Co-op needs to retain its name or face meltdown
The Co-operative needs the City to cough up another Libor scandal to divert attention from the escalating woes of its bank before they derail the latter's rescue plan. That is now a danger, one that was potentially compounded by the intervention of the business secretary Vince Cable. He warned that he could strip the bank of its right to use the 'Co-operative' name because the behaviour of ex-chairman Paul Flowers violates the principles that are enshrined within it.
You might think he made a good point, and not just in relation to Mr Flowers' conduct. The low politics that allowed a man who was out of his depth – when not out of his head – to ascend to that position required the collusion of others.
There was incompetence and hubris aplenty at the top of the organisation, even if you take the minister and his sins of the flesh out of the equation. That can be seen in the testimony of those so far called before the Treasury Select Committee as part of its inquiry into the collapse of the Co-op's attempt to buy Project Verde from Lloyds Banking Group.
However, Mr Cable's intervention is problematic for two reasons. First, his timing couldn't have been much worse. Mr Flowers' misdeeds are a sideshow when compared to the real financial crisis engulfing the Co-operative Bank.
Such a debate would have been far better off left until after the proposed rescue plan has been secured. A plan, remember, that is contingent on the backing of hedge funds.
But taking such a step, which Mr Cable has the right to do under the Companies Act of 2006, might not be such a good move even if the deal gets done.
As he has identified, the sad thing about this affair is how out of step the behaviour of Flowers, and probably others, was when set against what the Co-operative movement stands for. Without it, what do you have with the bank? A small, distressed, institution trying to compete with four giants and a number of 'new' players with clean balance sheets and big ambitions. How long do you think Scandal Bank plc would last before finding itself in another crisis? Five years? Three?
No, the Co-operative Bank without the Co-operative name is doomed. With it, it has a shout if it acts quickly. It needs to demonstrate to customers that what they thought they were buying into can be made into a reality.
While the chairman should be someone with experience in the business (in Richard Pym it has that), the appointment of other new non-executive directors who could be trusted to act as guarantors of the Co-op ethos. One name is Sir Brendan Barber, the former TUC general secretary-turned-chairman of the conciliation service Acas.
He might be able to persuade customers that it will in future live up to its ideals, even under the ownership of hedge funds.