Bob Diamond, the ex-chief executive of Barclays, dropped out of hosting the fundraising bash which was held in London on Thursday night for Mitt Romney, the presidential hopeful. But he was there in spirit. Mr Diamond had already sent a cheque for $2,500 and is known to have given more to his campaign; Barclays paid a $50,000 speaking fee to Mr Romney last year. Another 82 employees of Barclays have also donated up to $1m to Mr Romney's campaign, according to the US Federal Election Commission records, many of them ex-Lehman.
It's said that Mr Diamond stayed away from the Romney party because of the Liborgate scandal. But the two are close and the Barclays gossip was that if the Republican wins in the autumn, Mr Diamond had fancied his chances as the new US Treasury Secretary.
Barclays is not the only one to have bankrolled Mr Romney; most of Wall Street's biggest banks have smiled sweetly on his campaign. Goldman Sachs is top with $636,000, followed by JPMorgan Chase & Co and Morgan Stanley, Bank of America and Credit Suisse. Now Mr Diamond, and his banker friends, are entirely at liberty to give money to whichever candidate they so wish. But it doesn't take a genius to work out that Wall Street is funding Mr Romney because the bankers do not want the universal banking model broken up. Wall Street is not going to vote for a potential president who wants to take away the gravy train which has for the past 20 years provided them with riches galore. Turkeys voting for Thanksgiving and all that. Why would they? Well, they may not but there are others who do want to shake up the status quo. Ironically, it's the investors who are now shunning bank shares as they see how employees, like Mr Diamond, have stripped out the goodies and left them, the owners, with the dregs. Indeed, James Chappell, financial analyst at Berenberg Bank, has put a red alert on most universal banks and has a sell rating on Barclays and a lowly target price of 160p until a new strategy is agreed upon by the new board.
In an excellent report out last week, Investment Banks: Time to change the Model, Mr Chappell argues that investment banks should not be owned by long-term equity as incentives are not aligned between them and the employees — pay is at least 30% too high. He comes up with three easier measures which would help align the industry with investors; make all variable pay paid out as long-term loss capital adequacy buffer securities, CABS, which would have first loss status on all the investment bank's losses. If these CABS had been in place in 2007, covering five years of compensation, then capital ratios would have been more than double reported levels, he claims. Dividend decisions and pay should be balanced and capital levels should be increased on a simple equity/assets basis.
But Mr Chappell knows these remedies are only sticking plaster and that returning the investment banks to private partnerships is the superior solution. That's why it was so disappointing to hear Marcus Agius, Barclays chairman, say on Friday while announcing half-year results that the board is glued to the universal banking model. There are two reasons why this was the wrong statement. First, Mr Agius is the acting chairman until a successor is found and it will be his replacement that will then help find the chief executive. Second, it is only when a new, strong board is in place that Barclays can decide on its future strategy.
Who knows, maybe the new board will see first-mover advantage in a break-up or at least a huge slimming of what was called Barclays Capital. Maybe Mr Diamond could be persuaded to risk his own capital and buy it out?
A tough doors policy but these three still have to face the music
Getting into London's magnificent Lancaster House, where Britain's Olympics for Business is being held can't be that much easier than escaping the confines of Colditz.
It was Cobra stuff: passports, body searches, personal escorts into the building while embarrassed UK Trade & Investment staff had to watch the gathered media's every move.
So whether somebody had managed to slip through the protocol to switch the music being piped into the media rooms for a laugh or serendipity was at play it's hard to say. But as the press waited patiently for the grand finale of finance ministers to begin, out from the speakers came the haunting strains of "Riders on the Storm".
Just as The Doors' Jim Morrison sang his wonderful lament: "Into this world we're thrown, Like a dog without a bone, An actor out alone…" up flashed on the screens our own Chancellor of the Exchequer George Osborne, Christine Lagarde, the managing director of the International Monetary Fund, and Angel Gurria, the secretary-general of the Organisation for Economic Co-operation and Development.
How appropriate; the three were taking part in a question and answer session on the global economy, so stormy it was.
Osborne admitted twice how disappointed he is by the latest GDP figures but hopes that the UK's "open for business" campaign will help boost inward investment; let's hope so too.
By far the most depressing was Gurria, who reminded us that Europe now has 14 million unemployed with up to half of all youngsters in countries such as Spain without jobs.
It was Lagarde who gave the most surprising answer to a question about what is the biggest problem facing the world when she put the US deficit at the top. Europe's sovereign debt came second while rising oil prices came third.
Her answer to another question on solving Europe's crisis was "more" Europe; banking, fiscal and monetary.
But no one asked her what I'm sure everyone wants to know: how does she keep up that tan?Reuse content