The Reverend Paul Flowers, the former chairman of the Co-op Bank, we are now told, was hugely profligate with expenses, watched pornography on his work computer, hired male prostitutes, paid for crack cocaine and, knowing next to nothing about banking, led the Co-op, already lumbered with the purchase of the Britannia Building Society, as it blundered into an attempt to buy 631 branches of Lloyds with no money in the till. This magical feat of accountancy beggars belief, coming as it did in the wake of the earlier huge bailouts by taxpayers of RBS and Lloyds, similarly blind to the limitations of their capital.

 

It is all too easy to see Flowers as the comic sideshow, now dubbed the crystal Methodist man of the cloth, who has spent years gleefully behaving badly, protected by his dog collar and the old boys' network. His solicitor says his client is now "in a rather ponderous frame of mind". Far more significant is the damage done to a mutual with a proud history of ethical behaviour, now with a £1.5bn hole in the bank's capital and at the mercy of two hedge funds propelled by a very different drive.

 

A danger also exists that Flowers and the mudslinging that currently occupies Labour and the Conservatives will distract from one of the core lessons of the Co-op debacle. Yet again, good governance and a sense of responsibility have been alarmingly absent in thefinancial sector. At the same time, Osborne, in allowing the regulators to appoint a head of their own choice to the inquiry he has instigated, has prompted Lord Myners, city minister during the banking crisis, to condemn "an enfeebled investigation, compromised and emasculated from day one".

 

In the business of the Co-op bank, regulation has clearly been found wanting. In late 2011, the Financial Services Authority, precursor of today's Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) told the Co-op bank that it lacked the management skills and possessed too little capital to make the Lloyds purchase. Yet still the Co-op was involved in a £750m deal to buy the Lloyds branches, incredibly with no dissent from the FSA. On the contrary, the Co-op was applauded by Osborne for "creating a new banking system for Britain that gives real choice to customers and supports the economy".

 

Earlier this year, in the wake of yet another financial scandal in the rigging of the Libor rate, the parliamentary commission on banking standards published its recommendations, optimistically entitled "Changing Banking for Good".