Steve Richards: Politicians vilify the bankers – but they don't dare to act
Political leaders dare to speak out but are fearful for different reasons of coming up with precise policies
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Independent Minds
The unpopularity of the bankers is without precedent. In the late 1970s, reckless trade union leaders could always count on support from parts of the Labour Party and the media. Now, the bankers face universal vilification. Political leaders are in a contest to shout the loudest in their condemnation of big bonuses. Powerful newspapers fume at their immoral behaviour. As the shadow Chancellor, George Osborne, declared: "The party's over."
Or is it? Gordon Brown's response in terms of policy is to hold a review. That is always Mr Brown's response to areas which are complex and controversial. Indeed, in the past, he appointed senior bankers to conduct his reviews. Most famously the former banker, Derek Wanless, reviewed NHS spending. That was when Mr Brown considered it to be fashionable and politically expedient for him to be associated with bankers, a Labour chancellor dancing arm in arm with wealth-creating entrepreneurs. It worked for him at the time. In 2003, Mr Wanless proposed tax rises to pay for the NHS, and – behind the protective shield of such a revered member of the financial community –Mr Brown dared to make his move.
Now he turns to Sir David Walker, a senior adviser at Morgan Stanley International to review the bankers. I can imagine the fevered thinking that led to the setting up of this review. Mr Brown would not want to decide who should or should not get a bonus. There are legal contracts entitling some to bonuses. He wants to keep a distance and yet at the same time he wants to be seen doing something. So he sets up a review. When the review reaches its conclusion at the end of the year he will be acting on behalf of Sir David Walker, another protective shield.
The timing is also highly political. The review will report its preliminary findings in the autumn. That will give ministers a set of headlines about a tough new approach to banking. I can assure you now that the preliminary findings will be the same as the final ones scheduled for the end of the year, which will give Mr Brown another hit as he responds to the definitive report.
Mr Brown recognised long ago that the anti-politics culture in Britain means it makes more sense for a non-politician to take the controversial decisions. It is a depressing and yet valid insight. Nonetheless, in this case, Mr Cameron and Mr Osborne have good cause to spot the ploy and mock it. It does not take a review to discover what has been going on in the banks. Mr Brown and others know exactly what happened and why. The review is a timid device when action is needed.
But Mr Cameron and Mr Osborne are severely challenged by the banking crisis too. They make much of changing capitalism through cultural pressure, a nudge here and there. In his generously received speech in Davos, Mr Cameron argued that "if markets and capitalism, and the activities of individual businesses conflict with our vision of the good society and a better life ... we must speak out".
A lot of powerful forces are speaking out at the moment and the banks have told them all to get stuffed. The response is the most vivid proof yet that exhortation is not enough. If they won't yield to such forces as the mighty media and all the main political parties it is difficult to imagine them relenting to any combination of words and cultural pressures.
In fairness, the Conservatives accept the banks need a tougher regulatory framework. I spoke to one of their frontbenchers yesterday asking some more interesting questions about the efficacy of markets. Why was it, he wondered, that some bankers were being paid huge sums for offering advice and information that were in the possession of any senior financial journalist being paid a tenth of the salary? One example of many, he concluded, in which markets were not working effectively. The analysis is thoughtful. The problem is that merely telling the bankers and others to behave themselves evidently will not do the trick.
Currently, political leaders dare to speak out but are fearful for different reasons of coming up with precise policies. Mr Cameron's latest move is to form a new Economic Recovery Committee, another gesture, an attempt to be seen doing something rather than addressing more fundamental questions about the Conservatives' economic policy. Mr Cameron's committee and Mr Brown's review are symptoms of fearful caution as the world moves on.
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Comments
Of course, the people in charge of the clear-up are the same as those who scammed their way into fortunes through their insider deals, and the gravy train between the financial institution and politicians rolls on - scratch my back and I will scratch yours.
The UK and US establishments increasingly resemble the Ancien Regime, and perhaps the results will be similar if things go sour.
In Germany, Switzerland and France some greater sincerity in cleaning up is evident.
We need a more balanced, fairer society to emerge after the crisis is over. Seen from outside central London, the leaders of business and politics are seen as a privileged clique, all of whom have their snouts in the trough. Until our leaders get serious about controlling the worst abuses, and making sure the burden of hard times is shared fairly, we'll not get out of the present mess.
Give us a fairer, more balanced society. Is that too much to ask?
The problem surely began over the pond way back in Jimmy Carter's time in the White House when he encouraged banks to lend to the poor blue collar workers to enable them to own property. This was carried further by Clinton who continued to encourage Fannie Mae and Freddie Mac both state sponsored banks to continue the process. The resulting chain effect can be seen in a very good article at http://myslu.stlawu.edu/~shorwitz/open_
I am so saddened by all of this when I look back on that first day of May 1997 when hope was rekindled after 18 years on Tory rule. With this in mind Politicians and Bankers need to be held to account for all this destruction. I'm not impressed by Brown and others sheding crocodille tears for they have the prospect of avoiding the day to day consequences of what they have done. The Treasury Select Committee may surprise us by biting the arses and drawing the blood of those before it today but I fear that won't be the case as our politicians are piss poor at their principal role of defending the electorate that have put them in Parliament and given to each of them our individual atom of power to exercise jointly and powerfully on our behalf.
There seems little hope for the future in a political system containing leaders content to cede power to whoever is flavour of the month to the detriment of electorate. Surely government is for the benefit of the people not for individuals - we now now that New Labour and Brown - by name and nature -can shit on Society every bit as effectively as the Conservatives - so where do we go from here!
o anyone and everyone, google up
jamesroberston
Download his proposals and and see if you agree and do what you can to promote them.
Now is the time to act.
There's no point relying on Gordon to do it is there?
The Treasury Select Committee deemed Wanless culpable. In between oustings Wanless was Knighted on the recommendation of Gordon Brown. Similarly, Sir Fred Goodwin was also Kighted on the recommendation of Gordon Brown. Goodwin's citation was 'For Services to Banking'. What more do we need to know ?
"Mr Cameron's latest move is to form a new Economic Recovery Committee, another gesture, an attempt to be seen doing something rather than addressing more fundamental questions about the Conservatives' economic policy".
I think that is very unfair.
Cameron is not the PM and cannot do anything. He is preparing for when he takes over; is that wrong?
Gordon the Golem said that he'd eliminated "boom and bust". In such circumstances it was surely acceptable to take greater and greater risks. Were they even risks in the New Jerusalem that the Golem was creating? A never-ending boom was what the Golem laid out.
Interest rates should've been cranked up from 2006 onwards to dampen down the housing bonanza, but when he made the BoE nominally independent he charged them with setting interest rates without considering house price inflation. It was insanity and a recipe for the boom to end all booms.
Now, when will the high and mighty John McFall call on the Golem to face his Select Committee. When will be harangue the Golem over his failure? When will he demand straight answers to simple questions (good luck to him, no one else has managed to get a straight answer from the deceitful Golem)?
I have been worried for ages Steve that you seemed utterly desperate to find excuses why we should all vote Labour at the next election in spite of the unholy cockup they have been making of "ruling" this country. I hope you are starting to see this country simply can't afford Labour incompetence and their amazingly arrogant timidity any more.
"Oh, I'm so, so terribly sorry I screwed up your savings, and ..oh, did you really lose your life savings?
I just can't express how awfully sorry I am.
Tennis, anyone? Croquet?
Ah! A good solid mug of tea! We're so lucky to be so civilised that when all is crashing down about us, we just say politely, 'So sorry," and carry on up the Khyber.....oh, well, no, not the Khyber...somewhere else...."
Define "politics."