hutch0 (hutch0) wrote,

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schadenfreude corner (banking division)

It's been interesting, the past couple of days, watching the opprobrium heaped upon Sir Fred Goodwin, former chairman of the Royal Bank of Scotland, which just posted 2008 losses of £24.1 billion - the largest loss in British corporate history.
The question of whether the man dubbed `the world's worst banker' actually deserves to walk away from the biggest banking disaster this country has ever seen with a £16 million pension is, of course, pertinent, and the Government has picked it up and run with it, with Gordon getting in such a snit that he's threatening legal action to get Sir Fred to hand back some of his cash. The hatred of Sir Fred has grown to such ridiculous heights that one Scottish MP is demanding that he be stripped of his knighthood.
Some commentators have seen the Government's hand in the leaking of the details of Sir Fred's pension in order to deflect attention away from the fact that they've pumped another £13 billion into RBS. I think this misses the point. Sir Fred has done nothing illegal. He was an absolutely shit banker and he doesn't deserve to walk away from the RBS catastrophe with a pension that will pay him just under two grand a day, but that pension was granted him under RBS's rules. He didn't steal it, and much though it may pain us, he's under no obligation to give it back.
I don't, personally, think the details of his pension were leaked to deflect attention from the continuing RBS bailout. That was never going to slip by under the radar. I think they were leaked in advance of Gordon's speech today, in which he basically turned on the banks and the people who run them.
He said that the financial world had lost sight of ordinary people's values, such as fairness and hard work. "Some came to believe that we should sacrifice the value of being fair to that of laissez-faire," he said. "Some acted as though free markets could be value-free markets." And of course the image of Sir Fred polishing his pot of gold was uppermost in people's minds as Gordon gave the speech.
What Gordon didn't say was that the buoyant economy of the past decade or so was driven by people who acted as though free markets were value-free markets. And as Chancellor Gordon was perfectly happy for these people to do their thing. Their astronomical salaries - and astronomical pensions - were excused by saying that if we didn't pay them enormous sums, they'd go and work somewhere else - for the French, maybe, or the Germans. Additionally, I think they were badges of honour. "Look how well we're doing, we can let our bankers pay themselves so much."
The prosperity of the past few years, we all know now, was nothing more than smoke and mirrors. It was like a shark - it only stayed alive while it was moving forward. As soon as it stopped moving, it began to drown. And as Chancellor Gordon was right at the heart of that illusion. The same bankers he bitch-slapped today were the ones he was happily hobnobbing with a few years ago. And let's not forget that Sir Fred Goodwin used to be one of Gordon's financial advisers.
But of course this catastrophe isn't Gordon's fault. It's the fault of the United States. It's the fault of greedy bankers. That's why Gordon made his speech today, and it was handy to have an example uppermost in our minds as he spoke.
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