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Sunday 1 July 2012
What happened to reliable, honest bankers?
I write as a long-suffering bank shareholder, hearing in amazement that the CEO of RBS has decided to forgo his bonus this year. The amazement stemmed from the idea that his directors would have even considered offering him a bonus in this situation, and from deducing that bonuses were not bonuses but an in-built part of his normal salary.
The argument that high pay and lavish bonuses are needed to attract the best talent has surely now been exploded in an industry where such incentives have coexisted with such disaster.
What shareholders like me need are steady, reliable, sensible and, above all, honest people, executives who have no mercenary incentive to massage results or jigger share prices and who have decent remuneration but who also get satisfaction from a job well and honestly done in the interest of bank and community.
If you offer high wages and bonuses as well, you will attract precisely the wrong type of person and foster a bonus-hunting culture where anything goes.
T H C Noon
Barclays President Bob Diamond, told BBC Radio 4 on 15 September 2009: "There isn't any banking without risk". Anyone unwilling to take risks should "get out of banking," he added.
Had Mr Diamond been a responsible banker he would have echoed, instead, the wisdom of US Comptroller of the Currency and later Secretary of the Treasury, Hugh McCulloch, who wrote in December 1863 to all national banks: "Pay your officers such salaries as will enable them to live comfortably and respectably without stealing, and require of them their entire services. If an officer lives beyond his income, dismiss him.
"Pursue a straightforward, upright, legitimate banking business. 'Splendid financing' is not legitimate banking, and 'splendid financiers' in banking are generally either humbugs or rascals."
For sixty years, the Glass-Steagall Act of 1933 in the United States separated commercial banks from investment firms. Different funding sources between commercial banks and the other types of financial organisations evolved different cultures, value systems, temperaments, and personality types.
Commercial banks are custodians of society's saving; thus, highly regulated. Commercial bankers are trained to avoid speculation, respect risk control structures, and pursue long-term banking relationships. They earn relatively modest but comfortable salaries. Investment firms, by contrast, are prohibited from seeking customers' deposits; speculation is at the heart of their trade. Investment managers are disdainful of control structures, regarded as impediments to making money.
The liberalisation years of the Reagan and the Thatcher administrations of the 1980s, the repeal in 1999 of the Glass-Steagall Act, a Bush administration contemptuous of regulation, along with light-touch controls in the United Kingdom during the Blair and Brown years, removed the protective wall surrounding commercial banks. Non-bankers, traders, "rascals" and "splendid financiers" took control of people's saving and turned cautious banking into casino banking.
To protect national saving, Glass-Steagall Act provisions should be reinstated.
For banks to engage in tricky dealings when they are being showered with almost free money (by the Bank of England) is bad enough (especially when that cheap money is used for speculation rather than lending to the real economy) but to hear David Cameron feigning anger and telling Barclays that they will "pay for this" really takes the biscuit.
The Tory government is the one which has been pussy-footing around on regulation, and which has either blocked or delayed clear and logical measures such as splitting up the banks, introducing a financial transaction tax and acting against tax and regulation havens.
But this is not only a failure of governance. Both the voting public and the media realised that the finance industry was not "kosher" when the crisis first struck in 2008, but instead of taking action we left governments and regulators to bumble along in the pockets of the banks and big business while the problems ballooned. We shouldn't now be surprised if we are forced to pay the price for our complacency.
The recent revelations of the banks' mis-selling and wholesale cheating of their customers should sound a timely warning to the banks' Tory fellow-travellers. Their current campaign against "red tape" is no more than a shabby attempt to remove protections, introduced over the past century or more, that safeguard employees and customers from the callous greed of business owners.
It is a sad but obvious truth that businesses will cheat their customers and endanger their employees unless they are actively prevented from doing so. If there is one lesson to be gained from the verminous behaviour by the kleptocrats that populate the boardrooms of this country it is that we need much more business regulation, not less.
East Hagbourne, Oxfordshire
How many more times are the bankers going to be allowed to rob us? First, they virtually go bust and have to be bailed out by the taxpayer. Nothing happens; they continue as before paying themselves bonuses and threatening to leave the country if penalised in any meaningful way. Now the Libor fiddle, another robbery.
It is a great pity David Cameron's government doesn't have the same zeal when it comes to dealing with these thieves as when targeting those struggling by on benefits.
We have had the Lloyds scandal, the Libor rigging scandal and many of us have seen our pension money disappear into the pockets of the fund managers. Aren't we lucky that David Cameron and his cohorts are fighting so valiantly to prevent the wicked bureaucrats in Brussels regulating the City to stop this never-ending saga of greed and incompetence?
How many times have we read that the highest-quality talent has to be paid the best salaries or they will go elsewhere? On the basis of the Barclays revelation, large salaries have not retained the best talent but the most corrupt.
Bomber crews' bravery recognised
Yes, Mary Dejevsky ("Wrong size, wrong place, wrong memorial", 29 June), the sight of very elderly war veterans and their families at the dedication of the Bomber Command Memorial did inspire respect. I was there with my younger daughter.
The veterans we chatted to commented on the large number of people at the ceremony and the wide range of ages represented; they were surprised and delighted that their sacrifice had not been forgotten. There was nothing but praise for the memorial – no criticisms were levelled at its size nor place!
My late father, Flight Lieutenant George William Bartlett DFC, who completed a tour of 30 operations with 90 Squadron and then flew another 23 operations with 35 Squadron (Pathfinder Force), did not speak much about his war experiences, but he was always aggrieved that the brave "lads" of Bomber Command aircrew had not received the formal recognition they deserved. The very high rate of casualties they suffered is testimony to their dedication and courage. Albert Speer, the Nazi Minister of Armaments and War Production, stated after the war that the real importance of Bomber Command campaign was that it created a second front long before the invasion of Europe.
A Bomber Command crew member had a worse chance of survival than an infantry officer in the First World War. Only 27 per cent completed a tour of operations. They were all volunteers, and yet those who cracked under the strain were often labelled with "Lack of Moral Fibre" (LMF), stripped of their rank and humiliated. It is incredible, but true, that aircrew who had flown many hazardous missions, suffered crashes in burning aircraft and been decorated for bravery could be accused of LMF and for ever branded as cowards. How many of them fought against their own dreadful fears and yet somehow continued to force themselves to climb into their aircraft?
I am quite certain that I am not the only one who has been infuriated by the extremely negative content of Mary Dejevsky's article, published less than 24 hours after the event.
Ilkley , West Yorkshire
Three centuries of steam power
Vaughan Thomas is right about Thomas Newcomen being the inventor of the first practical steam engine in 1712 (letter, 27 June) but wrong about him being ignored.
He was an ironmonger who was born and invented his engine in Dartmouth, and we are celebrating his tercentenary with a week of events (9-14 July) including a play, an ecumenical service, a massed choir, and a series of talks. The oldest engine in the world is here in Dartmouth.
Chairman, Newcomen 300 Committee, Dartmouth, Devon
No, she really does work
What does it mean to say "She doesn't work" ("Cherie Blair has a point", 23 June)? What is meant – and what Harriet Walker and Cherie Blair meant – is, "She doesn't do paid work."
When I had four very small children, I wasn't "working", though a quiet day at the drawing board would have been a welcome respite. Later, I ran my own architects' practice till retirement age. Please, no more "She doesn't work".
Little Baddow, Essex
Your report "Marriage Impossible" (30 June) states that Tom Cruise, 49, was double the age of Katie Holmes, 33, when they met in 2005. But seven years ago he would have been 42 and she would have been 26. They would have had to meet a decade earlier for this bit of gossip to be true: Tom 32 and Katie 16.
As MPs are required to declare their interests, surely it is right that all those who intend to vote in the debate on the future of the House of Lords should declare whether or not they would be happy to be elevated to an unreformed upper chamber. Their responses could be pinned up in the Commons Library for future reference.
Ben Chu, commenting on the euro crisis, talks about "failing to calm the markets". But the characterisation is wrong. Markets now feast on public subsidy. They move on economies like wolves.
Doctors in the dock: Scandal of GPs who get cash from healthcare firms for patient referrals
Sydney siege inquest: Hostage died from fragments of ricocheted police bullet
Public satisfaction with the NHS at near-record levels
Apple's iPhone: The most profitable product in history
Jail ‘wrong’ for half of women inmates
Rutland earthquake: Locals express shock at tremor measuring 3.8 on Richter scale
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