Ignoring the evidence

A piece from The Economist argues that bankers should not be villified.

The writer mentions how the banking crisis “needed a villain, and Bob Diamond, who resigned on July 3rd as chief executive of Barclays Bank, is about as noire as a bête can get. An American who infused an ancient, Quaker-founded British institution with the highly paid, highly competitive ethos of Wall Street investment banking, he was described by Lord Mandelson, then the business secretary, as ‘the unacceptable face of banking’. Humility is not uppermost among his virtues: last year, in front of the House of Commons Treasury Committee, he said that ‘there was a period of remorse and apology for banks. I think that period needs to be over.'”

The piece goes on to mention that “bankers were evidently paying themselves huge sums even in bad years, but the shareholders didn’t seem to care. It was complex: making the system work better involved rewriting rules on matters such as capital adequacy, with which nobody outside the business could reasonably be expected to get to grips. It was confusing: since the government had taken over some of the banking system, it belonged in part to the taxpayer, so it was not clear whether big bank profits were good or bad for ordinary people”, he adds that “Attacking them has a certain electoral appeal—bankers were unpopular long before the posh Italians set about persecuting Shylock—but the bankers have been generous to the Tories”.

Importatly he article states that “It is not just the venality of the bankers’ misdeeds that fuels the government’s enthusiasm for picking over the entrails of the scandal. Conveniently, the offences for which Barclays has been fined (and of which other banks are suspected) took place while Labour was in power, under the watch of Gordon Brown, the former chancellor of the exchequer, prime minister and mentor to both Ed Miliband, the Labour leader”.

The piece concludes noting that “It emerged that the bankers were only sometimes fixing the rate for personal gain; in late 2008, they were putting in low submissions in order that the bank should appear healthy and be able to recapitalise itself. The beneficiary of that was the British taxpayer, who might otherwise have ended up footing the bill”. While this specific point might be true, it does not take away from the enormous list of immoral, greedy, incomptent and reckless behaviour that they have inflicted on the world.

The piece concludes noting “Headhunters say that while it is easy to get British bankers to go and work elsewhere in the world, it is exceedingly hard to get people to move the other way. At senior executive and board level, shortages are beginning to emerge”. However, this is most likely due to the fact that people do not want to take senior positions in an industry that has destroyed its own reputation, and continues to do so.

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2 Responses to “Ignoring the evidence”

  1. Bigger problems « Order and Tradition Says:

    […] exerted too much sway”. Yet it bears out reality with Dr Cable speaking out against greed and immorality of the financial world to the horror of the rabid neoliberals. It also explains how the Lib Dems […]

  2. “An automatic cap on bonus payouts” | Order and Tradition Says:

    […] Yet those who oppose this sound measure come up with few real and valid arguments against it, with some claiming, or implying, that profit itself will be outlawed. Such “arguments” should be dismissed for the hyperbole that they are. Capping the pay of bankers and those in finance will be beneficial because it will mean more control over an industry that has run riot over the last 30 years and bring some balance back into the system that seems bent on rewarding those who fail spectacularly, eg Bob Diamond. […]

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