The original Red Knight idea, that a bunch of well-heeled Man Utd supporters would club together to buy out the club, looks more-or-less dead.

I’ve spoken to a number of the potential investors and they all say the same thing: they can’t see how to do it without paying more than the club is worth; and they don’t want to throw their money away.

Why their pessimism?

Well, they’d need to find considerably more than £1bn in equity and debt to provide a return to the Glazers, the not-universally-popular current owners.

Which was always going to be challenging.

Even if the Red Knights had kept Man Utd’s £500m of bond finance in place, they would still have had to find perhaps £600m of risk capital.

At, say, a £15m contribution per deep-pocketed fan, it required 40-odd Knights to dig into their respective treasure chests.

That wouldn’t have been a doddle even in the balmy (or should that be barmy?) market climate of 2007. In the current volatile conditions of tumbling share prices and concerns about the risks of a lurch back into recession caused by the eurozone’s woes, it’s harder than breaking through Inter’s defence.

So I would say that the prospect of an offer being made to the Glazers by a bunch of “ordinary” fans, who just happen to be worth a bob or two, is as likely as Blackpool winning the Premier League next year.

It’s not going to happen.

Does that mean there’ll be no takeover bid for Man Utd?

I am not quite saying that.

The Red Knights, advised by Nomura, is scouring the globe for the (you guessed it) inordinately wealthy investor with so much money that he or she can take an improbably long view of when ownership of Man Utd could deliver a profit.

Whether Man Utd’s un-monied fans would believe that replacing the Glazers with a more conventional sugar daddy would be progress, I cannot say.

But, of course, with the Glazers having said all along that they don’t want to sell, the clever money probably says there won’t be a takeover of any kind any time soon.

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The cumulative impact has been a doubling of that rate during those 90 odd days, to more than 0.5 per cent yesterday – the highest three-month dollar LIBOR rate for something like 10 months.

What does it all mean?

As you’ll probably recall, when LIBOR rose relative to central banks’ official funding rates in an almost unbroken sequence from the summer of 2007 till the autumn of 2008 – when Lehman collapsed – the causes were sinister.

It was the most visible manifestation of perhaps the worst liquidity crisis the world’s big banks had ever experienced.

A whole series of wholesale markets in which banks had raised hundreds of billions of dollars closed down. And there was no great pool of cash elsewhere to make up for this great loss of finance – so the interest rates at which banks lent to each soared.

As 2007 turned into 2008, this liquidity crisis transmogrified into a solvency crisis, as the shortage of finance led to sharp falls in the price of assets, especially property and loans to property, which generated huge losses for banks.

The horrible consequence was that a liquidity crisis became a catastrophic solvency crisis: one enormous investment bank, Lehman, went bust, and a series of other financial institutions would have followed Lehman to the graveyard if taxpayers hadn’t resuscitated them with unprecedented injections of new capital.

What’s more, central banks have – since the Lehman debacle – created unprecedented amounts of new money, and have lent record sums to banks.

That means it’s difficult to argue that banks are suffering from a liquidity crunch on anything like the scale of 2007 and 2008.

And if you want evidence that banks really can’t be chronically short of cash, just look at how little the European Central Bank has increased its loans to banks over the past 18 days or so: its net funding for banks has risen just 6 per cent or so, which is hardly proof of banks gasping for liquidity.

What’s more the take-up of dollar loans by the ECB under swap arrangements with the US Fed has been paltry, even though the LIBOR prices indicate that the peak of stress for banks is in the dollar funding market.

All a bit odd. Unless you think that what’s going on is the reverse of the trends of 2007-8.

It could be that this time a solvency problem is wagging the liquidity dog, rather than a liquidity shortage giving a good shake to the solvency dog.

Or to put it another way, it may be that what’s persuading banks’ creditors to demand a higher rate for their loans is the expectation that European banks’ will suffer big losses on their holdings of assorted eurozone government bonds and their loans to assorted European property markets.

The rising price of Libor may be based on the belief that a possible default by the Greek government on its debts, or a further downward lurch in the value of Spanish property, could generate unsustainably high losses for a number of big European banks.

Or to put it another way, the LIBOR rise may be saying that the eurozone’s fiscal crisis could be the precursor to the demolition of some substantial, thinly capitalised European banks.

Which would be the most worrying interpretation of the LIBOR rise.

There is however a more benign explanation.

The thrust of anticipated bank reforms – whether they’re the Obama reforms or the increases in capital and liquidity ratios to be demanded of banks by the Basel Committee on Banking Supervision – are likely to have the effect of increasing the costs for banks of lending.

And if the costs for banks of lending were to rise, that would mean that banks themselves would have to pay more for their credit, along with the rest of us (ouch). Hey presto, three-month dollar Libor rises in a semi-permanent way.

As it happens, there is one more explanation of the LIBOR rise: that disunited regulators, central bankers and government heads are largely united by a single reforming ambition, which is to put in place new legal structures for big banks that would allow them to fail without crippling the economy.

Here’s the paradox. If big banks can be allowed to fail, if they could no longer be certain that they’d be bailed out by taxpayers in a crisis, the risks of lending to them rise.

So in sanitising the banks, in turning them from weapons of mass destruction into more conventional businesses that can be permitted to go bust, they become less attractive to creditors, who would obviously demand a higher LIBOR interest rate.

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Business leaders have been arguing passionately that the public sector needs to become more efficient. You’ll recall that the equivalent of a plane-load of them publicly backed the Tories’ general election campaign to make additional savings in public expenditure this year – in order to avoid that national-insurance rise they hate.

Well, it’ll be interesting to see how they respond, now that their dreams have been made a reality.

Because a good proportion of the savings announced today will hit them directly.

So, for example, the Treasury has announced £1.15bn of cuts in discretionary spending by Whitehall on items like consultancy and travel.

Who receives the bulk of such largesse? Well, it’s private-sector consultants and travel companies.

There’ll also be £95m of IT savings – again a squeeze on monies handed over to private-sector contractors.

A further £1.7bn will be saved from delays and cancellations to contracts and projects – which is probably £1.7bn of revenue that won’t be received by companies.

On top of all that, there are the reductions in funding for regional development agencies, which could have an effect on financial support received by many thousands of businesses.

In other words, the harsh reality of making government more efficient may not be quite so appealing as the theory to the many business leaders who sell goods and services to the public sector.

As for those business leaders who recognise that there’s no gain without pain, they’ll only be half-impressed by today’s one-off cuts.

They’ll see most of today’s savings as so-called low-hanging fruit, blindingly obvious examples of eliminating unnecessary expense: what they’ll want to see is a cultural revolution, to improve productivity for years to come and create a waste-averse climate in every allegedly cushioned nook and supposedly feather-bedded cranny of the public sector.

Meanwhile, there’s another paradox about the effect on jobs of today’s cuts.

George Osborne said – and passionately believes – that the cuts in public spending that he announced this morning, and the further and deeper cuts that will be chosen in the autumn, will over time create jobs rather than contribute to intractable long-term rises in unemployment.

The chancellor bases this optimistic view on the assumption that shrinking the public sector, and narrowing the gap between what the government spends and what it receives in taxes, will liberate the private sector – which, he hopes, will create the jobs that are shed by the public sector.

How compelling is this argument?

Well, most would concede that interest rates paid by households and businesses will be lower, in the absence of a collapse in confidence in the government’s ability to pay its debts – and that therefore the interest burden on the private sector is irretrievably linked to the perceived financial health of the public sector.

Which means that the private-sector benefits if banks and investors are impressed by the coalition government’s determination to shrink the public-sector deficit earlier and faster than the previous Labour government would have done.

But there is an internal contradiction in one of the underlying arguments deployed by the Tories when saying that the state must be shrunk from the 50%-or-so share of GDP that it currently represents: to wit, that the public sector is intrinsically more wasteful, less efficient and less productive than the private sector.

Most research proves that the productivity of public sector is indeed lower than the private sector. But the lower productivity of the public sector means – by definition – that each extra pound of reduced public-sector spending will tend to lead to relatively more jobs lost than are created by each extra pound of income received by the private sector.

To put it another way, the lesser efficiency of the public sector means that it creates more employment than the private sector when expanding, and sheds more when contracting.

Of course, that’s not an argument for increasing the size of the public sector relative to the private sector. If that went on indefinitely, we’d all be in the workhouse.

But it does mean that shrinking the public sector can in the short term bring a huge human cost, in jobs lost, and hopes of fulfilling employment dashed.

Which is presumably why the chancellor has not used all his public-sector savings to pay down the national debt. He has also authorised £150m of new spending, to create 50,000 adult apprenticeships, and he is allowing £50m to be spent on the modernisation of further-education colleges.

Shrinking the state may well boost the creation of sustainable jobs in the longer term. But the immediate effect must be to increase unemployment.

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The two main areas of cuts in the Business Department, to be announced later today, will be universities and industrial intervention.

I am expecting that funding for universities will be cut by around 3%.

And I also hear that there will be deep reductions in the budgets of the Regional Development Agencies for South East England and Eastern England – which may well be seen as the first step on the road to closure of these two agencies, whose aim is to provide support for business that is not available from the private sector.

In addition, a substantial saving is likely to be forced on the UK Strategic Investment Fund, a £750m fund that was the vehicle for French-style industrial intervention by the previous business secretary, Peter Mandelson.

The gross cut in spending at the Business Department will be £900m. But it will also receive £200m of new funding to support apprenticeships, so the net saving will £700 – or just over 3% of its £22bn annual budget.

One area regarded as strategically important for the UK’s long term economic prospects, support for science, will be largely protected.

And there will also be protection of funding for further education and adult learning.

In other words, the new business secretary, Vince Cable, will be able to argue that the government is doing what it can to provide relevant vocational skills to those most vulnerable to becoming semi-permanently unemployed at this time of weakness in the British economy.

Also, the Regional Development Agencies in regions where the private sector is smaller and weaker than in the South – notably the North West, North East, Yorkshire and the West Midlands – will not be forced to make the kind of savings being forced on the South East and Eastern RDAs.

As for the squeeze on the UK Strategic Investment Fund, support for green technologies, such as tidal power, will be sustained.

Even so, most university vice chancellors already complain that they have inadequate funding, and will argue that the long-term competitiveness of the British economy will be put at risk by the 3% squeeze – especially since they’ll fear that they’ll be forced to take even bigger cuts later in the year.

Also, there will be squeals of anguish from those companies deprived of funding by the cuts in industrial intervention.

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Financial reform in the UK was always going to be conditioned by whatever reforms are enacted in the US.

And as of last night, we now have a clearer – if not yet definitive – view of how Congress is planning to shake up Wall Street.

The important point is that the Senate has – finally – voted for financial reform. Which means that President Obama will get his way, and there will be an overhaul of America’s biggest financial institutions more radical than anything we’ve seen since the 1930s.
But we can’t yet be certain of the minutiae of the overhaul, because the Senate’s reform package has yet to be reconciled with the House of Representatives.
Here, in general terms, is what is likely to happen:

(1) Most of the $600 trillion derivatives market will be forced through third-party clearing houses, to increase oversight of the deals and ensure participants in the deals put up sufficient margin or security against the risk of losses. As I’ve mentioned before, this will significantly reduce the profitability of derivatives trading for banks, because it will lessen their ability to blind gullible investors with the wizardry of their science.

(2) Banks may be banned from proprietary trading or speculating for their own account.

(3) An important part of banks’ derivatives business, their swaps desks – which include the business of insuring loans through credit default swaps – may be walled off, or forcibly separated.

(4) There’ll be a powerful new consumer protection agency.

(5) There’ll be new powers for the authorities to seize control of large systemically important institutions that appear to be running into difficulties.

(6) There’ll be new powers for the authorities to break up troubled systemically important institutions in a supposedly orderly way.

(7) There’ll be new multi-authority oversight of the risks in the financial system.

(8) In general, the Federal Reserve will emerge as the regulatory super-power, though the precise scope of its remit remains to be defined.
What does it all mean?

In theory, banks will be taking fewer risks – and they will certainly be less profitable.
There will be a particular challenge to the business model of Goldman Sachs, which generates more profit – in a proportionate sense – from proprietary trading and derivatives than most of its competitors.

The reforms would have direct implications for Barclays, owner of defunct Lehmans’ US operations.

And there will be indirect implications for all big British banks, because where America leads in financial reform has a significant influence on the room for regulatory manoeuvre of the British government.

Finally, there is a knock-on to conditions in global financial markets, especially stock markets, in the coming weeks.

Investors will fear that US banks forced by Congress to retrench and narrow their scope will be less generous with the provision of credit and liquidity, which could dampen the economic recovery.

There’s always a bill, a price, for necessary financial reform. Calibrating that price, in respect of timing and size, is the tricky part.

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The coalition’s programme for government will not please all businesses and business people.

There is a surprising amount of detailed policy to promote equality, for example, which will give the willies to some of the more traditional Tory-supporting corporate grandees.

So, for example, there’s a pledge to promote gender equality on the boards of listed companies.

That said, there’s conspicuous gender inequality on the board of UK plc, otherwise known as the cabinet. And if the target is to match the balance between the sexes in Mr Cameron’s team – well, most big companies won’t be sweating.

As for the banks in which taxpayers own huge stakes, Royal Bank of Scotland and Lloyds, they may be somewhat alarmed by the remarks this morning of Vince Cable, the business secretary, that they should become instruments of the state.

In particular, he wants to rip up their agreements with the previous government to provide a specific amount of gross lending to business and to replace those agreements with new targets for net lending.

This may sound a technical issue of little importance, but it matters.

As I’ve pointed out here on many occasions, any bank can take money out of the economy while increasing gross lending, so long as repayment of existing loans exceeds new lending.

It’s therefore much more stretching and demanding for a bank to be obliged to increase net lending.

Banks however would argue that it would be bonkers to oblige them to increase net lending, because they would be under pressure to provide credit to those who don’t deserve it.

And they would also make the point that what got the UK into its current economic mess is that banks lent far too much to households, businesses and other banks: forcing them to repeat the mistake would seem a little weird.

To which Vince Cable would reply that he only wants to make sure that small and medium-size businesses can tap into the credit they need at this delicate stage of the economic recovery – and that there’s plenty of evidence that these foot-soldiers in the battle to rebuild the economy are being starved of vital financial provisions.

It’s a finely balanced argument. And the government may yet opt for providing a more generous scheme of taxpayer-backed bank loans for small businesses, in preference to coercing Lloyds and Royal Bank to do more.

What I would point out, however, is that if Mr Cable were to opt for new net lending targets for the two semi-nationalised banks, the argument could become a fraught legal one.

Because Lloyds’s and Royal Banks’ gross-lending agreements are written into lengthy binding contracts relating to support they’ve received from taxpayers – and it may not be quick, cheap or easy to re-write these agreements.

Also, as I’ve pointed out in respect of a previous scrap between banks and ministers over bonus payments, the directors of the banks would probably have to resign if the government forced them to extend credit in a way that they felt was uncommercial and was contrary to the interests of all their shareholders.

Mr Cable could find himself having to chair the banks’ boards as the price of bossing them around.

So is there no joy in the government’s shared agenda for the private sector? Well, there is a commitment to create the “most competitive corporate tax regime in the G20″ – though no detail on how that will be judged – and a vow that any new proposed regulations will only be introduced if first other bits of red tape of greater bothersome effect are first abolished.

Also, there looked to me to be a reason for non-doms to crack open the bubbly.

Because the Tories’ election manifesto had pledged that these (mainly) well-heeled individuals who live and work here, but pay tax (if at all) elsewhere, would pay a new flat-rate levy – and the Lib Dems had pledged to phase out the tax advantages for non-doms altogether.

So what does the coalition’s to-do list say? Only that the government “will review the taxation of non-domiciled individuals”.

Hmmm.

My sources in the coalition insist that this review should strike fear into the heart of the tax-avoiding non-dom community, that (really, truly) it is not an example of a review being a substituted for action.

Time will tell. But if past reviews of non-doms’ taxation is anything to go by, the plutocrats don’t need to be booking their flights to Switzerland quite yet.

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Those who criticise the German government for trying to restrict the use of naked shorts and credit default swaps (CDS) are – on the whole – concerned about the when and the how, rather than the whether.

Or to put it another way, there are strong arguments for restricting the use of credit default swaps, or insurance policies for loans, in that their use exploded well beyond what could seen as sensible protection against loans going bad.

At their peak a couple of years ago, there were $60 trillion of extant credit default swaps, insuring loans with a value of around $6tn. This was the equivalent of taking out 10 buildings insurance policies on a single house, or 10 life policies on one individual.

The point is that $6tn of credit default swaps would have provided appropriate cover for the risk that the loans might go bad.

And just as you might feel a bit anxious if your neighbours took out nine insurance policies that would enrich them in the event that your house burns down or you pop your clogs, it is reasonable to fear that the other $54tn of CDS contracts were not all taken out with the purest of motives.

As I’ve pointed out before, many of these CDS contracts were a way of speculating in the fortunes of a business or a government, without the regulatory hassle of trading on a transparent, well-scrutinised, regulated exchange.

If a hedge fund or speculator thought that a company, government or specially created investment product, such as a collateralised debt obligation, were going to the dogs, a CDS was (and is) a way of making a killing from their respective woes.

And, perhaps best of all, that killing could be made well away from the prying eyes of media or regulators: it was the last frontier of a financial wild west.

None of which would have mattered all that much if – to coin a phrase – the cowboys in this financial Wild West had only hurt their own.

The problem is that many of the world’s biggest financial institutions, giant insurers such as AIG and assorted banks, couldn’t resist the gold rush – but found themselves on the wrong side of these CDS deals.

So when the speculators made profits, the insurers and banks made enormous losses. And the tab for these losses was eventually picked up by taxpayers, because (as you’ll be tired of hearing by now) the damage to all our prospects would have been unbearable if we’d allowed these cornerstones of the economy to crumble.

All of which is a meandering explanation for why there is a powerful argument for reforming the CDS market.

As you’ll deduce, there is a strong case for banning naked CDS’s, or the use of credit default swaps by those who don’t actually own any of the relevant debt being insured.

There are also good reasons for forcing all CDS trades through transparent, regulated exchanges and clearing houses, to provide some kind of verification that they’re not being used for insider trading, and to ensure that counterparties to deals put up appropriate “margin” or cash when prices swing as proof that they have the wherewithal to honour the contracts.

Here’s the thing however.

It’s quite possible to be the world’s harshest critic of the explosive growth of credit default swaps and still take the view that the German government took leave of its senses on Tuesday night when it imposed a unilateral ban on their use in respect of the debt of eurozone governments.

How so?

Well, in the world as it is – as opposed to the world as we might like it to be – the financial institutions who use credit default swaps provide vital loans to eurozone governments and businesses.

And if they’re told that, at a stroke, they can’t use those credit default swaps, well then investment climate for them in the eurozone is perceived to become harsher – and it becomes rational for them to seek to put their cash elsewhere.

The French finance minister, Christine Lagarde, has grasped the risk: she said yesterday that she was concerned that the German prohibition, if followed by other governments, would reduce liquidity in the eurozone government bond market – which, in theory, means that the price of those bonds would fall and would push up the cost of funds for eurozone governments.

There’s a time and a place for radical reform of financial markets. The place is probably the world as a whole, and not just one part of it – because unilateral national initiatives may either be ineffectual or may create dangerous distortions in the allocation of capital around the world.

And the time is probably when there’s evidence that fiscal deficits in Europe are on a pronounced downward trend and economic recovery is entrenched.

The worst time to alienate investors and banks by restricting how they invest is when they are anxious about the strains within the eurozone and can simply shift their money to other places where they feel more welcome.

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Bafin, the German financial regulator, was on the blower last night to other European regulators, trying to persuade them to participate in its attempt to ban purely speculative bets by investors that eurozone governments will have growing difficulties paying their debts and that the woes of banks will also worsen.

Unless other regulators do the same – and there were signs last night that some important ones may not – it’s difficult to see how the German initiative can have much impact, given that the trading of government bonds and bank shares is a global business.

Or to put it another way, very few of the investors doing the short-selling that Bafin wants to prohibit are German and almost all the relevant securities are traded in financial markets other than Germany’s.

Which is not to say that it won’t have any effect at all, though not necessarily of the sort that Bafin or the German government desires.

Investors see it as a fairly desperate attempt to ease strains in eurozone markets and fear that it shows that eurozone governments are running out of policy options to hold the eurozone together – so they have sold the euro, which has fallen to its lowest level against the dollar for four years.

What Bafin is trying to do is reduce the volatility of financial markets and the instability of the financial system. But it could have the opposite effect, even if Bafin secures agreement on a Europe-wide prohibition – because the distinction that Bafin wishes to draw between naked short selling, which it hates, and hedging, which it thinks is acceptable, is not as clear cut as it appears to believe.

The German ban is three-pronged: on short sales of eurozone government debt unless the investor has first borrowed the stock; on the use of credit derivatives to bet on a fall in the value of the debt of a eurozone government, unless the investor owns some of the relevant debt; and on short sales of the shares of German banks and insurers, unless the investor has first borrowed the shares.

Bafin sees this as an attempt to put a stop to what it would see as mischievous bets by investors that the financial difficulties of the likes of Greece and Portugal will worsen.

It thinks that such bets are what force down the price of Greek and Portuguese government bonds, which then spook investors, and make it much more difficult and expensive for the likes of the Greek and Portuguese governments to borrow vital new money.

That may be so.

But there’s an alternative narrative about the use of naked shorts and credit default swaps which would show them to be less malign than Bafin would believe and which would imply that their prohibition could increase the vulnerability of financially overstretched eurozone governments.

Many investors use credit default swaps taken out on the debt of one government to hedge exposure to some other kind of investment in the same country or to the debt of another eurozone government, inter alia.

So banning the use of credit derivatives and naked short-sales for eurozone government debt could prompt some investors to liquidate those “long” investments and lessen investors’ appetite for investing in the eurozone in general.

Which, at the moment when eurozone governments and banks need all the credit they can lay their hands on, would not be the result favoured by the German government.

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George Osborne’s theme, for a change, won’t be cuts, but growth – or how to engender the kind of renaissance in Britain’s private sector that would generate the tax revenues and jobs that can help us out of our malaise.

So what’s his cunning plan?

Well, when he thought and hoped the Tories would be governing alone, his flagship policy on all of this was to simplify the tax system for companies and reduce the headline rates of corporation tax – from 28p in the pound to 25p for larger businesses and from 21p to 20p for small companies.

The costs of reducing these taxes was to be financed, according to the Tories’ manifesto, by “reducing complex reliefs and allowances”.

And the Tories told me that they would do all this in the emergency budget they’ve consistently said would take place within 50 days of a general election.

Readers of this column will know that I’ve highlighted on a number of occasions that in respect of this particular tax policy, there has been a significant and unusual ideological divide between the Tories and Labour: Osborne wanted to streamline the tax system for companies, in contrast to the Treasury of Gordon Brown and Alistair Darling, whose philosophy was to target tax reliefs and fiscal aid at sectors thought to be particularly deserving.

So I was slightly surprised that there was no mention of any of these tax reforms in the agreement between the Conservatives and the LibDems that underpins their governing alliance.

Did that mean Osborne had ditched these ambitions to simplify that are redolent of his Conservative predecessor at the Treasury, Nigel Lawson?

I’m told not, by those close to Osborne.

On the other hand, his new LibDem colleagues have been pointing out that Gordon Brown’s jibe – that the policy amounts to a tax cut for banks and a tax increase for manufacturers – is not a total canard.

The fiscal reality is that manufacturers tend to be big beneficiaries of allowances for capital spending of the sort that Osborne would reduce – and banks have less opportunity to reduce their tax payments by exploiting such reliefs.

Also most biggish businesses, in my experience, rather like the existing tax credits for research and development, and are unenthusiastic about the Tory manifesto promise to redirect them at “hi-tech companies, small businesses and new start-ups”.

It’s true therefore that a policy of reducing the various business tax allowances would have the effect of pushing up the tax burden on the kind of companies that make and export things deemed vital to the UK’s economic future, even if the headline rate of tax were reduced – whereas the tax burden on banks would tend to be reduced in these circumstances.

That’s why the LibDems themselves never went further than flirting with the idea of simplifying the corporate tax system two or three years ago: they couldn’t see how to implement such a policy without penalising too many businesses necessary for the UK’s ability to pay its way in the world.

What will Mr Osborne actually do, now that the levers are in his hands?

I can’t see him abandoning the commitment to cut and simplify corporation tax. To do so would be a humiliating U-Turn on a genuinely flagship policy.

On the other hand, I would be staggered if he didn’t do something to ease the transitional pain of those companies that invest a great deal, and therefore benefit most from the tax break on capital spending.

Somehow it doesn’t seem plausible that Osborne would stand up tonight in a room full of boozed-up manufacturers and tell them that their subscription price for operating in the UK is about to rise sharply.

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Johnny Cameron, the cove who ran Royal Bank of Scotland’s investment banking division at the time the bank went to the very brink of collapse, has agreed with the City watchdog that he won’t ever again work full time in a senior position in the financial services industry.

Hmmm.

You might find that story about as surprising as “starving, rabid dog in hot climate bites sweaty fat man”.

Or to put it another way, after Royal Bank was bailed out to the tune of around £50bn by taxpayers, it would be slightly odd if any of those in senior executive or non-executive positions at RBS back then were deemed suitable stewards of financial businesses.

In fact what some may wonder is why – some 18 months after the meltdown at RBS – Mr Cameron is so far the only former director of that bank to be the object of a formal restriction on where and how he can work.

It’s also worth noting that Cameron jumped before he was pushed: he agreed to be disbarred (so to speak). But he retains the right to act as a part-time advisor to City firms (which, since his very public humiliation, is all he wanted to do, in any case).

Here’s perhaps the most significant part of the FSA’s statement about Mr Cameron:

“The FSA has not made any findings of regulatory breach against Cameron and he has not made any admissions”.

Or to put it another way, the FSA questions his competence to run a bank, but doesn’t think he broke any of its rules.

What that implies is that it’s quite possible to be on the bridge of one the world’s great banks, which is part of the UK’s economic infrastructure, as it ploughs into a humungous iceberg, while following the FSA’s rulebook and the law.

Some, I suppose, may wonder whether the rules and the law are quite what they should be.

What also follows?

Well, the FSA continues to investigate the events leading to the disasters at RBS and at HBOS.

In RBS’s case, the focus is on its reckless acquisition of the poisonous rump of the Dutch bank ABN Amro, which made RBS too dependent on unreliable short-term funding in the wholesale money markets and also imported several tankers of loss-making loans and investments on to its overstretched balance sheet.

At HBOS, the FSA is looking at how the bank lent so many tens of billions of pounds to companies – especially property ones – that were acutely vulnerable to any economic slowdown.

Both probes have been going on for well over a year. So it’s reasonable to conclude that if the FSA had found evidence of fraud or serious malpractice, we would have known by now – such is the propensity of these things to leak.

What that means is that if the FSA finds that the banks and their directors did anything untoward, the verdicts are likely to be about their competence and diligence, not their probity.

Which some might see as something of a great escape for bankers who many would hold responsible for the biggest raid on taxpayers’ wealth in British history.

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