Banks and railways.......Virgin on the ridiculous.

Two big stories have hit the financial pages - Virgin's failure with its rail franchise bid, and the hoo-ha over Standard Chartered Bank.

First, Virgin.

I take little interest in public transport in England, not having been a user for years, but I do take an interest in cock-ups by Government, and this one appears to be a corker.

It seems to make no sense whatever. First Rail have paid £700 million more than Branson’s offer and yet have promised more services, improvements to rolling stock, catering and Lord knows what else. The figures just don’t stack up. But they are allowed to increase fares by up to 11% a year, more than 3 times the rate of inflation. The upshot would seem to be either promises that won’t be kept or the passenger pays through the nose or both.

First Rail already has 4 franchises and has not distinguished itself with any of them. It is also beginning to look a tad monopolistic. It all smells of a Government Department that is interested only in grabbing the money without a thought for the economic effect of increased rail fares. It will end in tears.

I know that Branson is self-publicist – in – chief, but he runs a good operation and understands the meaning of service. That is why Virgin Atlantic is one of the world’s best.

We will hear more, much more.

Now for Standard Chartered.

I have been devilling on this since the story first broke.

And it stinks!

Because SC has paid a fine (much less than demanded) this does not necessarily add up to an admission of guilt.

What have we got? A new, young, ambitious lawyer with political yearnings out to make his mark. His bailiwick is Wall Street. It is common knowledge that Wall Street is seriously pissed-off about being overtaken by the City. His handling of the affair shrieks ‘grandstanding’ and taking the easy and fashionable road of banker-bashing to grab the headlines.

SC was already engaged with the Fed about this. Bernanke is reported to be livid with this young man’s side-lining him and going rogue without any consultation. It is said also that the A-G is not a happy bunny. George Osborne has been yelling down the phone at the Fed. Most informed opinion here is asking ‘Wall Street stitch-up? Dirty tricks department working overtime?

It is notable that although a bank investigation usually results in immediate contrition because a bank is in a very disadvantageous position vis-à-vis the Regulator, on this occasion SC hit back extremely aggressively, and m’ learned friends are anticipating a big pay-day.

It is admitted that SC has made errors in an extremely complex situation but not necessarily wilfully. The accusations are not an offence under SC’s law of domicile and it seems apparent that the US requirements are confusing and opaque. But SC can’t risk its New York licence so it has paid its protection money.

I may have got this hopelessly wrong, but of one thing I am certain. This will run and run even if it quickly goes off the front pages.