Chris Blackhurst: We should have let banks go to the wall. They don’t care about our wellbeing
Midweek View: The City in the past has behaved like a separate country, aloof from all of us
Have attitudes in the City changed? It’s a question I’m asked a lot by people outside the Square Mile.
They seem to raise it in hope, more than anything else. The answer I give is “yes and no.” That may seem typically fudge-like but it also happens to be accurate.
On some levels, the City is different: banks are weighed down with compliance and procedure: there’s far greater attention being paid to recruitment at the top level; bonuses are increasingly being paid in shares; firms are anxious to be seen to be doing the right thing.
They’re pursuing pretty much zero tolerance to anyone caught crossing a line. Humility and maintaining a low profile are the orders of the day.
So far so good. But deep down, have attitudes really shifted, has the culture altered? Here, I have to report a resounding “no”. We’ve had numerous examples of bad practice, including instances of mis-selling and manipulation of rates. Right now, the Co-op Bank debacle continues and there are claims that RBS pushed struggling businesses to the wall so it could take over their properties on the cheap. Meanwhile, no less a figure than Justin Welby, the Archbishop of Canterbury, has felt moved to intervene, and join with Lord Lawson, the former Tory chancellor, and other senior peers, to try to toughen up the Government’s banking reform bill.
Here’s another scandal to add to the mix. A friend contacted me. He was outraged by the behaviour of an investment bank. He’d approached it with a proposal – I can’t go into detail but, suffice to say, he was setting up a new business and was looking to forge a lasting relationship with a bank. My friend and his partners are not slouches – they come with established records, of the sort that would cause anyone in finance to nod in recognition and want them as clients.
My pal and the bank got on well. Then they quoted how much they would charge for their services. When he gasped, and queried the price, he was told: “We’re too big to fail.” In other words, by dealing with them, his money was safe – they were guaranteed by dint of relying on a future government bail-out not to go under – and therefore he should pay more.
It’s unclear how much the bank is imbursing the Government for this explicit insurance policy – presumably nothing, but there’s no doubt if they hit a crisis, they expect the taxpayer to cough up.
I confess to not believing him. I was so shocked as to assume he was having me on. But when I quizzed him, he remained solid. I played a bit of a guessing game as to the identity of the bank, but he was having none of that – he did not want people thinking their conversations with him would be relayed to the press.
There was no doubt in my mind it was true. He had no reason to call me; he was gaining nothing by making up such a tale.
In which case, I must put up my hand to naivety. When Mervyn King banged on about “moral hazard” I tended to scoff at the Bank of England Governor. I thought the cerebral, unworldly academic in him had won through, that Mervyn was finding conspiracy and deliberate, cynical, calculated action when there was none. I did not suppose that banks felt able to chase greater profits because they knew the authorities would not let them collapse.
I know, I know. I was a fool, a total innocent where bankers and morality are concerned. I should have realised: that to give a bank even a sniff of making extra profit is enough; that pretty much everything that is put in their way can be turned on its head and made into an opportunity.
Mervyn was right all along. We should have let banks go to the wall, rather than save them. In our desire to shore up the system we’ve created monsters that now feel able to exploit our goodwill, which do not care two hoots for us or the overall well-being of society.
The arrogance is breath-taking. Unfortunately, it’s all too indicative of a City that in the past has behaved as if it’s a separate country, aloof from events that affect the rest of us, unable to see beyond securing the next quarterly earnings rise and that all-important bonus. It seems that stance still prevails. So “yes”, coupled, sadly, with a resounding “no” is the right answer.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...