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'They would have to be idiots to not realise what was going on'

(L-R) Bernie Madoff and Paul Flowers. Photo: Reuters/The Co-operative Group

If you were hoping that in 2014 the headlines would be free of banking scandals, you'll be disappointed. This afternoon the American bank, JP Morgan, has finalised a settlement with the US authorities over the scandal that marked one of the worst episodes of the ill-fated finance boom - Bernie Madoff's enormous financial scam worth tens of billions of pounds.

Madoff himself is serving a 100-year sentence in jail, but suggested previously that the bank must have known that he was up to no good, telling an American journalist, "they would have to be idiots to not realise what was going on." The bank is paying out, and paying out handsomely,around a billion pounds, some of which will go to the victims of Madoff's scheme.

JP Morgan has finalised a settlement with the US authorities over the Bernie Madoff scandal. Credit: Reuters

Past financial misdemeanours have been catching up here too, as MPs questioned the man who approved the decision to make the now infamous Rev Paul Flowers the chairman of the Co-op bank. The Treasury Select committee this afternoon accused Clive Adamson, who was in charge of the appointment at the former City regulator, the FSA, (now director of supervision at the new FCA) of giving the job to a "financial illiterate".

Adamson had to admit that the FSA did know about Flowers' previous conviction for gross indecency, and that they were well aware that he was "deficient on technical banking experience." Before the Co-op Bank was forced to admit they had a 1.5 billion black hole in the books that might not seem to have mattered very much. Now the bank has been struggling to keep afloat, it seems it could hardly have mattered more.