Remember how the trade unions were handled by Thatcher when they were deemed to have too much power and to have held the nation to ransom? They were subjected annually to a series of 6 Trade Union Bills which decimated their powers and hedged them round with such an impenetrable thicket of regulations that they were virtually legalised out of any capacity for independent action. Now compare that with the banks who are almost universally deemed to have too much power and to have used it to hold the nation to ransom by pursuit of their own greed and self-interest without any regard for the real economy. But instead of being crushed, they have been awarded £650bn of taxpayers’ money in grants, locans and guarantees, and are now being stroked with the softest of velvet gloves. Alistair Darling tonight is telling the City grandees assembled in the Mansion House that, no, there is no need to rstrict the size of banks lest they remain ‘too big to be allowed to fail’ – all that is needed is that “we, as well as the banks themselves, have plans for tackling failure”. Really? “Bank boards must have the right people, skills and experience to manage themselves effectively” (what business is that not true of?) and “their focus must be long-term wealth creation, not short term profits”. Well, what an original thought – so how is that to be secured?
It gets worse. Not only are the banks being treated with kid gloves and showered with half the nation’s entire wealth in gratitude for the way they virtually brought the country to its knees, but in their insouciance they continue effectively to hold up two fingers to the Government and any attempts to rein them in. Seemingly oblivious to the nation’s rage at obscenely buge bonuses, Barclays today doled out some £400m in bonuses to senior management after the sale of its fund management arm BGI to BlackRock for £8.5bn. The BGI chairman, Bob Diamond, not content with the £36m he shovelled up last year, is topping it up with a further payout of £22m, a combined reward equal to nearly 2,500 times the average wage. The BGI chief executive scooped a further £55m. Not bad going, even for Barclays as \Britain’s greed machine.
What is so disreputable about the Government’s handling of the banks is that it is full of pious and platitudinous waffle, but absolutely no action is being taken which will change anything significantly. There is a strong suspicion that the Government is colluding with the banks in muddling through until the recovery, and then it’s business as usual, no lessons learned, no reforms in the structures and procedures of financial power – until the next crisis.
At the Mansion House Darling even refused to remedy the calamitous failure of financial regulation by substantially strengthening the powers of the FSA, so that even if it spots trouble ahead (which on past form seems highly unlikely) it will still not have the authority to intervene to compel an errant, failing or incompetent bank to change course. Nothing is being done to curb the use of credit derivatives, the worldwide proliferation of which laid the foundations of the crisis. The bonus culture is still being allowed to flourish, even though it is widely recognised as the major source of the greed and recklessness that sparked the crisis. The credit rating agencies are not being regulated to make them truly independent and to remove the current glaring conflict of interest. Commercial banking is not being separated from casino banking. Capital adequacy ratios and reserve requirements are not being put in place. Offshoring and massive exploitation of tax havens is not being stopped.
Lucky for the banks that their cartel isn’t seen as a trade union, or the results could have been so different.