The latest hilarious episode in the long-running bank farce--"You'll laugh! You'll cry! You'll feel murderous rage!"--came in late November when it was revealed that the Bank of England had advanced £61.6 billion ($101 billion) of our money to two banks, Royal Bank of Scotland (RBS) and HBOS, last autumn. Bank governor Mervyn King explained to a committee of MPs that it had been necessary to send out a convoy of dumper-trucks filled with £50 notes to refill the coffers of the two busted banks so as to "prevent a loss of confidence spreading through the financial system as a whole."
If the government hadn't rushed to the rescue, other banks would have become so terrified that it wouldn't rush to their rescue either, in the event of their gambling debts overwhelming their assets, that they'd be liable to collapse en masse into a financial coma. Northern Rock might go belly up. Oh, no, now that I think on it, they'd already sunk under the weight of their own irresponsibility and had been bailed out to the tune of, if memory serves, £55 billion ($90 billion).
The RBS, it might be remembered, during the period when it was sliding steadily into what George W. Bush used to call "deep doo-doo," was headed by Sir Fred Goodwin--a.k.a. Sir Fred Bigwin. He left in what the naive public assumed was disgrace until it emerged that somebody (us again, actually) had stuffed a pension worth just over £8,000 ($13,300) a week for life into his lapel pocket as he exited the building. It was later to be explained that this was no more than the going rate for a fellow of Sir Fred's genius--being based, according to a standard formula, on his 2007 salary of £1.2 million ($2 million), plus a bonus of £2.86 million ($4.76 million). Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling were tremendously exercised by the whole affair, and toured the television studios declaring that this was the last straw, and there'd be a rigorous clean-up underway before sun-up.
The chap chosen to wield the new broom turned out to be Sir Philip Hampton, appointed chairman at a salary of £750,000 ($1.25 million) plus options of £1.5 million ($2.5 million). The salary, said RBS at the time, was "designed to align his own interests firmly with the long-term interests of all our shareholders. It reflects the scale and complexity of the job he agreed to do at a critical time for the company." Scale and complexity, eh? He'll be working all hours - or maybe not. I was browsing through the financial pages a few weeks ago when I chanced on news that Sir Philip has just taken on a second job--as non-executive director of Anglo American, "one of the world's largest mining and natural resource groups." Bored with so little to do at his RBS office, obviously. Meanwhile, how are things going in the banking sector generally?
The man appointed, following the calamitous collapse of the casinos, to conduct a review of corporate governance of banks and major financial institutions was Sir David Walker, former executive chairman of Morgan Stanley and deputy chairman of Lloyds TSB. He's set to issue a report today, dealing with calls from Chancellor Darling, City Minister Lord Myners and others for the banks to be required to publish the names and salaries of their top 20 earners each year. The word in the City is that Sir David will recommend no such thing, because to make British banks come clean about the wages of their top guys would put them at a competitive disadvantage against banks run by the unscrupulous and notoriously secretive Johnny Foreigner. Past form suggests that the government will murmur disapproval, shrug their shoulders, and plead, "Sure, what can we do?"
The fabulous salaries of the super-rich must be kept secret and beyond regulation in order to keep the country competitive. Just as workers, for the same reason, must accept public debate on their pay and conditions and wage cuts and job losses. It's government of the bankers, by agents of the bankers. That the elected government operates as the servant of the banks has been nowhere so evident as in the scandalous shambles of the £61.6 billion ($102.5 billion) handed to RBS and HBOS in October last year. Mervyn King's disclosure on Tuesday was described by one Labour MP as "a bolt from the blue." But not for everybody, it wasn't. Mervyn King knew. Plus, presumably, the members of his board. And the directors of RBS and HBSO. And Gordon Brown and Alistair Darling. And here's the thing. In the 13 months since the money was handed over, not one of them breathed a word. In an "omerta" competition in Sicily, these guys would be in a class of their own. Does the phrase "conspiracy of silence" come to mind? Let us ponder these matters as we brace ourselves for the impact of 3 percent cuts in public spending year on year, and deeper cuts still from the £370 million shortfall, which the capering Sammy Wilson tells us we have no option but to dig deep and diet to make up. Madness, I tell you. Or, to put it another way, capitalism.