James Moore: Banks need to cool it as anger grows
Wednesday 02 September 2009
Outlook Not wanting to be outdone by Lord "Tax 'Em" Turner, Gordon Brown has now decided he has to join in with the bonus bashing too. Of course, when you look beyond the headlines, it becomes clear that, amid all the noise and the fuss and the desperate desire to pass the buck on to someone else, they are saying much the same thing. Which is that there should be international action to rein in the recidivists, who can't seem to shake their addiction to seven-figure payouts for doing well at financial roulette.
Of course, it is terribly easy to talk tough and make all sorts of bold promises when that little caveat is attached to whatever you say. Funnily enough, "international action" is exactly what the British Bankers' Association has been saying is the way forward for months now, ever since it became clear that some banks are carrying on regardless of the fact that the world has changed.
They all know that securing any sort of agreement for anything beyond vague platitudes is going to prove very difficult. Not least because some of Britain's European partners see the chance to rewrite the rules as little more than an opportunity to grab some of the business that flows through London.
The trouble is that the banks just keep on adding fuel to the fire. Barely a week goes by without a story of ABC Bank offering squillions to poach XYZ bank's super duper forex derivatives equity share trading team.
Shielded in their top-floor offices in the towers of the mini-Manhattan that is Canary Wharf, and cooed at by any number of sycophantic yes-men, bank bosses appear not to realise that those headlines are going down with the public like a lead balloon. So badly, in fact, that the clamour for action is getting louder and louder.
Politicians are well aware that this country needs the City of London. They know that the consequences of losing the jobs and tax revenues it provides do not bear thinking about. They are partly responsible for encouraging the excesses that got us into this mess in the first place.
But as an election approaches and their own gravy trains are put at risk, there is a real danger that they will feel unable to resist the urge to just "do something", without too much thought for the consequences.
The banking industry needs to realise this. It is high time somebody told its high priests it is time to cool it. Not poaching that trading team might be a short-term disappointment. It might set back ambitions temporarily. But there will be a long-term benefit because history shows that the law of unintended consequences always applies when Westminster rushes into things. There is still time for bankers to take steps to put their own houses in order. But it is rapidly running out.
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