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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