What else would you expect from an American investment banker who’s twice foregone his bonus but pugnacity?
What else would you expect from an American investment banker who’s twice foregone his bonus but pugnacity? Bob Diamond of Barclays did everything but punch Andrew Tyrie in the nose at yesterday’s Treasury Select Committee as the MPs tried (and largely failed) to stab him with their sword of self-righteousness.
The immortal quotation will be: ‘There was a period of remorse and apology for banks – that period needs to be over.’ As well as immortal, it may also be wishful, to judge by the reaction of the MPs, who pursued Diamond with a remorseless, sardonic drive, slapping him down when he went on and repeating their questions to the point of rudeness. Chuka Umunna, MP for Streatham, was a real star, provoking Diamond to admit that he didn’t know how many subsidiaries Barclays had in tax havens. (Hundreds, it turns out.)
But is Diamond right? Should remorse be over? First, it’s not evident that there really was a period of remorse, if by remorse we mean attempts to mend behaviour. CEOs foregoing bonuses and a mild sense of restraint on bonuses for everyone else only had the appearance of contrition; many bankers I know still fail to understand public anger and thus put on the mask of remorse because that is what was clearly expected. They feel that their contribution to the British and global economies are not properly appreciated by the public, and as soon as the spotlight was off, it was business as usual.
What Diamond means is that the pretence should be over – we all know that we can’t touch the banks and we should just let them get on with it. Every satisflying slap we apply to the City of London is really (to mix metaphors) cutting our nose to spite our face, and Diamond knows it, and the MPs, if they have any sense, know it.
All of this deceit does not mean, however, that he is wrong. We should be letting banks get back to banking (and lending) without feeling like success requires self-flagellation. Measures of restraint are being taken to keep them within the bounds of sane behaviour. Basel III is seeing to capital adequacy ratios (although we are unlikely to have a ‘Swiss finish’ over here), so banks can absorb external shocks and internal calamities better. The Government is imposing stiffer lending targets. Bonuses paid in stock may help, but don’t forget Lehman’s were too, and the obvious corollary of banning/limiting bonuses is that banks go abroad – and they will.
How do we benefit from more of the false piety of bankers? Better we gain from taxed profits and spent bonuses.