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
Homeless Veterans charity auction: Cook with Angela Hartnett and Neil Borthwick at Merchants Tavern
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Sport
Amir Khan is engaged in a broader battle than attempting to win a fight with Floyd Mayweather
boxing Exclusive: Amir Khan reveals plans to travel to Pakistan
Arts and Entertainment
J Jefferson Farjeon at home in 1953
booksBooksellers say readers are turning away from modern thrillers and back to golden age of crime writing
News
Stacey Dooley was the only woman to be nominated in last month’s Grierson awards
mediaClare Balding and Davina McCall among those overlooked for Grierson awards
PROMOTED VIDEO
News
Twitchers see things differently, depending on their gender
scienceNew study shows that birdwatching men have a lot in common with their feathered friends...
Voices
Vivienne Westwood and her son Joe Corré deliver an anti-fracking letter to No 10 last week
voicesThe great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
News
i100
Arts and Entertainment
Caroline Flack became the tenth winner of Strictly Come Dancing
tvReview: 'Absolutely phenomenal' Xtra Factor presenter wins Strictly Come Dancing final
News
Xander van der Burgt, at the Royal Botanic Gardens, Kew
scienceA Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
Life and Style
A still from the 1939 film version of Margaret Mitchell's 'Gone with the Wind'
life
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

Bill Granger's Christmas Eve fish feast

Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

Rodgers fights for his reputation

Liverpool manager tries to stay on his feet despite waves of criticism
Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

Michael Calvin's Last Word

Sepp Blatter is my man of the year in sport. Bring on 2015, quick