Sorry Seems To Be The Hardest Word

The London Paper  –  13 Feb 2009

Just when they thought it might be safe to go back into polite society bankers have been getting it in the neck this week from all sides. Firstly, various idiots who destroyed the banks they ran were finally forced to apologise to the Treasury Select Committee. Then, Alistair “don’t call me” Darling announced a review into banking practices. Finally, Sir James Crosby, a top City regulator, was forced to stand down after it was revealed by a whistleblower that he was apparently sacked by Sir James when he was chief executive of HBOS because he dared to warn him that his bank was following too risky a strategy. God’s teeth! If the public’s anger gets any more intense they’ll be a revolution and these boys will definitely be the first up against the wall.

Well, at least the former bosses of HBOS and RBS managed to say sorry when grilled by the committee but then again if they hadn’t done so I reckon their knackers would have been cut off with a blunt knife and fed to the crows. Interestingly, these comedians’ main defence was that it wasn’t just them to blame but rather the bonus culture as a whole … and on this particular issue I couldn’t agree more and I’ll explain why.

Imagine yourself as a young, macho dickhead who’s just began his City career. Within a few days you work out that your job entails gambling with other people’s money and that it may end at any moment because all your more experienced colleagues keep telling you the good times can’t last. A City career is therefore essentially akin to entering a casino and being given a large amount of someone else’s cash to bet with whilst also being told the casino could close at any minute. When you work out that you get to share a portion of any winnings you make via a bonus but you have no money taken off you if you lose then there’s only one rational strategy: massive, reckless short-term punts ASA bleeding P!

So the credit crunch was actually a logical product of the bonus culture because those critters who infected our financial system with over a trillion dollars of worthless loans knew what they were doing but didn’t care because they would earn phat bonuses before the house of cards came crashing down. That’s why unless the system changes we’ll have another similar event over the next decade or so.

“Don’t offer me problems, offer me solutions.” Ahh, how often I used to hear that particular cliché when working in the City and how relevant it is now! The only way to avoid yet more City-based financial disasters is to encourage City boys to think long-term and the only way to do that is to ensure banks have sensible remuneration packages that don’t encourage irresponsible short-term gambling.

If not, they’ll be another City-based recession and my already dwindling pile of dinner party invites is going to dry up completely.

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