Yep, I cautiously looked forward to Robert Peston’s BBC TV programme last night – Britain’s Banks: Too Big to Save?
The caution is because I find generally Robert Peston’s description of our financial plight overly doom-laden, which his halting delivery and persona doesn’t lighten. Anyway, the programme was a review of the situation national economies face when they have huge global banks to oversee.
Peston succeeded in gaining interviews with some of the most influential people and commentators on international banking.
For me, the most impressive individual interview by Peston was with Paul Tucker, the deputy governor of the Bank of England. My, Tucker exhibited intellectual prowess, and studious calm at the same time. Why, oh why, that mind-numbingly awful Gordon Brown ever removed banking oversight from the Bank of England escapes me. We might not be in this mess now if he hadn’t rushed through that change. Remember that ‘Steady’ Eddie George, the previous governor, was thinking of resigning over the matter, but declined to do so for fear of destabilising and incoming government, and one that had won a overwhelmimg victory. Hell, that’s history now.
But, I hope you’ll see from the comments below that Paul Tucker made to Robert Peston what I mean.
“If we have a system where banks take the upside but the taxpayer takes the downside something has gone wrong with capitalism, with the very heart of capitalism, and we need to repair this”.
“Capitalism can’t work unless these financial firms at the centre of the heart of capitalism can be subject to orderly failure. The rules of capitalism need to apply to them just as they do to non-financial companies.”
Oh, and Peston managed to extract an equally powerful comment from Sir Philip Hampton, chairman of the Royal Bank of Scotland, on why mediocre investment bankers get paid so much. So, now the reason is known, it should be possible get the renumerations down to more acceptable levels.
“The star quality, as it were, seems to filter down to people who don’t seem so star quality. There is, if I can use the expression, a sort of gangmaster cultural phenomenon in this, that you recruit top people who really do make a difference, who really do move markets and get business and are really high achievers.
“But they do tend to associate themselves with people who aren’t such stars, but they want them around and they trust them, sometimes they move with them and there is a team associated with it. And the disparities between the top stars in the team and some of the journeymen players, if you like, is probably not as marked as it should be.”
It’s the likes of Paul Tucker and Sir Philip Hampton that should encourage us that change to investment bankers pay, and the removal of the ‘moral hazard’ element of global banking are both fixable.