Invisible Hands: 4. The Big Bang

Summary

Invisible Hands: Episode 4 – The Big Bang

Host: David Dimbleby
Podcast: The History Podcast by BBC Radio 4
Release Date: April 16, 2025

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Introduction to the Free Market Revolution

In "The Big Bang," the fourth episode of Invisible Hands, host David Dimbleby delves into the transformative period of the mid-1980s when Britain underwent a seismic shift in its financial landscape. This episode explores how deregulation, championed by Prime Minister Margaret Thatcher and Chancellor Nigel Lawson, reshaped the City of London, unleashing the power of the free market and setting the stage for both unprecedented growth and eventual turmoil.

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Margaret Thatcher and Nigel Lawson: Architects of Change

Under Margaret Thatcher's second term, the British government embarked on an ambitious agenda to dismantle state-owned industries and promote free-market capitalism. Thatcher aimed to "make free market capitalism popular and accessible to everybody," as she stated, emphasizing the democratization of economic opportunity (Timestamp: 05:24).

Nigel Lawson, the newly appointed Chancellor of the Exchequer, complemented Thatcher's vision by recognizing the financial sector as a "national asset of enormous potential." He envisioned transforming Britain into a global financial powerhouse, a goal that necessitated radical reforms within the City of London (Timestamp: 09:03).

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The City of London Before Big Bang

Before the Big Bang reforms, the City of London was characterized by a traditional, insular financial ecosystem dominated by an "old boys' club." Relationships were forged through personal contacts and long lunches, with a clear division between jobbers—who set stock prices—and brokers, who interacted directly with clients. This system was described as a "gentleman's club" where "things very rarely went wrong" (Timestamp: 05:38).

David Buick, a merchant banker from the 1960s, epitomized the era's conservative financial culture. His experiences highlighted the exclusivity and rigidity of the pre-Big Bang financial institutions, where only "trusted British banks" could be full members of the established financial circles (Timestamp: 07:00).

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The Birth of Big Bang: Deregulation Unleashed

Thatcher and Lawson's reforms, collectively known as the Big Bang, represented the most radical reorganization of London's financial system since the old coffee houses. The primary objectives were to abolish the outdated jobber and broker system, introduce electronic trading, and open the market to foreign banks and investments. This deregulation aimed to foster competition, innovation, and accessibility, allowing "people who'd never even dreamt of entering the city" to participate in the financial sector (Timestamp: 10:13).

David Dimbleby narrates how the Big Bang dismantled longstanding barriers, enabling the City to evolve into a high-speed, technology-driven global financial hub. The introduction of electronic trading systems allowed transactions to occur in seconds rather than hours or days, fundamentally changing the nature of financial dealings (Timestamp: 10:13).

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Nick Leeson: From Humble Beginnings to Star Trader

Central to the episode is the story of Nick Leeson, a trader whose meteoric rise and catastrophic fall epitomize the era's financial transformation. Nick, a "working-class kid from the suburbs," seized the opportunities presented by the Big Bang to ascend the ranks of the financial world.

Initially working as a clerk, Nick's life changed dramatically when he landed a position at Barings Bank, one of Britain's oldest and most prestigious financial institutions. His entry into the high-stakes world of futures trading in Singapore marked the beginning of a journey fueled by ambition and unchecked risk-taking (Timestamp: 13:24).

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The Chaotic Trading Floor and Leeson's Ascent

Nick Leeson's first day at the Singapore Stock Exchange (SIMEX) was a baptism by fire. The trading floor, known as the "Pit," was "deafening" and "chaotic," relying on intricate hand signals for communication. Despite the overwhelming environment, Nick thrived, quickly becoming Barings' star trader. His success was celebrated with lavish parties and unwavering support from the bank, which granted him "carte blanche" to generate profits (Timestamp: 18:10).

Leeson reflected on the culture of the time, emphasizing the lack of oversight: "I can't remember anybody giving me, you know, a list of policies and procedures" (Timestamp: 19:30). This environment fostered a "gambler's mentality," where traders like Nick felt invincible amidst minimal checks and balances.

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The Downfall: From Star Trader to Fraudster

A minor error on the trading floor—a misread hand signal leading to a $20,000 mistake—marked the beginning of Nick Leeson's downfall. Instead of reporting the error, Leeson opted to conceal it, attempting to recoup the losses through increasingly risky trades. This decision was fueled by the deregulated environment where "fewer checks, fewer balances" existed to monitor such activities (Timestamp: 20:46).

As his losses escalated from $20,000 to £827 million, Leeson engaged in fraudulent activities, creating fake accounts and falsifying trading reports to mask the extent of his financial mismanagement (Timestamp: 22:39). The lack of regulatory oversight and the relentless pressure to generate profits led Leeson to double down on his risky strategies, ultimately jeopardizing the very institution he represented.

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Collapse of Barings Bank

The tipping point arrived when an earthquake in Japan triggered a market crash, exacerbating Leeson's already untenable position. Unable to secure additional funds from the London office, Leeson fled to Malaysia, leaving Barings Bank on the brink of collapse (Timestamp: 23:40). The bank, with a capital far exceeded by Leeson's losses, could no longer sustain its operations, leading to its historic bankruptcy—Britain's oldest merchant bank was obliterated in mere months (Timestamp: 24:01).

Leeson's arrest and subsequent extradition highlighted the vulnerabilities introduced by the Big Bang reforms. His case became emblematic of the systemic risks posed by unchecked deregulation and the pursuit of profit without adequate oversight (Timestamp: 25:37).

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Aftermath and Reflections

The collapse of Barings Bank prompted intense scrutiny of the financial industry's regulatory frameworks. Nigel Lawson addressed the issue in the House of Commons, advocating for stronger internal controls and regulatory measures to prevent such disasters in the future (Timestamp: 26:03). The incident raised profound questions about accountability, with many arguing that the responsibility extended beyond Leeson to encompass the entire financial system and its permissive culture.

David Dimbleby concludes that while the Big Bang brought significant economic growth and transformed London into a global financial center, it also exposed inherent vulnerabilities. The episode serves as a cautionary tale about the consequences of deregulation when coupled with insufficient oversight and the human propensity for risk-taking and fraud.

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Key Quotes

• Nick Leeson: "I enjoyed the lifestyle. I was the ascending star. At the age of 25, they're thinking, God, you're too hot to handle." (Timestamp: 02:35)

• David Dimbleby: "The government would get out of the way, freeing up the banks and unleashing the full power of the market. Competition, innovation and opportunity, including opportunity for people who'd never even dreamt of entering the city." (Timestamp: 12:48)

• Nick Leeson: "I grew up on a council estate. There was never a lot of money around." (Timestamp: 13:11)

• David Dimbleby: "Big bang brought untold riches to Britain, made it a financial center of the world, that maybe this was the first sign that the government had lost control, that the markets were now more powerful than anyone in Westminster." (Timestamp: 27:18)

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Conclusion

Episode 4 of Invisible Hands provides a comprehensive examination of the Big Bang's role in revolutionizing Britain's financial sector. Through the lens of Nick Leeson's rise and fall, David Dimbleby illustrates the double-edged sword of deregulation—fostering innovation and growth while simultaneously paving the way for systemic risks and financial instability. This episode underscores the profound and lasting impact of the free market revolution on Britain, highlighting lessons that remain relevant in today's global financial landscape.

Transcript

[David Dimbleby]

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[Paul McGann]

Titanic Ship of Dreams, the new podcast from the award winning Noiser Network. Join me, Paul McGann, as we explore life and death on Titanic. I'll delve into my own family story following my great uncle Jimmy as he tries to escape the engine room. We'll hear the harrowing tales of the victims and the testimonies of the lucky survivors.

[David Dimbleby]

I saw that ship sink and I saw that ship break in half.

[Paul McGann]

Titanic Ship of dreams. Listen wherever you get your podcasts.

[David Dimbleby]

BBC Sounds Music Radio podcasts.

[Nick Leeson]

Bags were packed. I went home and said, look, we need to leave. And then we went to Changi Airport.

[David Dimbleby]

It's February 1995. A 27 year old banker from Watford has collected his wife from their apartment in Singapore.

[Nick Leeson]

We took the money that was in the safe. I think it was about $10,000.

[David Dimbleby]

He's in a hurry. First a flight to Kuala Lumpur and then on.

[Nick Leeson]

The only flight that was leaving that.

[David Dimbleby]

Afternoon was to Kota Kinabalu, the luxury resort in Malaysia.

[Nick Leeson]

So we went to Kota Kinabalu, stayed in the Shangri La.

[David Dimbleby]

White sand, palm trees, infinity pools.

[Nick Leeson]

And yes, it does look like we were on holiday.

[David Dimbleby]

But this wasn't a holiday.

[Nick Leeson]

You see stories about Interpol chasing us and you're then thinking about how you.

[David Dimbleby]

Survived because this banker is on the run. Nick Leon hasn't been seen since he checked out of a hotel in Quala Lumpur on Friday. Until he turns up, it may prove rather difficult to unravel the financial mess he's left behind him. Barings has collapsed. The bank of England has failed to find a buyer for Britain's oldest merchant bank. The man hiding out in Malaysia has just brought the oldest merchant bank in Britain to its knees. £827 million wiped out, leaving behind betrayal of chaos. Share prices on the London market have nosedived. The pound's already hit an all time low. Markets in the Far east have fallen sharply devastated by the news that one trader could wreak such havoc. His name is Nick Gleeson, a working class kid from the suburbs who became a star trader.

[Nick Leeson]

I enjoyed the lifestyle. I was the ascending star. At the age of 25, they're thinking, God, you're too hot to handle.

[David Dimbleby]

Until he wasn't.

[Nick Leeson]

There's three people to sell. Six foot by nine foot, you get a hole in the floor to go to the toilet in.

[David Dimbleby]

But Nick's story, his rise and his even more spectacular fall isn't just the story of one man. Financial services earned a surplus last year of over 7 billion pounds. What he did was enabled by what happened when the markets were unleashed. Work is continuing tonight to build a power station on the roof of the London Stock Exchange. It's all part of the preparations for what the City are calling the Big Bang. I'm David Dimbleby and this is Invisible Hands. The story of the free market revolution. A hidden force that changed Britain forever. Episode 4 Big Bang in her second term as Prime Minister, Margaret Thatcher dismantled Britain's state owned industries. BT was privatised and more would follow. This government has rolled back the frontiers of the state and will roll them back still further. It was part of an ambitious plan. A plan to make free market capitalism popular and accessible to everybody. All of us in politics have dreams. It's part of mine to give power and responsibility back to people. She'd given ordinary people the opportunity to buy shares in companies. There's a new breed of investor, the man in the street. Indeed. Now one can simply buy shares over the counter of a shop or bank and the freedom to buy their own home. The great Tory reform of this century is to enable more and more people to own property. And now she had her sights set on something else. A secretive world steeped in tradition, where men knew each other from school and made deals over long lunches. A gentleman's club that operated in one square mile in London. A maze of banks and business houses. Structures of steel and stone yet built because of money, wheat and wool, oil and ships. For these facades conceal the men and the work of one of the greatest financial centers of the world. It was a world full of people like David Buick.

[David Buick]

My father took me to lunch at Guys, which is a fish restaurant in the city.

[David Dimbleby]

This was the early 1960s, when David was just a teenager.

[David Buick]

He wore thick twin spectacles. He had the same thing every time, which was Brown Windsor Suit followed by Dover Soul.

[David Dimbleby]

David was nervous. He just got his A level results in and he'd screwed up. He knew that his father wouldn't be pleased.

[David Buick]

I didn't know if he was crying because his glasses were all steamed up from Brown Windsor soup, but he let me have both barrels.

[David Dimbleby]

Thousands of pounds wasted on a prestigious private education. And his son had thrown it all away.

[David Buick]

And he said, I had such aspiring thoughts for you. I wanted you to be a corporate lawyer and now you're going to have to go merchant banking.

[David Dimbleby]

Merchant banking was a kind of old boys club in the 1960s and it would be easy for David's father to get his son a job. And so he did. Here are the exchanges, centers of commerce, operated by personal contact, vast, yet as intimate as the old coffee houses from which they grew. The office was thick with cigarette smoke, or more likely cigars and the sound of papers shuffling and pens scratching. The carpets get richer and the men, servants grow more deferential. As the visitor approaches the office of the chief general manager, David started getting to grips with his new world, which revolved around buying and selling shares. And David quickly learned in the City of London that this buying and selling was a very strict, organized system. Everyone had their roles. There were the jobbers who set the prices of the stocks, and then there were the brokers, and they worked with the clients who wanted to buy or sell. When a deal was ready, the brokers got on the phone to the jobbers and asked them to do the deal. Good, well, that's done then. That's a quarter million 65s into 66s. 11 net. And the seven net jobbers were jobbers, brokers were brokers, and there was no crossing that line. Okay, Gordon, thanks very much. Right here. Bye bye. And there were also fixed fees that bankers could charge across the industry. And there were restrictions on who could actually own banks. Only trusted British banks could be full members of the club. It was a safe, closed world where things very rarely went wrong.

[David Buick]

We had the most wonderful time, you know, a couple of pints down to the Green man and an egg mayonnaise sandwich.

[David Dimbleby]

David Buick quickly got the hang of it.

[David Buick]

Bubble, that was the best word. My culture is about friendship. You know, yarns, stories, things that make us laugh, families. Who's going to win the Cheltenham Girl Cup? That so? That's all part of it as far as I'm concerned.

[David Dimbleby]

By the early 80s, David had carved out a comfortable career for himself. Long lunches betting on the horses and a steady flow of profits year on year. He assumed it would go on like this forever. But Thatcher had other plans. She believed the checks and balances were excessive. The division of jobbers and brokers inefficient and exclusive. That it served to protect those already in it and to shut the door to outsiders. That it discouraged true free market competition.

[Paul McGann]

The Office of Fair Trading started an.

[David Dimbleby]

Investigation into the cozy, traditional ways of the stock exchange. They found no less than 173 different practices which they considered discouraged competition. She wanted to break David's club. Like World Apart. Open it up to the free market, open it up to new investments. For many years, our vitality in Britain was blunted by excessive reliance on the state. We're having to recover the spirit of enterprise. And to help her do that, she had a new Chancellor of the Exchequer, a man called Nigel Lawson. A thriving financial sector is of course crucial to the success of any free enterprise economy. A financial journalist turned politician, Lawson knew the city well. But as an outsider, of course, he wasn't part of the club. And he shared Thatcher's vision. What we have here in London is a national asset of enormous potential, whose success will bring great benefits to the whole country. Her vision of turning the country into a global financial powerhouse, a great prize.

[Nick Leeson]

Is within our grasp.

[David Dimbleby]

But in order to do that, they had to rewrite the age old rules of the city. The changes represent the most radical reorganization of the way brokers and jobbers do business since they left the coffee houses. The rigid, slow system of jobbers and brokers would be abolished. The clients will be able to talk directly to the people who are making the prices. Foreign banks and their money would be welcome. And what's more, they'd be able to buy up British stockbroking firms. A couple of things we can reasonably predict about the banks in the next century are that they will be big and they'll be everywhere. New electronic trading systems will be put in place. Transactions will be made in seconds rather than hours or days. All I have to do now is tell them where I want my money to go to. So I think I'll choose some little offshore bank. But I do promise I will be here next week. Everything will be set up. So you didn't need to leave your desk. I get nightmarish thoughts of what the new deal is going to be like. He could be chained to his computer, a terminal in front of him, surrounded by screens, intravenously fed with his cholesterol bag by his side, dealing 24 hours a day. It'll be sink or swim. The intense competition means some brokers will come unstuck. But most believe that they stand to make a bomb. Thatcher and Lawson's changes were so radical, they were given their own name. Big Bang. In just under two hours, at 9 o'clock, big bang will finally explode in the City of London. On October 27, 1986, the Old World was obliterated.

[Paul McGann]

Titanic, Ship of dreams. The new podcast from the award winning Noiser Network. Join me, Paul McGann, as we explore life and death on Titanic. I'll delve into my own family story following my great uncle Jimmy as he tries to escape the engine room. We'll hear the harrowing tales of the victims and the testimonies of the lucky survivors.

[David Dimbleby]

I saw that ship sink and I saw that ship break in half.

[Paul McGann]

Titanic ship of dreams. Listen, wherever you get your podcasts.

[David Dimbleby]

The government would get out of the way, freeing up the banks and unleashing the full power of the market. Competition, innovation and opportunity, including opportunity for people who'd never even dreamt of entering the city. People like Nick Gleeson.

[Nick Leeson]

I grew up on a council estate. There was never a lot of money around. You know, I remember hiding from the telly man when he came around to collect money. The 50ps that were put in the back of the TV to keep it going.

[David Dimbleby]

Nick is the infamous trader who brought down a whole bank. And to understand how he managed to do that, we need to start right here in 1986 with Big Bang.

[Nick Leeson]

Big Bang is probably the biggest episode of opportunity for me during my lifetime.

[David Dimbleby]

At the time, Neeson was working as a clerk at a bank in the back office, processing the cheques and commuting in from Watford. But he felt stuck. Then Big Bang happened.

[Nick Leeson]

You know, when you got off of the tube at bank, there'd always be people standing there handing you out magazines. You know, there'd be a couple of little articles in the front of it and then it would probably be 15 to 20 pages of jobs.

[David Dimbleby]

So Nick applied for a job at the American Bank, Morgan Stanley threw in.

[Nick Leeson]

An application and then they offered me a job.

[David Dimbleby]

And for the first time, he was making serious money. Oi, you shut your mouth and look at my wad. More and more people like Nick were streaming into this new world. This is a journey into money.

[Nick Leeson]

I remember articles where there were a few traders holding up bottles of Stella or something outside a pub. City traders swap champagne for Stella Artois.

[David Dimbleby]

I know it's low to make. People whose parents had never owned stocks, people who hadn't gone to private schools, people who preferred lager to champagne. They were given a name.

[Nick Leeson]

Was I yuppie? You know, probably my friends back in Watford thought I was.

[David Dimbleby]

It stood for young urban professional. Sharp pinstripe suits, polished shoes, slicked back hair, oozing confidence and flaunting their success, the yuppies were poster boys for Thatcher and Lawson's financial revolution. I remember we even covered this for the BBC. Now let's go up into our airship over the River Thames for a moment, looking down over the big bang. The city of London. There's huge towers that have gone up over the last few years where the yuppies live. The people who drive down there between half past four and half past seven in the morning in their Porsches, we're told, and make a lot of money. Joan Baker's been talking to some of them. Celebrating. Yes, we are, yes. I mean financially. Things going well? Very steady. Good. Yeah. No change. Happy with that. So you're going to get rich, Ryan? I'm not rich already. We've never had it so good. Sing a song of six months A pocket full of dosh bosh, bosh. By the early 90s, Nick Leeson had left Morgan Stanley and was working at a famous, long established London bank, barings.

[Nick Leeson]

The venerable 230 year old Merchant bank.

[David Dimbleby]

One of the city's oldest and most.

[Nick Leeson]

Prestigious institutions, had some very, very wealthy clients. Members of the royal family, most definitely.

[David Dimbleby]

Before Big Bang, a job at Barings wouldn't have even been on the cards for someone from Nick Gleeson's background. But Thatcher and Lawson's revolution flung the doors wide open for him and for the banks too. Because now money could travel between banks and across national borders. British banks were looking to cash in, setting up branches across the world. And so Barings, one of the most established of the British banks, set up a trading desk in Singapore and they were going to trade in something called futures. Trading in futures is a kind of gambling. You agree with a seller to buy shares at a set price, but you don't pay for them straight away. When the time comes to pay, if the share price has risen, you're quids in because you only have to pay what you'd offered earlier and the rest is profit. Of course, if the share price falls, you lose everything. It's a dangerous game, but perfect for the fast paced, aggressive global culture that was now driving banking. Twenty years ago, the financial futures markets didn't even exist, whereas today they're right at the forefront of financial innovation. You could make a lot of money very quickly and you could lose a lot of money very quickly. The perfect opportunity for someone young and ambitious who wanted a chance to prove themselves. Someone like Nick Leeson, who was offered the job of a lifetime running the new futures desk out in Singapore, which was exactly what he wanted to do.

[Nick Leeson]

I loved it. It was where I wanted to be. It's what I wanted to do.

[David Dimbleby]

His first day on the job, Leeson stepped onto the trading floor at simex, the Singapore Stock Exchange. They call it the Pit. The noise was deafening, everyone shouting, arms waving, deals flying. It was so noisy, so chaotic. Traders had to rely on hand signals.

[Nick Leeson]

If you touch your fingers off your chin, that's singular. So, 1, 2, 3, 4, 5, 6, 7, 8, 9, then off your forehead, that becomes 10, 20, 30, 40, etc.

[David Dimbleby]

I couldn't have lasted a minute. I'd have forgotten what the signs meant.

[Nick Leeson]

And if you're selling, your palm is away from you, so you sell the number first, whereas when you're buying, you give the price first.

[David Dimbleby]

What an extraordinary system. But Nick worked frantically at it every morning to late afternoon, buying and selling stocks, making deal after deal. He was good at it, really good at it. In fact, he quickly became the bank's star trader.

[Nick Leeson]

You know, like Barings were having, you know, we had a party at Central Station in New York and they flew everybody there to celebrate the success we were having in Singapore.

[David Dimbleby]

Nick's success was so dizzying, the bank gave him carte blanche. They'd give him whatever he wanted as long as he kept making them more and more money.

[Nick Leeson]

I can't remember anybody giving me, you know, a list of policies and procedures. And you know, how you did a job. The organization wasn't too bothered how many people sank. They just wanted the swimmers.

[David Dimbleby]

Just as Thatcher and Lawson intended. A new world that created seemingly endless opportunities.

[Nick Leeson]

I was being celebrated by everybody, right? So as long as London keeps sending me mummy, you know, I can do this ad infinitum.

[David Dimbleby]

But it was hard work. Nick was on the trading floor all day, often until late into the evening. One day it was even more hectic than usual.

[Nick Leeson]

The markets were going crazy, the volume was going through the roof.

[David Dimbleby]

He was executing a deal when he made a signal to a new colleague, raising his hand, palm towards him, indicating he wanted to buy. Yeah, those hand signals.

[Nick Leeson]

It was about 3 or 4 o'clock in the morning that we realised we had a position error.

[David Dimbleby]

He realized there'd been a mistake. His new colleague had misread his hand signal.

[Nick Leeson]

She executed it the wrong way.

[David Dimbleby]

She sold instead of bought. A $20,000 mistake. Leeson wasn't too worried about it. He decided to let it go for the night and to report it in the morning. But then he realized something. His bosses only cared about one thing and that was profit. Big bang. The great deregulation of the city had given traders much more freedom. There were fewer checks, fewer balances. And out in Singapore, far away from London, it felt to him as though no one was really watching him. And so Leeson, feeling invincible and the darling of the city, the star trader, had an idea. What if he didn't report the error and made the money back himself without.

[Nick Leeson]

Anybody being any the wiser?

[David Dimbleby]

It's a gambler's mentality. You Lose. And then you keep playing, hoping to make up for the original loss. And that's what Nick Gleeson does at this point. He buys and sells, making bigger and bigger trades, riskier bets with ever larger sums of money. But there's a problem.

[Nick Leeson]

The loss is getting bigger.

[David Dimbleby]

Nick isn't making the money back. In fact, he's losing more money. So the original $20,000 mistake has now become 50,000. 100,000. A million.

[Nick Leeson]

It snowballs out of control quickly.

[David Dimbleby]

But Nick keeps doubling up every day, asking for more cash from the London office to trade with.

[Nick Leeson]

They've got no idea where this money is, what it's being used for. They're not asking questions.

[David Dimbleby]

No one is checking what he's doing because no one needs to. The checks and the balances are long gone. Of course, it wasn't just the lack of checks and balances, because by this point, Nick was essentially engaged in a massive fraud. He'd made fake accounts, he'd falsified trading reports, all to try and cover up the scale of his losses.

[Nick Leeson]

You get a little bit more confidence that you've got more time to solve the problem.

[David Dimbleby]

But then disaster struck. Rescuers in Japan are digging in the rubble for a thousand people still missing after the worst earthquake there for half a century. An earthquake in Japan caused a run on the market. The markets start falling and falling and falling.

[Nick Leeson]

I need more money from London, and you know London has no money.

[David Dimbleby]

Barings had simply run out of cash. Nothing left to send Nick Leeson. He knew the game was up.

[Nick Leeson]

I went to see one of the guys on the trading floor, said, I'm leaving. You know, the proverbial's gonna hit the fan. I need to get out.

[David Dimbleby]

He packed his bags, got on a plane to Malaysia, hoping to clear his head.

[Nick Leeson]

You go down into the new agent, you pick up the Asian Wall Street Journal, and the headline is British bank collapses.

[David Dimbleby]

The bank of England fights to save Britain's oldest merchant bank from collapse. Barings faces bankruptcy after an employee loses £400 million gambling on the Tokyo stock market. It seems incredible, but Leeson's original tiny loss of about $20,000 had reached 827 million pounds, more than Baring's entire capital. The bank could no longer trade. One of Britain's oldest and most stable banks, founded in 1762, had gone, wiped out in a few short months. Police in Malaysia searching for the financial trader at the center of the Barings bank collapse say the trail has gone cold. And this takes us back to the beginning of our Story with Nick in the luxury Shangri La Hotel. I can imagine him there, sitting in his hotel room, watching the news. News of what he had done. A former star trader who had lost £827 million. A figure so large it's almost unfathomable. And maybe the fear, maybe the humiliation and being on the run, maybe it all got too much for him. And Nick decided to come home. So he boarded a flight back to England via Germany. He walked through the crowd of press at the airport.

[Nick Leeson]

Suppose it was the first time that I've ever had to deal with the world's media. So when I arrived in Frankfurt, what.

[David Dimbleby]

Was said last night over the interrogations? Can you give us some idea?

[Nick Leeson]

The media were. Everybody was waiting at the airport.

[David Dimbleby]

Just give us an idea. He is cooperating with cad. He was now on the COVID of newspapers all around the world. He was an international celebrity.

[Nick Leeson]

Everybody wanted a story. Everybody was trying to get to me.

[David Dimbleby]

Nick Gleeson spent time in a German prison before being extradited back to Singapore to stand trial. And there he was, convicted of fraud and sentenced to six and a half years behind bars. Back in London, Baring's employees faced devastation. It's very mysterious, people just walking around, not sure what's happening. Some people are wrapping up all their belongings. I've only been here a week. My career has been halted at the first hurdle. I'm very, very happy that he's been called. His colleagues were, of course, furious with Nick Leeson. But there was a bigger question. How could this have been allowed to happen? As far as I'm concerned, the management should stand up and take some of the blame. And they're not even the Chancellor. No longer. Nigel Lawson was forced to address the issue in the House of Commons. The better the bank's own systems and controls, the less likely this is to happen. Every regulatory authority and every bank must now be considering what further steps it can take to protect itself against this sort of risk. People began wondering, was Nick really the only one to blame? Or was it the bank or even the entire financial system in London? The question people are asking why did.

[Paul McGann]

It take the authorities so long to see Barings problems?

[David Dimbleby]

Rumours had been circulating in the City for days. In the years since, one thing became clear. Both Nick's spectacular rise and his even more spectacular fall would have been unthinkable before Nigel Lawson and Margaret Thatcher unleashed the power of the free market. Before Keith Joseph had sold the idea, before Anthony Fisher had dreamt of a free market Britain. Big bang brought untold riches to Britain, made it a financial center of the world, that maybe this was the first sign that the government had lost control, that the markets were now more powerful than anyone in Westminster. After Nick lost £827 million, there was some performative soul searching in the industry. But things pretty much went on as before. A global system enthralled to booming balance sheets. But there was one person who was worried, one man who more than anyone else, foresaw the turmoil that was to come. He came up from, if you like, a political swamp and rose above it all. A bit like Excalibur coming up out of a lake. A tycoon who turned on the very force that created him and who maybe predicted the world we live in today. See all those beautiful caps? We will make America great again. That's next time on Invisible Hands. Invisible Hands is from the history podcast, Radio 4's Home for Story driven history documentaries. And if you subscribe on BBC Sounds and switch on push notifications, we'll tell you as soon as new episodes of this series become available. Invisible Hands is a Sam as DAT audio production for BBC Radio 4 and the History Podcast. It's hosted by me, David Dimbleby. The producer is Joe Barrett. The executive producers and story editors are Joe Sykes and Dasha Licitsina. Sound design by Perry Peregrine Andrews. The commissioning editor at Radio 4 is Dan Clark. And our thanks to Phil Tinline, Peggy Sutton and Leo Schick. It's a parent's nightmare. They said, oh, it's a boy. And I was holding my hands out, ready to cuddle him and they took him away. A switch at birth discovered with the gift of a home DNA test. The so called brother that we grew up with wasn't a brother and there's someone out there. If he's still alive. Is a race against time. I don't want this woman to leave this earth not knowing what happened to her son. The gift from Radio 4 with me, Jenny Kleeman. Listen now on BBC Sounds.

[Paul McGann]

Titanic Ship of Dreams, the new podcast from the award winning Noiser Network. Join me, Paul McGann, as we explore life and death on Titanic. I'll delve into my own family story following my great uncle Jimmy as he tries to escape the engine room. We'll hear the harrowing tales of the victims and the testimonies of the lucky survivors.

[David Dimbleby]

I saw that ship sink and I saw that ship break in half.

[Paul McGann]

Titanic Ship of Dreams. Listen wherever you get your podcasts.