Thursday, 2 February 2012

Don't Bank On It

Racing driver Sir Jackie Stewart claims Fred Goodwin was been made “a scapegoat”, following his friend being stripped of his knighthood for services to banking. When the Royal Bank of Scotland hit the buffers in 2008, to be publicly propped up to the tune of £45 billion, it could have been little worse if run by a real goat. Of course, bashing the bankers has become fun, fashionable, and a fresh way to let off steam, like roller-discos in the 80s, but without knee-pads. And yet, this de-knighting has been chastised and championed in equal measure. Simon Walker, the Director-General of the Institute of Directors warned that it “politicises the whole honours system”. It is political, and was even before Cash for Honours.
The Chancellor, George Osborne, welcomed the decision by the forfeiture committee, saying that “RBS symbolised everything that went wrong in the economy.” Taking the honours does nothing to negate a repeat of the banking crisis, and successive governments have failed to police any pernicious practices, so it is indeed a purely symbolic gesture. But will it stem the flood of public anger over the pension Mr Goodwin receives, and the bonuses currently up for grabs in a company that is 83% owned by the taxpayer? Surely the call to be competitive must be balanced with the restrictions of what is effectively now a public sector entity, and not getting the pension you were promised is part and parcel of that re-written reality.
In some ways, the current Chief Executive of the Royal Bank of Scotland has a lot in common with the Prime Minister. Stephen Hester took on a large organisation that had been grossly mismanaged, requiring an eye-popping amount of borrowing to maintain its very existence, and Mr Cameron took on Britain. Both work in results driven industries, geared to short term targets, and neither has probably taken a bus or bought a pint of milk in years.  Of course, a lack of familiarity with public transport and the purchasing of dairy produce need not preclude either from giving a competent account of themselves professionally. However, it speaks to the outrage at one being offered a million pound bonus, and the other seeming unwilling to prevent him taking it.
With belts audibly tightening across the country, the news that Mr Hester would forgo his shares must have elicited an even louder sigh of relief in Downing Street. Mr Cameron has hit the jackpot without even buying a ticket. It would be hard to credit his actions which precipitating this change of heart.  It was pressure from the media, the public, and the Labour party, in the form of an impending Common’s debate on the issue. A tenacious opposition leader might make plentiful political capital of that, although this one has shown a tendency to take the loaded weaponry that fate has handed him, and shoot himself in the foot with it.  

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