I don’t think we can ignore it any more. In the upper echelons of finance, certain people are clearly failing to do their jobs properly. I’m talking about public relations advisers.
I mean, who thought that it was a good idea for Barclays chief executive John Varley to stand at the pulpit in St Martin-in-the-Fields earlier this week and defend bonus payments? “Profit is not satanic,” said Mr Varley. “Talent is highly mobile. If we fail to pay or are constrained from paying competitive rates then that talent will move to another employer.”
It’s nothing we haven’t already heard (well, perhaps not the ‘satanic’ bit). But you have to bear in mind that this little homily was delivered within days of Chancellor Alistair Darling announcing that taxpayers would be forking out another few dozen billion to shore up the finances of Lloyds and RBS.
Didn’t anyone consider how this was going to play out? Didn’t any of the presumably highly paid advisers who manage these sorts of events suggest that it might not be a good idea to play the ‘persecuted banker’ card when a big chunk of the sector was passing around the begging bowl to the general public, yet again? RBS in particular makes the ‘talent’ argument look utterly spurious. Given its eventual fate, RBS was a bank where talent must have been conspicuous by its absence (indeed, City Minister Paul Myners has called it “the worst-managed bank this country has ever seen”) and yet stupendous pay packets were not.
Mr Varley is, of course, just the latest in a long line of finance chiefs to try to justify bonus payments. Perhaps we shouldn’t be surprised at their protestations. Capitalism is built on the idea that actions have consequences, in the sense that good investments and good decisions make you money, bad investments and bad decisions lose you money. But the banks aren’t subject to capitalism. They exist in a moral vacuum, cushioned from the impact of their decisions by taxpayers’ money and low interest rates. So it’s little wonder that bankers don’t ‘get’ public outrage – they’re not used to being accountable.
The good news is that the latest bail-outs have imposed some restrictions on bonuses at the banks involved. So we might get some idea as to just how critical bonuses are to recruit and retain staff who can take money from one set of people and lend it to another, all without going bust at some point in the middle. I suspect we might learn that compensation bills simply don’t need to be as high as bankers would like in order to run a decent bank. That would mean more profits going to shareholders (the owners of the business) rather than the ‘talent’ – which would be good news for us all.