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.

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before