Bob Diamond: gone but not forgotten
With every week that passes, the banks continue to be in the news, usually for reasons that do not reflect well on them. In addition to destroying our economy and inflicting significant damage on the rest of us, particularly the less well-off, banks and bankers have been involved in scams of various kinds, from Libor to PPI. Yet bankers continue to receive massive salaries and huge bonuses, and loud voices are raised whenever there are proposals to moderate them, as the EU has voted to do.
It may be repetitious to ask why this is so. But the failure of bankers to ‘get it’ is also repetitious. Their sense of entitlement is breathtaking. Their rhino-hide approach to criticism is frustrating. Their insistence that we cannot do without them is unconvincing.
It was Bob Diamond who told us a couple of years ago that ‘the time for remorse is over’ – having never shown any remorse on his own account anyway. We may not be able to expect remorse, but we can expect that those who cost us billions of pounds – £37 billion? £45 billion? – might show a little reticence. We cannot expect humility, of the kind that Rupert Murdoch purported to feel when confronted with the evils perpetrated by his tabloid journalists (about which, of course, he knew nothing). But we can expect a recognition that, as the saying goes, we are all in it together, and that means that bankers as well as the rest of us need to show some restraint.
We are told that bankers need to be ‘incentivised’. If they are not paid – in some cases, by us, the taxpayers – very large sums of money indeed, they will leave the country. Where would they go? Singapore, perhaps. Lucerne? Not now, I should think. The Swiss, of all people, have revolted and voted for a cap on the highest salaries. Public anger reached boiling point recently when it was revealed that Novartis, the Swiss pharmaceuticals giant, had been planning to pay its departing chairman, Daniel Vasella, 72 million Swiss francs (about £50 million) over six years for consultancy services and for not working for any of their rivals. I may lack imagination, but why does anyone need that amount of money? How can you spend even a quarter of it?
It seems to escape the bankers and government ministers that there is something of a contradiction: those who are already rich allegedly need financial incentives to work to make themselves even richer, whereas the poor allegedly need financial sanctions to get them to work to try to make a living.
We are told that there is an international market that determines how much the best in the banking world need to be paid. If we do not offer enough to attract them, they will go elsewhere and give our competitors the benefit of their expertise. But the problem is: what expertise? These are the people who got us into the mess we are in in the first place. They gambled with our money. They lent irresponsibly to those who could not afford to pay back loans. They cheated their customers through deliberate scams such as PPI. They amassed fortunes for themselves. The institutions that they ruined run at a loss, but they require rewards for failure and incentives so that…so that they can fail again?
How are ordinary semi-numerate mortals supposed to understand all this? You foul up, so you get rewarded, in spades. And you continue to be able to demand rewards because, you claim, financial institutions will go down the tubes without your expertise. Have they not noticed that we have already gone down the tubes, courtesy of their expertise?
In Britain, much is made of the dependence of the economy on the City of London (and also on financial services in Edinburgh). Perhaps it does bring in revenues on a large scale, but it is hard to believe that those who might leave if not paid outrageous amounts could not be replaced by perfectly able people prepared to operate at lower (if still, by most people’s standards, high) salaries, people who are perhaps more honest and risk-averse than the cowboys who have ruined our country. Attitudes on the continent towards the banks have become much more unforgiving, even hostile. And if individual institutions retaliate, and warn that their best people will leave, it might turn out that, as Wolfgang Münchau says, ‘people come to regard this not as a threat but as a promise’.
Jill Stephenson is former professor of modern German history at the University of Edinburgh
