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The British banker reality show


By Neil Behrmann

 

March, 2009   Thank heavens for the UK Parliamentary Treasury Select Committee.   In a two day hearing last week, it has enabled a key whistleblower to come out in the open and unravel the spin of British bank chiefs and Premier Gordon Brown.

Prior to the appearance of Paul Moore, a trained barrister and former head of risk at stricken bank HBOS, the bank chiefs did their utmost to put on a good show. Their public relations advisors, including a former editor of the News of the World, almost succeeded in turning them into gentle contrite humble men with extraordinary talent and achievements. How could the public think otherwise? How could it doubt them? These, the great and good; knights and peers for services to the financial sector.

Apologies galore, but "we're not to blame"

And apologise profusely they did, at the two day televised hearing of the Committee, although of course, they themselves weren’t to blame. Sir Tom McKillop and Sir Fred Goodwin, former chairman and chief executive of RBS, Lord Stevenson of Coddenham and Andy Hornby, former chairman and Chief Executive of HBOS showed the unreasonable public and press, that their banks’ mammoth losses, taxpayer bailouts and sackings of thousands of underlings were unfortunate incidents---- the inevitable outcome of the business and banking cycle. They were in full agreement with Gordon Brown that America and the rest of the world were the cause of the financial mess. But for that, British banking policies, management, risk controls and regulation were and are still sound. Hundreds of millions of pounds of bonuses should still be paid; indeed have to be paid, they contend. Talented banking executives, like them, should have adequate incentives and pensions to incur more losses.

Some impressive deals

The four were dressed elegantly in front of the baying millions who watched the Treasury Select Committee’s reality show on BBC. These gentlemen, the cream of Britain’s bankers, as impressive as World War 1 Generals, responded with praiseworthy aplomb to questions from arrogant disrespectful Members of Parliament. Sir Tom McKillop and Sir Fred Goodwin, for example, were questioned on why they proceeded with the acquisition of ABN Amro Bank in 2007 after the banking crisis had already begun.

"In retrospect, we bought ABN Amro at the top of the market ... In fact, I'm sorry we bought ABN Amro," replied Sir Tom, gracefully.
"You failed," growled Michael Fallon, deputy chairman of the Committee.
"At the time it didn't look like that," Sir Tom replied, adding that the bank's shareholders and the Financial Services Authority approved the deal.
Directors were unanimous that the bank should take the opportunity to battle Barclays and buy ABN, he said. Impressive reply considering that the bank only wrote off around 10 billion pounds on the ABN deal and that in 2008 RBS’ 28 billion pound loss was the biggest in British corporate history.

HSBC's brilliant performance warrants bonuses

Bank chiefs that are currently in charge were also questioned. Nick Ainger, a disrespectful MP had the affront to ask Paul Thurston, UK Managing Director of HSBC about the bank’s performance.
Mr Thurston replied that in the past two years the shares had declined by 40 percent, but had “performed better than most of the peer group in the banking industry.”
Illustrating the brilliant performance of the bank, Mr Thurston (who with his serious face, could be a brilliant comedian) stated that the bank’s market capitalisation had risen from 50 percent of the combined total of all the other UK banks to 200 percent. In relative terms, compared to the shocking performance of other banks, HSBC was doing brilliantly. Potential bonuses will be studied carefully.

The nasty Paul Moore appears

Horrors upon horrors Paul Moore, risk manager of HBOS, since taken over by Lloyds Bank, gave evidence. Mr Moore informed HBOS management that there was a cult of excessive lending at the bank during the boom. Sir James Crosby, former chief executive sacked him and in terms of the payoff he had to keep his mouth shut. The Treasury Select Committee’s parliamentary privilege enabled Mr Moore and increasing numbers of whistleblowers to free themselves from their muzzles. His revelations led to the resignation of Sir James as deputy chairman of the UK Financial Services Authority, which regulates banks and failed to control them during the boom. Mr Moore intends releasing several documents. He claims that they show that Gordon Brown's reckless policies as Chancellor of the Exchequer, led to the banking crisis.

Gordon Brown and Anthony Barber--Britain's best chancellors

Surprise, surprise both Sir James and Mr Brown deny such charges. Gordon Brown knows full well that he remains Britain’s greatest chancellor since Anthony Barber who also had policies that created a banking boom in the nineteen seventies that inevitably ended in bust. Anthony became Lord Barber and was chairman of Standard Chartered in the seventies. His spin doctor, John Major, eventually became Prime Minister and is now famous for economic and other measures that consigned the Tories to the political dustbin for more than two decades. Who on earth dares consider such a fate for Mr Brown?

 

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