It's only now that scientists are beginning to understand how power shapes the brain and behaviour: that power really does feel as good as cocaine and sex. According to Professor Ian Robertson, a Dublin university neuroscientist, it's because power increases testosterone levels which in turn increases the uptake of dopamine in the brain's reward hard-wiring which leads to an increase in egocentricity – and a reduction in empathy.
In a well-timed article for the New Scientist last week, Professor Robertson explains that dopamine – like many neurotransmitters in the brain – works in an "inverted U" shape where either too little or too much can impair the co-ordinated functioning of the brain. Too much power leads to real problems in judgement, self-awareness and even narcissism. Look at how President Obama has changed in office, he says, from the aloof, academic-type when first in power, to one who jokes about sending predator drones to attack a boy band liked by his daughters to sexual innuendos about his wife .
You could see signs of this Master of the Universe behaviour from "I love Barclays" Bob Diamond at the Treasury Select Committee last week when he refused to take personal responsibility for the Libor fixing and stone-walled any suggestions that he should have. Even his apologies for the "reprehensible" behaviour of others sounded hollow.
It's been obvious to many in the press and the outside world that Mr Diamond's behaviour over the past few years has not been what you would expect from the boss of one of the UK's most important banks; for once, it's not a case of the media crying wolf after the event. Serious questions have been asked over the bank's tax arrangements, the decision to hive off toxic assets into the off-balance sheet vehicle, Protium, after the crash and the decision by Diamond and other high earners in Barclays Capital to take mouth-watering pay and bonuses despite a disappointing return on equity, a 70 per cent collapse in the share price over the past five years, as well as other scandals from the miss-selling of payment protection insurance to interest-rates swaps.
It also became common knowledge that Diamond had become almost a cult figure, revered yet feared, for his ruthless empire-building so no one on the board dared stand up to him; some of us asked, back in September 2010, when Diamond became chief executive, when would the bank be renamed the Diamond Bank such was his power.
That's why the revelation from Andrew Tyrie, the chairman of the select committee, that the Financial Services Authority warned the Barclays board about Mr Diamond's suitablity to take control of the bank in 2010, and then warned again about the culture at the top as recently as February, is so damning.
If the FSA had these fears, did it make it clear to the board that it wanted changes to be made? Or were those warnings so insipid as not to be listened to? Or is it true, as Mr Diamond explained, that the fears were about managers lower down?
There's an alternative view; that the FSA is leaking these documents to Tyrie because it wants to show the watchdog was barking but no one listened? Is it trying to dump the blame on the Barclays board? If the latter excuse is the case, then such a defence is deeply damaging to the FSA's chairman Lord Turner and may well backfire on the regulator.
It's fair to say the FSA is not having a good crisis. Last Sunday, Turner said on television that the FSA could not bring criminal prosecutions because the watchdog could only act in relation to qualifying instruments – and that Libor is not a qualifying instrument. But according to the HBOS whistle-blower and barrister, Paul Moore, that is not true. He says there are at least four options open to the FSA – ranging from powers to prosecute under s.401 of the Financial Services and Markets Act 2000 for reckless behaviour to private prosecutions under s.16 – obtaining pecuniary advantage by deception – to s.129 for market abuse. Is Moore correct? We should be told.
If anything at all, the Barclays affair demonstrates once again how power is such an intoxicating drug; one that needs constantly curbing. It's why we have elections every five years to keep the politicians under control, and it's why regulators should look at the behaviour of financiers rather than their rule-book. Did power go to their heads too?
Ministers must ensure Barber doesn't disappear into a boardroom
Away from Westminster's cynical mud-slinging over Libor, it was good to catch up with Brendan Barber, the TUC's retiring boss, who as always had some interesting thoughts on the latest scandal.
Barber was the guest speaker at a dinner held last week by the Respublica think-tank – where I am a fellow – held to discuss how the UK should be shaping its industrial policy. It was the liveliest of debates with guests ranging from No 10 policy advisers to German diplomats. Barber surprised many with his concern that the political point-scoring over bankers is distracting us from the bigger issue; the failure of the banking system to finance the broader economy and small businesses specifically.
Barber wants less jaw-jaw over bankers' bonuses and more action on getting more investment into the economy, more lending to small businesses and sectoral rebalancing. In his view, even the Vickers report – on ring-fencing the banks – doesn't go far enough to provide solutions to introducing more competition into banking or a greater credit flow.
Nor does he blame this Government – but all governments. If you look back to the 1980s, he says, the UK has always had the lowest or second lowest rate of investment into the real economy of the G7 countries as a percentage of GDP. In 1980 it was less than 20 per cent – Germany was nearly 30 per cent – and in 2010 it hovered at 15 per cent.
So what's to be done? Well, other than finding a Higgs Boson "growth" particle, he puts radical reform – breaking up the banks, reducing loans to property and finance, a new state investment bank, developing venture capital and new bond markets – at the top of his list for industrial recovery.
Who knows, he teased, maybe now is the time for some new economic thinking between bosses and unions; give workers seats on boards and German style works councils and the workforce will leap at the chance. Barber retires in the autumn; if the coalition is smart it will find him a new job before he's snapped up as a non-executive. There must be hundreds of boards which would just love to have him.Reuse content