rory Phillips: And the BBA published guidance to all participating banks in August 2008, terms of reference in July 2009 and further guidance in November 2009-that's right is it not, Mr Nielsen?
Peter Nielsen: That is correct.
Q3973 Rory Phillips: The FSA points out that it is particularly troubling that you completely failed to comply with any of that guidance because, as I have said, you had at all times a representative on the committee, didn't you?
Peter Nielsen: That is correct.
Q3974 Rory Phillips: Is that representative the head of short-term markets?
Peter Nielsen: Short-term financing-short-term markets and financing.
Q3975 Rory Phillips: And he has left the bank?
Peter Nielsen: Yes, he has.
Q3976 Rory Phillips: The position gets worse as we move into 2010. You have described, Mr Hourican, how the American regulators came on the scene. Clifford Chance investigated. Their investigation went on for many months and generated all the material that you have been describing, and various personnel, including managers, were interviewed, weren't they?
John Hourican: Yes.
Q3977 Rory Phillips: You were interviewed, Mr Nielsen, weren't you?
Peter Nielsen: Yes.
Q3978 Rory Phillips: One of the major focuses of the investigation was the same person I have mentioned, who was the committee member of the BBA's FX and MM committee, wasn't it?
Peter Nielsen: That is correct.
Q3979 Rory Phillips: As the investigation continued, there was no particular reason to think that things were going to get better, was there?
Peter Nielsen: No.
Q3980 Rory Phillips: As more information emerged you were not being presented with a glorious and sunshiny picture. As far as the American regulators were concerned, things were getting worse, weren't they? There was more for them to investigate, and they continued the process.
Peter Nielsen: They did continue the process, that's correct.
Q3981 Rory Phillips: Mr Hourican, when were you first aware of the allegations or the misconduct that is now set out in the regulators' reports? Which year and which month?
John Hourican: I do not have an exact recollection of it, but I was kept constantly informed. I was aware that the CFTC had made the inquiries and I was kept informed.
Q3982 Rory Phillips: To try to help you, they made the request for the independent investigation in April 2010. Were you aware before then?
John Hourican: No.
Q3983 Rory Phillips: You think that that was what triggered your awareness of the matter.
John Hourican: Yes, it was.
Q3984 Rory Phillips: What about you, Mr Nielsen? Were you aware before then?
Peter Nielsen: I was made aware when we received the notice from the CFTC.
Q3985 Rory Phillips: That was a very serious moment, wasn't it? The idea of being investigated by the American regulators, apart from anything else, is potentially a very serious moment for any bank, isn't it?
Peter Nielsen: I would say so of any regulator, not just American regulators.
Q3986 Rory Phillips: Did you, Mr Hourican, make sure that the group CEO was aware?
John Hourican: Yes, I think I did. I am sure I did.
Q3987 Rory Phillips: As far as you know, was the matter reported to the board?
John Hourican: I think that once the investigation got under way, it was, through the regular risk reports that Nathan Bostock, the chief risk officer, gives to the board.
Q3988 Rory Phillips: As the investigation continued, did you report to the executive committee of which you were a member?
John Hourican: How things were going was generally reported through the chief risk officer, because general counsel was doing most of the work.
Q3989 Rory Phillips: Did you discuss the issues with Mr Hester as they emerged?
John Hourican: Not extensively, but at the moments where it was required I would have had discussions with Stephen.
Q3990 Rory Phillips: Were you ever required to make reports to the board?
John Hourican: I was not required, as an individual, to report to the board on this matter. It was reported through the CRO's monthly report. The risk function was dealing with ensuring that we and the legal function were engaging fully with the regulators.
Q3991 Rory Phillips: Indeed. They may have been dealing with it, but as the FSA report makes clear, the manipulation continued for over another year, until the summer of 2011. That's right, isn't it?
John Hourican: Yes, it is.
Q3992 Rory Phillips: So whatever they were doing, it wasn't very effective, was it?
John Hourican: Not in hindsight.
Q3993 Rory Phillips: The management failures described by the FSA continued for nearly two years after the American regulators came on top of you, until March 2012.
John Hourican: The majority of the issues that were identified were dealt with by March 2011. The issues identified that were relevant to the submission and creation of policies around LIBOR submission data were put in place and made sure they were in place for the money market traders by March 2011.
Q3994 Rory Phillips: What the FSA say is that you were beginning to get a grip on it in March 2011.
John Hourican: If we can explain the sequence of events, it may help you understand what happened.
Rory Phillips: Thank you.
Peter Nielsen: We did spend the first eight or nine months dealing with the CFTC's request in looking primarily at dollars, which is why the millions of documents and hours of tape conversations were reviewed. Going into the latter part of that year, which is 2010, and going into the first quarter of 2011, we were finally coming to grips with their requirement of needing policies and procedures on LIBOR. That was late, and it was slow, and it should have been earlier, but-
Q3995 Rory Phillips: Can I interrupt? There was a specific problem about that, wasn't there? The issues on procedure, which were identified by your internal audit, were identified in a report to the member of the BBA's FX and MM committee.
Peter Nielsen: That's correct.
Q3996 Rory Phillips: That was the same person who had, as you have confirmed, been a primary focus of the Clifford Chance investigation, wasn't it?
Peter Nielsen: That's correct.
Q3997 Rory Phillips: Was it not an obvious difficulty with the way the bank's management was going about this, that it entrusted responsibility for putting things right to somebody who was being investigated for his part in the original misconduct?
Peter Nielsen: That is a point of view.
Q3998 Rory Phillips: Do you agree with it?
Peter Nielsen: I think a number of people, all the way up to myself, were dealing with attempting to put this right-
Q3999 Rory Phillips: You were dealing with it very, very slowly. Is that fair?
Peter Nielsen: Too slowly.
Q4000 Rory Phillips: Yes. You should have acted much, much quicker.
Peter Nielsen: On the other side of that coin, if I am honest and look in the mirrors-we had many failings in this process-we were very slow in terms of taking the BBA's terms of reference and incorporating that into policies and procedures, and delivering them.
Where we acquitted ourselves better is once it was brought to our attention that we had the problems that were subsequently found in yen and Swiss, where we found them and brought them to the regulators' authority in July 2011, we dealt with those extraordinarily expeditiously. We went from finding them to suspension and disciplinary process in a matter of weeks.
Q4001 Rory Phillips: Can I ask about the attestation? The FSA place great emphasis on the attestation that was required from the bank in February 2011 and came in a letter on 21 March written by the group treasurer. The FSA, in their report, had this memorable comment to make about it: "The FSA has not concluded that RBS deliberately misled the FSA with respect to its attestation." I think in FSA report-speak, that means that they have just-just-acquitted the bank of dishonesty. That letter was written by a very senior official of the bank, was it not-the group treasurer?
Peter Nielsen: That is correct.
Q4002 Rory Phillips: Were you involved in approving the terms of that letter, Mr Hourican?
John Hourican: No.
Q4003 Rory Phillips: Were you involved, Mr Nielsen?
Peter Nielsen: No.
Q4004 Rory Phillips: Did you discuss the fact that the letter had to be written by the group treasurer with him before it was sent?
Peter Nielsen: No.
Q4005 Rory Phillips: Are you aware with which other colleagues in the bank the group treasurer discussed the terms of that letter before it was sent?
Peter Nielsen: I believe, from reviewing the documents-I have not had a conversation with him about this-that he at least had that conversation with a number of professionals in the audit function.
Q4006 Rory Phillips QC: Did he discuss it, do you believe, with his own line manager, the group finance director?
Peter Nielsen: I am unaware of that.
Q4007 Rory Phillips: Do you think it is possible that its terms were discussed by a committee of the board? The audit committee, for example.
Peter Nielsen: I do not know.
Q4008 Rory Phillips: Is the group treasurer still in post?
Peter Nielsen: Yes.
Q4009 Chair: Before we leave this, was consideration given to not keeping him in post? Were you party to any of those discussions?
Peter Nielsen: No, and may I say that I think we have an extraordinarily competent group treasurer.
John Hourican: I would echo that. He reports to the group finance director, which is outside the line of this business.
Peter Nielsen: Correct.
Q4010 Rory Phillips: The final question I wanted to ask you two-I am sorry, Mr Cameron, that you are getting a very unequal share-is this: you have already made a number of general comments intended to reassure the Commission, and now we have together been through this rather unedifying history of management failure, what can you say in addition to give the Commission assurance that this sort of wholesale failure will never be repeated at RBS?
Peter Nielsen: I wake up every single day and attempt to make sure that that is the case. Obviously, nothing in this world is 100% certain. Can I add to what John was describing in terms of what we went through from 2009 to 2010? You point out that that story stops at some point in 2010; then, in 2011, the record shows that we made a great deal of progress on a number of the more cultural and attitudinal issues that have been brought out of the FSA and CFTC probes. We have-management have, I have and my management team have-all taken those directly to heart. Other than fixing those, there is nothing that is more important to myself and that team.
I will say that-holding a mirror up and being completely frank-during 2009 and 2010 we focused almost exclusively on the things that broke the bank. This bank went broke for funding failures, for leverage failures, for market-risk failures and for having market risk that it could not calibrate or count. It did not know what it had. It had three separate credit businesses. Fixing that occupied everybody, not just the front line, but the second and third lines of defence. I sleep very comfortably at night in terms of those risk issues. We are guilty of lots of things. If we had that to do over again and if we could have taken 10%, 15% or 20% of the effort that we spent in 2009 and 2010 getting our arms around that risk and focusing more quickly on the cultural and attitudinal aspects, I think we would be in better shape. We are engaged in that process on a wholesale effort at the moment.
Q4011 Rory Phillips: Thank you. Mr Hourican, you have paid the price in that sense. Is there anything that you want to add in answer to my question?
John Hourican: Much of the testimony that I gave you earlier on is the bedrock of why I think what I think. You also have my note to staff, which is a very clear record of what I think. The cultural shudder that we have sent down the spine of our organisation by my taking responsibility for the actions of people deeply embedded in the company is an important point. As I have said to some people who have been willing to listen, they should not waste my death, which is perhaps not a nice way to describe it.
I think it is incredibly important that the company-everyone in it-really stands up and feels the anger that exists around the issue, exists around the industry and, because of our own peculiar circumstances, exists around our company. Before I depart the bank fully, I will go and spend some time with each of the trading floors and each of the major populations of staff to make sure this message is delivered very firmly home. I think it is incredibly important that we recover the trust of all our stakeholders through how we act, and how we act must be moving away from blind trust to trust and verify. Those are the circumstances we find ourselves in today.
Q4012 Chair: I just want to ask Mr Nielsen one set of questions. You were in a key position to identify the LIBOR risk. You were in overall charge of that area, but you didn't find it. That's correct, isn't it?
Peter Nielsen: That's correct.
Q4013 Chair: You agreed earlier that there were disastrous failures of controls, and over many years, and they took place on your watch as well.
Peter Nielsen: That's correct.
Q4014 Chair: You have agreed, and Mr Hourican has confirmed, that you should have been dealing with these problems on the trading floor and elsewhere in the bank much earlier, and you agreed that the explanation for your failure to deal with these in 2008 and 2009 could have been what was described as accident and emergency work, but not for the more recent work that you have done. You would agree with that, too-it is not an adequate explanation for your failure to deal with this in 2010, 2011 and 2012?
Peter Nielsen: I wish we had gotten to them earlier.
Q4015 Chair: You have agreed on a number of other points, too, that you acted far too slowly-not least, for example, with respect to the BBA's terms of reference.
Peter Nielsen: That's correct.
Q4016 Chair: Given all that, why is it that you feel we should rely on your judgment to continue the clear-up operation in RBS?
Peter Nielsen: I think that that judgment, again, shouldn't just be relying on what I say, but the record of what we have been doing since 2011-there were some additional things that we accomplished in 2012. But if you look at where we are with LIBOR, for instance, it's a separate set of individuals that do it. They have a separate set of policies and procedures. There's completely separate detection and observation of e-mails and conversations that are going on here. And we have accomplished that not just in recent weeks and not just since the settlement. As soon as we found the major and, if I can say this, heart-rending issues that were brought to our attention in the middle of 2011, we got to work on those, and I think we've made manifest progress. That's just the topic of this afternoon, which is just one aspect.
I think what's important is that people don't just come to the process in an attempt to fix a problem when one needs to delve into what the themes are that actually caused this. John has quite articulately mentioned a number of the reforms that we have put in place, but if you look at the work that RBS has done on compensation, I think we can lay much of what happened in 2006, '07 and '08 at the door of the very stridently individual-oriented compensation that existed both-
Chair: And '09, '10 and '11.
Peter Nielsen: Both within our firm and within the industry. I think that in addition to the very public avowal that we're a back marker in overall compensation within financial services, we are a forward marker, and have been a forward marker since Stephen Hester took up his role. We were the first with clawback. We were the first with more aggressive deferral structures, announced in 2009. These are vehicles through which the institution is able to enforce the changes in behaviour that I think we have already seen, and we will see an example of that again this year.
Q4017The Archbishop of Canterbury: Mr Hourican, your presentation in March 2010 showed that the RBS investment bank had a footprint in more than 50 countries. Was it simply too large and too complex to manage? Was it impossible to manage adequately?
John Hourican: It was certainly too large. I would have accused the predecessor organisations of what I would describe as strategic tourism-being in too many places, doing too many things, with too little capital. The ABN AMRO network combined with the RBS network created a 52-country network. We closed 14 of those countries.
Q4018The Archbishop of Canterbury: So you think it is perfectly possible to manage a 38-country network?
John Hourican: I think it is possible to manage if you know why you are there, what you are doing and who you are doing it for. When we took the strategic review that we did, we looked at who our customers were and we reduced the number of customers we were focusing on to ensure that we had some purpose for them. We looked at the products we were doing and asked whether they were relevant to our customers, and we looked at where we did the work for them. We retained a network across the banking and markets business which was designed to serve the export and import and capital needs of our customers. So we sit on about 82% of the world's trade corridors to ensure that we can play our part to make our customers a success and be a success ourselves.
Q4019The Archbishop of Canterbury: When the former head of UBS was giving evidence here, he was asked what he would do differently. He said he would keep it simple. He did not mean 38 countries, he meant about three divisions and a lot fewer than 38 countries. You are remarkably optimistic about the management capacity of large and complex institutions.
John Hourican: Complexity, in many ways, is lots of layers of well managed simple; what we had was a lot of badly managed simple. What we need to ensure that we do, in shrinking down the activities of this company-its leverage, its balance sheet use and its products-is to try to get it to a manageable level of complexity that serves our customers well. There will always be complexity in this business. It is difficult for me to stand here and say that we could make it so simple that it was both really easy to understand and really easy to manage. This is a difficult business to manage.
Q4020The Archbishop of Canterbury: Mr Cameron, your evidence was very interesting. Obviously, you have taken personal responsibility for a lot of what went wrong and have said so publicly and clearly. In one of your comments, you said that you cannot impose moral standards on those who do not want to be moral. This afternoon, you said that one of the problems was the culture of traders, not the culture of the bank. We are talking about high money, high pressure, high volume and high living among those who are involved in those markets, I think it is fair to say. Risk management means knowing the risks, but it appears that the risk of sheer immorality-to pick up your phrase about moral actions-was not managed. It was not recognised and therefore could not be managed. How do you test for the moral culture of a trading floor? And is it possible? From what you have said, I get the impression that you do not think that it is possible.
Johnny Cameron: You are straying into very philosophical territory.
The Archbishop of Canterbury: But it is the one that brought down the bank.
Johnny Cameron: If I may say so, I think that you slightly misrepresented one thing that I said. I do think that traders have a particular approach to life and need much tighter and closer controls than many other people who work in the bank. By and large, those controls are imposed. What happened in this particular case-I look to my colleagues to correct me if I am wrong-is that the risk managers did not recognise this as a risk. Those controls were not there. That is not the same as saying, which I think you were implying, that by and large, we are all very well aware of the risk of traders, of putting tickets in drawers. We all read about what traders can do as individuals, and the risk controls are designed to-and should-protect the bank against traders misbehaving.
Q4021The Archbishop of Canterbury: I am trying to look forward to the development of a culture here. I want to come to one other question about that after this. Part of this culture seems to be an incapacity to recognise the human-generated risks as opposed to the credit or transaction-generated risks. You did not recognise that people would be doing things that were significantly wrong.
Johnny Cameron: And I am afraid that I do not quite agree with you. I think that, by and large, the risk controls do recognise that and do try. John went through-eloquently, I thought-how he sat on traders' desks and asked them various questions. The controls of the traders absolutely bear in mind the possibility that traders will misbehave. The problem in this narrow instance is that no one envisaged that LIBOR could be fiddled by a cartel of traders across many banks.
Q4022The Archbishop of Canterbury: Yet, to many of the questions that Mr Phillips put to you-the three of you-the answer was, "I don't know", or "I didn't know", when it came to being aware of what was going on around LIBOR. So it seems that the risk systems were simply not picking up a risk that you had not envisaged happening. They had a pretty wide mesh.
Johnny Cameron: I do not believe they had a very wide mesh, but they had an enormous hole as regards LIBOR and nobody in risk recognised that.
John Hourican: You quite rightly characterise that there was a risk that we did not pick up, but the limit structures, the daily P and L structures, the balance sheet limits, the leverage limits, the various reconciliations and the mathematical calculated risk limits-all the things that you would expect to be ongoing and enveloping a trader, a trading desk or a business of this type-are deeply embedded and actually cultural on the floor. And there are golden rules that, if you breach them, you have a sanction, and they are categorical.
This LIBOR issue was a data submission to a Thomson Reuters trade capture, which was arithmetically averaged and the outliers were taken out. None of us thought of this as a risk that needed the level of attention that other risks were getting, and it is a regret that we didn't realise that.
Q4023The Archbishop of Canterbury: But the risk of someone deliberately quoting off the market is a risk that we all recognise. Anyone who has run a trading floor recognises that traders might have a reason for doing that; there is always the temptation. And that was essentially what was going on. It was quoting off the market, it was quoting a rate that did not represent the genuine level of the market.
Johnny Cameron: I don't think it was quoting a rate; it was making a submission to a panel or whatever. They were not dealing on those rates, and that is part of the problem.
Q4024The Archbishop of Canterbury: I think that I would say that that was a distinction without a difference. However, what I am getting to is that it is nevertheless extraordinary what happened in the culture of the bank-this is important in what you do about the future culture of the bank-when something was happening that all of you say was catastrophic, utterly wrong and totally inadmissible on any basis of morality. How many whistleblowers told you about this during the time that it was happening?
Johnny Cameron: None.
John Hourican: None.
Q4025The Archbishop of Canterbury: Why? Was there not one person anywhere who thought, "Hang on a minute, this is just not the right way to behave"? And what does that say? How do you set a culture in the future that means that someone-because it only takes one-will say, "That is really not sufficient"?
Johnny Cameron: Speaking entirely for myself, I would happily engage in a long debate, not that we have the time this afternoon. I don't have a silver bullet; I don't have an answer; and I very much hope that this commission comes up with some suggestions that can improve the outlook. I don't think it's very easy.
Q4026The Archbishop of Canterbury: Fundamentally, some of us think that the answer might be to make banks a heck of a sight simpler, so you can check much more easily what is going on.
John Hourican: May I add something that might add some tangible help about the clawback arrangements that we have in place? When we took over the management of this bank in late 2008-at the winter of its existence-we realised that the cash system of people being paid for the prior year and being able to walk away with everything was not good. So we put in place some very long deferrals-at the time they were very long deferrals but they are now more market practice. So we didn't pay anyone anything for the 2008 performances until a year and a half later, and then they received the rest over a three-year period. Our deferral process is such that if you get paid something, you get paid it for a three-year period. That is a starting point. We can also take it back, and it really is the tapestry that is created by all of the threads that we put in place that will create the culture.
The other thing I would say is about whistleblowing. I want the culture of the company to be one of calling each other to attention, much rather than using a whistleblowing channel. Having a lot of whistleblowing in a company that is not part of the normal running of the company is almost as bad as having none, because what we want to have is a culture where people hold each other to a high level of moral account in the company-that is certainly what I would like to aim for.
Q4027The Archbishop of Canterbury: When we were talking about the attestation from the group treasurer, it was clear that there had been no consultation by the group treasurer among the most senior people involved in other areas. You both said you did not know about the attestation: you did not know its contents and you did not know, before it was sent, what was involved in it. Does this not point to a culture of non-transparency, silo management that is still in place and a lack of willingness to consult? For a major and incredibly important document, a very significant number of people should see it and be allowed to test and challenge it before it goes out.
Peter Nielsen: I would not characterise it as such. The audit that the group treasurer was relying on came through the normal GIA audit process, and I would have seen a copy of that report, as usual. I would not necessarily have been consulted on the terms of reference, but I think he was entirely within his rights. He did not just blindly check a box-
Q4028The Archbishop of Canterbury: I am sure. I am not suggesting for a moment that he did. But he didn't consult you.
Peter Nielsen: He didn't, but I think it goes to what both John and Johnny referred to. I do not think that many people thought that there was the potential for this kind of abuse. We have reconfigured our audit function, and I do not come from a culture that blames risk or the second or third line of defence-I believe it is the responsibility of the first line of defence. I think it goes, more pertinently, to your first question, which was: was it too big and was it too complex? I think the group treasurer was doing an awful lot. We had gone through heroic hoops to change the funding profile of the firm over 24 months, from something that was calibrated in a number of hours to one that could survive now very comfortably for months on end with broken wholesale financing markets. That was a large portion of what that function was up to.
If I may make a reference to some of the Wheatley reforms-we have commented on that and made comments into the FSA's 12/36 document-many of those reforms will go a long way to remediating some of these issues. We had fundamental problems with a survey-based index that was based on where people might be able to raise deposits-a would or a could. The thrust of those reforms, to look at actual transaction data, is exactly right. We now have the reporting of our LIBOR submission going up into group treasury. That gives it independence of the actual markets, but we have to be careful that it does not lose the currency of being close to the markets, so that it actually represents the transactions that are actually being undertaken.
Q4029 Lord Turnbull: Last week's statement from RBS referred to 21 wrongdoers. By my calculation, 15 have left the bank, either dismissed or jumped before they were pushed. What steps have been taken to make future employers aware of their record while at RBS?
Peter Nielsen: I think the actual numbers work out to be: two2 of those employees have been disciplined and are still with us, so the decision there was that they were very junior or trainees-when they went through the process, they may only have been in the position for a number of months-so a final written warning and an explanation is probably the right outcome for that individual. Another three individuals are still involved in the investigatory and disciplinary process. For the people who have departed, those who have been dismissed, unlike three, four or five years ago, there is not a box-ticking exercise but identification to the FSA of their circumstances. A number of employees-not those employees, but employees about whom there has been no question-are having difficulty in getting recertified at a different firm. The sieve that the system and the market are placing on the transference of employees is well and truly working.
Q4030 Lord Turnbull: Even at trader level, when recruiting, you are checking whether there is any record?
Peter Nielsen: Absolutely.
Chair: That is helpful.
Q4031 Mark Garnier: I have two very quick questions. I will start with you, Mr Nielsen, but I would like an answer from all of you. When were you first aware of the investigation into the LIBOR scandal?
Peter Nielsen: I was made aware when we received the document from the CFTC in April 2010.
Johnny Cameron: I read it in the newspapers, but I do not recall when.
Q4032 Mark Garnier: Have any of you been interviewed by either of the regulators on this?
Johnny Cameron: I have not.
Peter Nielsen: I have had input into the FSA's investigation. I have personally been investigated by our legal team, which went through all the e-mail trails for LIBOR suppression and everything else. That has been fed into the FSA process.
Q4033 Mark Garnier: But you personally have not had any sort of conversation with either of the regulators on this?
Peter Nielsen: On that subject with the investigators, no. I see the FSA routinely, but not on that subject.
Q4034 Chair: While we are on the subject of investigations, you were investigated by the FSA after you left in March 2009, weren't you?
Johnny Cameron: It was a one-year investigation that started about then.
Q4035 Chair: Was that part of a wider investigation already being conducted by the FSA?
Johnny Cameron: No. When I left the bank, the FSA made it clear that I would be able to work somewhere else, but when I actually applied for a job somewhere else in March '09, they decided to launch an investigation into me.
Q4036 Chair: Was it your impression that that was part of a wider investigation into RBS? Or was that the initiation of it?
Johnny Cameron: No, I am pretty clear that it was entirely about me.
Q4037 Chair: Did you have a sense that they were on the case in a big way at that time into why RBS had failed?
Johnny Cameron: No, I think they were looking into me.
Q4038 Chair: Just you?
Johnny Cameron: That is my clear understanding.
Q4039 Chair: While we have you here, may I take you back to when you were still at the bank at, or pretty close to, the peak of the crisis in mid-September 2008? Did senior management at any time discuss the scope for altering submissions to the LIBOR market?
Johnny Cameron: No, we did not discuss that, but we did discuss the LIBOR market. Brian Crowe, who was chief executive of the investment bank, was also chairman of the BBA wholesale committee responsible for LIBOR and, therefore, both in that capacity and he and I in our capacities of having been major interlocutors with the FSA and the Bank of England on the dislocation in the money markets through August and September 2008 brought to the regular 9.30 morning meeting reports of the dislocation in the money markets.
Q4040 Chair: Was it a conference call?
Johnny Cameron: There was a morning meeting every morning at 9.30 led by the group chief executive.
Q4041 Chair: Fred Goodwin.
Johnny Cameron: Indeed. And it linked to Edinburgh and London, typically on video.
Q4042 Chair: Who would usually be on that? Were you on that, Mr Hourican?
John Hourican: No.
Q4043 Chair: Were you on that, Mr Nielsen?
Peter Nielsen: No.
Johnny Cameron: It was the group executive committee.
Q4044 Chair: So just the most senior people?
Johnny Cameron: About 13 or 14 people. Something like that.
Q4045 Chair: Was there any discussion at those meetings on whether to publish a favourable LIBOR rate?
Johnny Cameron: No, I do not recall that.
Q4046 Chair: Was there ever an exchange between Fred Goodwin and Mr Crowe on the importance of trying to maintain the integrity of the LIBOR rate?
Johnny Cameron: There was a discussion about how LIBOR was fixed, and the process, and the fact that, as was being reported in the press at the time, there was dislocation in the markets, and the level of LIBOR was increasingly hard to establish, and Fred and Brian had a discussion on one occasion about that process.
Q4047 Chair: Just be a bit more frank about this discussion, if you can remember it.
Johnny Cameron: I think what you are referring to is a discussion in probably late September 2008, when we were all getting pretty tense, to say the least, and there was a pretty frank exchange of views, when Brian basically said-how do I put this?
Q4048 Chair: Put it how it was.
Johnny Cameron: Yes, I know, but it is quite hard to remember five years ago, Chairman. There was a frank exchange of views where Brian felt that-it was a difficult, technical subject that I think perhaps Brian didn't feel Fred fully understood the complexities of, and he told him so.
Q4049 Chair: And what was Fred Goodwin suggesting?
Johnny Cameron: He wasn't suggesting anything. He was playing around with ideas, and really trying to understand how it actually worked-that was really what was going on.
Q4050 Chair: While you are here, I'd like to ask you another question, Mr Cameron. RBS's failure had a lot to do with over-reliance on commercial property; you had a hand in generating that over-reliance. Why is it that banks are incapable of learning from the mistakes of the past? You were at that time old enough to remember the last property crash, and the property crash before that.
Johnny Cameron: I was, yes.
Q4051 Chair: Yet you were using property as core collateral for so much of this lending.
Johnny Cameron: If you think about the option of would you rather lend to Woolworths unsecured, or would you rather lend to the owner of the shop that is rented to Woolworths, I think there is a very legitimate argument that says "I would rather lend to the owner of the shop that is rented to Woolworths, so that when Woolworths isn't there I can at least rent it out to someone else"; and there are a lot of features of commercial property that are attractive security for a bank.
It is also the case that one of the lessons that we learned was that in the early '90s inflation pushed interest rates up very high and a lot of the lenders to property got into trouble then, because the high interest rates overburdened the borrowers; and for that reason swaps were put in place, typically. So that particular problem did not arise. Of course, you are always fighting the last war, and in this particular case interest rates collapsed, which caused the opposite problem for those who had taken out fixed-rate swaps. So a lesson was learned-the dangers of having unhedged exposure to interest rates for lending to property; but the conclusion that was drawn proved not to be very helpful.
Q4052 Chair: Of course, at the moment everybody thinks they have learned the lessons. Do you think the regulators will be any better than bank boards at spotting asset price bubbles?
Johnny Cameron: Gosh, Chairman, I'm sorry; I don't know that I have a view on that. What I do know is that-
Q4053 Chair: That is what the new system embodies; I think it is in the plans for counter-cyclical macro-prudential tools.
Johnny Cameron: Again, I do not wish to be too philosophical, and I am sure you would say I would say this, wouldn't I, but in 2007 almost everyone agreed with me, and whether it was regulators, press, members of this-
Q4054 Chair: So you are not optimistic.
Johnny Cameron: I think the job of regulators is to lean against the wind, and the question is to what extent, I guess-in the sense, can they actually stop someone doing something, as opposed to advise them not to do something.
Chair: My last question is for you, Mr Hourican. Your assistant is going to remain in the bank; your boss is going to remain in the bank; but you appear to have been the human shield who has taken the hit. Is that how you feel?
John Hourican: I think one of the more difficult moments of leadership is when you have to do what you say. I have always said to our people that sometimes you have to stand in front of your business and take responsibility for things that occur within it. We have to do so in a proportionate way. Given the sheer size of the anger around this from every constituency and given my assessment of the risks to the bank in the various departures of others, I think this is the right thing to do for the bank, and therefore the right thing to do for me, because I must live by the principles I adopt.
Q4055 Chair: And you specifically agree with the conclusion that it should not be your deputy or your superior but you who takes that hit?
John Hourican: Yes. I think the bank is better served by those individuals remaining in post.
Chair: Thank you very much for giving evidence this afternoon; it has been extremely interesting. We will now go into private session for 15 minutes, and then we will resume.
[1] Note by witness: The FSA found that at least 21 individuals were involved in the misconduct that they identified. One manager was found to be aware of and involved in the making of requests (he is included in the 21). RBS Group, does not know how many others, below manager level, were aware of requests.
[2] Note by witness: A third individual who fell into this category is currently undergoing further disciplinary action.


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Bun B's 'Trill O.G.' Deemed a Classic by 'The Source'
It's been almost five years since 'The Source' magazine bestowed an artist's new album with a prestigious five mic rating, but the dry spell is over. The publication has awarded Bun B's third solo album, 'Trill O.G.' with the coveted evaluation, deeming the LP an instant hip-hop classic in their upcoming 'Back to School' issue.
"Each album went through meticulous review from 'The Source"s 'Mind Squad' across different categories that included originality, lyrical content, arrangement and production," said the magazine in a press release. "'Trill O.G.' scored high enough to receive 5 mics, the holy grail of Hip-Hop ratings, granting it admission into an elite club of timeless musical compositions that span over 20 years."
Already sparking debate on the Internet, the honor was last given to Lil' Kim for her 2005 album, 'The Naked Truth,' which many claimed was an inside job and spoke to the business practices of former owners Ray Benzino and David Mays. The pair was subsequently fired in 2006, after the board of directors ousted them for "financial recklessness and negligence." 'The Source' is now under new management, and continues to publish on a monthly basis.
'Trill O.G.,' which hit stores yesterday, is Bun's third solo album in a trilogy of similarly titled releases. The album features guest appearances from T-Pain, Young Jeezy, Drake, Twista, Tupac and Pimp C, as well as production from J.U.S.T.I.C.E. League, Boi-1da, DJ Premier, Play-N-Skillz, Drumma Boy and more.


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Women's Black Super Sleeks Mesh And Lace Push-up Bra
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A WORDSWORTH ANTHOLOGYCo//ec/-ec/ 6y Laurence HousmanScrlbner ($2).
To a world less likely to be moved by "one impulse from a vernal wood" than by a burst from a bazooka, Author Laurence Housman (Victoria Regina) has seen fit to issue a new selection of the poems of William Wordsworth.
This book, the first important edition of Wordsworth since Matthew Arnold selected and edited the best of Wordsworth more than half a century ago, fills an important gap.
Rustic Herbivore. Editor Housman is apologetic about filling it. Most people, when they think of Wordsworth at all, think...
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I hate drawing animals. Cars, too.
Ok. Love the drawing of the cat. Not sure what "satellites" means. Please explain it to me as if I was a moron (cuz I'm probably being moronical)
cuz, like, cats ears move separate from each other when they hear stuff.... right?
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Connect in Columbus
With over 3,200 hotel rooms, a 10,000 seat arena, 182,000 sq. ft. convention and trade center and a 2,000 seat performance hall — Columbus is prepared for hosting meetings large or small. From trade shows to product unveiling, from corporate retreats to training and everything in between, Columbus has the perfect venue for your event.
Browse our meeting spaces, hotel information, and our comprehensive list of attractions. Send us a request for proposal and our staff will get to work right away. Blocking rooms, reserving space, taking care of the details – we take care of business. Take advantage of our complimentary Convention Services.
Contact the CVB for more information.
Get the guide!
It's your one source for attractions, restaurants and more! Request the Visitors Guide.


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Archbald Pothole State Park
Archbald Pothole State Park is a 150-acre park in northeastern Pennsylvania. The park is named for Archbald Pothole, a geologic feature that formed during the Wisconsin Glacial Period, around 15,000 years ago. The pothole is 38 feet deep and has an elliptical shape. The diameter of the pothole decreases downward. The largest diameter is 42 feet by 24 feet. At the bottom it is 17 feet by 14 feet. The pothole has a volume of about 18,600 cubic feet, so could hold about 140,000 gallons. It would take 35 fire truck tankers to fill the pothole.
The eastern side of the park has undergone strip mine reclamation and has athletic fields in Ed Staback Park.
Seasons and Hours: The park closes the third Saturday of November and reopens the second Friday of April. Day use areas close at dusk. Contact the Lackawanna State Park office for facility seasons and hours.
Hunting and Firearms: Over 100 acres are open to limited hunting, trapping and the training of dogs during established seasons. Common game species are deer, squirrel and turkey.
Hunting woodchucks, also known as groundhogs, is prohibited. Dog training is only permitted from the day following Labor Day through March 31 in designated hunting areas. The Department of Conservation and Natural Resources and the Pennsylvania Game Commission rules and regulations apply. Contact the park office for ADA accessible hunting information.
Use extreme caution with firearms at all times. Other visitors use the park during hunting seasons. Firearms and archery equipment used for hunting may be uncased and ready for use only in authorized hunting areas during hunting seasons. In areas not open to hunting or during non-hunting seasons, firearms and archery equipment shall be kept in the owner's vehicle or enclosed trailer. Exceptions include: law enforcement officers and individuals with a valid Pennsylvania License to Carry Firearms are authorized to carry a firearm concealed on their person while they are within a state park.
Complete information on hunting rules and regulations in Pennsylvania is available from the Pennsylvania Game Commission Web site.
Hiking: A small loop trail starting at the wayside follows an old coal mine tram road passed rock ledges and through a forest.
Access for People with Disabilities
If you need an accommodation to participate in park activities due to a disability, please contact the park you plan to visit.
In an Emergency
Call 911 and contact a park employee.
Nearest Hospital
The Ice Ages
At least four ice advances, often called ice ages, have moved south into Pennsylvania. They are the Nebraskan, Kansan, Illinoian and the Wisconsin. Most of the evidence of glaciers in Pennsylvania is from the most recent advance, the Wisconsin Glacial Period. About 30,000 years ago, North America had a similar climate to modern time. Familiar animals lived here, but so did unique animals like saber-toothed tigers, giant ground sloths, beavers the size of wolves, deer the size of horses and other prehistoric animals.
For unknown reasons, the climate of the earth began to cool. Ice sheets in the arctic regions began slowly spreading in all directions. In the Northern Hemisphere, this glacier was called the Laurentide Continental Glacier and was several miles thick in the center while the edges were around 500 feet thick. The glacier moved very slowly, sometimes only several feet a year. The edge of the glacier often advanced in the winter, only to partially melt back in the summer. Like a giant bulldozer, the glacier scraped the land, removing vegetation and soil, and flattening hills and ridges. On the top, edges and underneath the glacier, ice melted and flowed in rivers carrying sand, pebbles and boulders.
Near the glacier, the climate was very cold. Winter lasted for six months and the annual temperature was 20 to 25 F cooler than the current climate.
About 13,000 years ago, the Laurentide Continental Glacier was at its greatest size, and covered two-thirds of North America, including the northeast and northwest corners of Pennsylvania.
Again the climate changed, becoming warmer, and the giant blanket of ice quickly melted and retreated. Animals and plants slowly repopulated the warming lands, but many of the prehistoric animals became extinct.
Formation of the Pothole
A pothole usually is a hole that is worn into the bedrock of a stream at the base of waterfalls or in strong rapids. The moving water spins sand, gravel and rock fragments in any small indentation in the bedrock. After enough time, the sand and stones carve out an elliptical hole. Potholes may also form under or near the edge of glaciers by the action of glacial meltwater.
Archbald Pothole was formed during the Wisconsin Glacial Period between 30,000 and 11,000 years ago. A meltwater stream flowing on top of the glacier probably broke through a crevasse (a crack in the glacier) and fell to the bedrock hundreds of feet below. There was enough force generated by the falling water to begin a whirling motion of rock fragments in a small depression. As the rock fragments swirled and bumped each other, they carved the bedrock, making the depression deeper and larger. The rock fragments eventually were reduced to tiny particles, but new rock fragments continually tumbled into the hole, enabling the grinding process to continue. As the glacier moved, so did the crevasse and the waterfall. Sand, gravel and rounded stones filled in Archbald Pothole and the waterfall moved off to make new potholes.
At Archbald Pothole, the water first wore away the top layer of bedrock, which is sandstone. Next the swirling water and rock carved through gray shale leaving a particularly smooth and polished surface that shows a typical, well-rounded, wavelike surface. This feature is especially noticeable in the lower half of the northern side of the pothole. The bottom layer of bedrock is black anthracite coal.
The southern and western sides of the pothole are nearly vertical, while the other two sides are deeply terraced. This is evidence that the waterfall that formed the pothole moved in a northeast and southwest direction. It is unknown whether the pothole formed during an advance or retreat of the glacier.
Preserved underground by nature for around 13,000 years, the pothole was uncovered in 1884 and has been exposed to weathering. The sides of the pothole are slowly eroding and are covered in ferns and lichens.
Please help preserve this signature of Pennsylvanias glacial history. If you observe someone vandalizing park property, please contact a park official.
For detailed information on Archbald Pothole, the Pennsylvania Bureau of Topographic and Geologic Survey created the brochure Trail of Geology 3 Park Guide.
Archbald Pothole was discovered in 1884 by coal miner Patrick Mahon while extending a mine shaft. Mr. Mahon fired a blast of explosives and water and stones came rushing out. The miners fled fearing that the mountain was falling on them. Edward Jones, the manager of the mining company, investigated and ordered the area cleared of debris. About 800 to 1,000 tons of small rounded stones were removed and Mr. Jones realized that the vertical tunnel was a large pothole.
About 1,000 feet north of Archbald Pothole, another pothole was found, but it was thought to be larger than the first pothole and was not excavated because of the excessive cost.
Archbald Pothole was briefly used as a ventilation shaft for the mine. A large fire kept burning in the bottom made the pothole function like a chimney, drawing air out of the mine. In 1887, Colonel Hackley, the landowner, built a fence and retaining wall around the hole. Edward Jones gave many tours of the pothole to local citizens and to noted geologists. The pothole became a popular tourist attraction. In 1914, the widow of Colonel Hackley donated a one-acre deed, which included the pothole, to the reformed Lackawanna Historical Society.
With the addition of 150 acres, Archbald Pothole became a Lackawanna County park in 1940. The county deeded the property to the Commonwealth of Pennsylvania 1961, and after improvements, Archbald Pothole State Park was dedicated in 1964.
Keep in Touch
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Like to spend time in the outdoors, meet friendly people and help make Pennsylvania State Parks great? Volunteering at a park might be for you.
Becoming a Conservation Volunteer is easy.
Pennsylvania Parks and Forests Foundation
Believing that each generation is responsible for leaving behind a better legacy of good conservation, the Pennsylvania Parks & Forests Foundation (PPFF) was created in 1999 to give supporters and users of Pennsylvania's parks and forests a positive way to contribute to the conservation of our publicly-owned properties. The Pennsylvania Parks & Forests Foundation welcomes the support of individuals and businesses who share a commitment to conserving, protecting, and enhancing the natural, scenic, and recreational areas of this commonwealth. www.paparksandforests.org
Make a Donation
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Thank you for your support!
Education Programs
We love when young people ask us how to get involved!
DiscoverE has programs for young people ages 4 to 17, provided by Pennsylvania State Park educators. By combining recreation and education, we hope to motivate children to learn more and return often, leading to a lifetime of outdoor enjoyment and conservation leadership.
In Watershed Education, teachers and students assess water quality of a local stream on a quarterly basis and develop strategies to solve local water quality problems.
ECO Camp - Exploring Careers Outdoors - is a week-long residential camp for a cross-section of high school youth from across Pennsylvania, sponsored by the Department of Conservation and Natural Resources (DCNR). Participate in action-packed, hands on activities and recreational adventures in Pennsylvania's state parks and forests that expose youth to conservation, recreation and careers in natural resources. Learn how people make a living working in the outdoors.
Explore education for more information on these and other programs.
Explore the Calendar of Events to find a program near you.
Do you take conservation personally? iConservePA is a Web site managed by the Pennsylvania Department of Conservation and Natural Resources whose vision is to inspire citizens to value their natural resources, engage in conservation practices and experience the outdoors. Take conservation personally.
Come Work with Us
Pennsylvania State Parks and the Department of Conservation and Natural Resources offer a wide range of civil service and non-civil service jobs, from foresters, to rangers, to engineers, to educators, to botanists and so much more. Learn what is currently available.
Tell us What You Think
Contact this park with compliments, concerns and issues about the park.
Archbald Pothole State Park
Nearby Attractions
Information on nearby attractions is available from the Northeast Pennsylvania Convention andVisitors Bureau. www.visitnepa.org
Lackawanna Heritage Valley: Pennsylvanias first heritage park tells the story of the important role that the Lackawanna Valley played in Americas Industrial Revolution--supplying over 80 percent of the nations anthracite coal that fueled the growth of American industry. www.lhva.org
Nearby Points of Glacial Interest
Hickory Run State Park: Boulder Field is 14 acres of jumbled stone caused by severe weather of the last glacial period. The glacier end moraine crosses the park. Hickory Run State Park can be reached at Exit 274 off of I-80. Follow PA 534 east to the park. 570-443-0400
Seven Tubs Natural Area: Glacial meltwater eroded the bedrock and created a series of potholes in an area now called Whirlpool Valley. Owned by Luzerne County, Seven Tubs can be reached at Exit 164 off of I-81. Follow PA 115 south for 2.5 miles. The park is on the right. 570-477-5467
Tannersville Cranberry Bog: This 150-acre wetland is the southernmost low altitude boreal bog on the eastern seaboard. It contains carnivorous plants, rare orchids and other plants. The bog is owned by the Nature Conservancy and can only be visited during scheduled tours. 570-629-3061
Maps and Downloadables
Below are many of the maps and publications for this park. You can read them or download them and might need special software (all free) to view the publications.
You must have the free Adobe Reader to view the maps and brochures that are in pdf format (.pdf).
Alternate versions of the text of the brochures are in rich text and text formats. Click on the files to view them. To download (.rtf) files:
Recreational Guide
Archbald Pothole State Park Map (.pdf) (272 kb, 3/11)
Interactive GIS Map
The Interactive GIS Map uses Geographic Information Systems to create a map that does not need to be downloaded and features driving directions, searchable park amenities and customizable maps. Please note that the background maps are maintained by a variety of public sources and driving directions usually go to the nearest large road.
Archbald Pothole is in Lackawanna County, nine miles north of Scranton. The park is easily reached from Interstate 81. Take Exit 191A to Business US 6 east towards Carbondale. The park entrance is six miles on the right.
GPS DD: Lat. 41.51305 Long. -75.5757
Driving Directions: The Interactive GIS Map has turn-by-turn driving directions to the park office from the Park Information Window. Please note that the background maps are maintained by a variety of public sources and driving directions usually go to the nearest large road.
Archbald Pothole State Park


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Companies Expect to Play Catch-Up on Forecasting: Survey
Improving business planning and forecasting is the top priority for finance and accounting departments over the next two years, according to a new survey this week.
About 72% of finance executives polled said they expect financial planning and analysis to be the biggest area targeted for improvement, in a survey of 358 senior finance executives at U.S. companies with over $1 billion in annual revenue by accounting firm KPMG LLP. Six in ten of those polled also said management reporting analytical systems and business planning and forecasting tools were their biggest near-term priorities.