Jerome Kerviel, a 31 year old trader at Societe General, now has the dubious honour of being the daddy of all rogue traders, after he racked up £3.6bn of losses. This puts our own Nick Leeson in the shade, who brought down Barings by losing around £800m.

 The losses racked up as a result of trading futures in the Eurostoxx 50 as well as the German and UK indices. The deals amounted to over Euro 50 million, greater than the value of the company he worked for. Although some have suggested the losses would have been much smaller had his bosses not chosen to unwind the trades once they knew of them.

Questions being asked now focus on how this was allowed to happen again, folllowing Barings, given the stringent regulations in the Banking sector. Emphasis will surely turn from Mr Kerviel to his bosses, the compliance department, the back office, internal auditors, external auditors and the stock markets.  Mr Kerviel could well be the scapegoat at one of France’s top banks.

A Treasury Select Committee report, not surprisingly, has laid a large portion of the blame with the directors of the troubled bank, concluding ‘The directors of Northern Rock were the principal authors of the difficulties the company has faced since August 2007′ adding that the strategy followed was ‘high risk’ and ‘reckless.’

Its approach of funding mortgages using short and medium term finance from the wholesale markets was unsustainable, particularly so once the credit crunch took hold.

However, other parties are not without blame. Whilst the Treasury has done little wrong and the Bank of England was thought to lack pragmatism, it is the Financial Services Authority (FSA) that has come in for the greatest criticism.

Of the FSA, the report said it had ’systematically failed in its duty as a regulator’ adding it had ‘failed to tackle the fundamental weakness in its funding model and did nothing to prevent the problems that came to the fore.’

The report has recommended that the Bank of England take the lead role in a new unit that will monitor financial stability and have the powers to intervene in failing banks. It is also recommended that it oversees the sale of Northern Rock.