The London Paper – 6 Mar 2009
Everyone knows that ‘a verbal contract isn’t worth the paper it’s printed on’ but we all found out this week that written ones might just be. Firstly, there was a huge brouhaha over the fact that the former Chairman of the Royal Bank of Scotland, Fred ‘The Shred’ Goodwin, is to henceforth receive a £700,000 a year pension despite having presided over the near-collapse of his bank. He has refused to have it reduced despite vast public outrage and has smugly pointed out that it is contractually guaranteed. If, as seems possible, the government was involved in the negotiations that resulted in this travesty then Gordon Brown’s ‘no reward for failure’ stance seems about as valid as a lady of the night espousing the virtues of ‘no sex before marriage’.
It was also reported that 250 of my ex-colleagues from my old firm, Dresdner, are taking legal action against their bank’s new owner Commerzbank, because it is apparently refusing to pay out promised bonuses. Commerzbank was recently bailed out by the German Government mainly due to losses at Dresdner and has allegedly reduced previously agreed bonuses by around 90% claiming that ‘a material adverse change’ had occurred. Predictably, people are once again up in arms that bankers whose firm would no longer exist but for taxpayers’ money, are greedily demanding their wonga.
Whilst I’m normally the first person to lay into any banker within punching distance, providing of course that he’s under five foot two, this isn’t as black and white as it may seem. Firstly, I know there are nice people at my former bank who had forgone a job offer at another firm because they were told on 19th December that they had decent wedge coming their way in two months time. A reasonable bonus was not only worth waiting for but suggested that the bank was in OK shape. Also, nearly all of these people did not have anything to do with mortgage-backed securities and so had bugger all to do with creating ‘the crunch’.
Perhaps more importantly, I would ask whether you would forgo your seemingly guaranteed bonus in these uncertain times. With possible redundancy facing you and a probable massive mortgage hanging over you, would you not try to ensure that every penny you were owed came your way? It’s all well and good bashing the bankers but before we start struggling for air because we’ve climbed so far up the moral high ground we should first ask ourselves what we would do given the same circumstances.
Having said that, if the delightful Mr Goodwin doesn’t think that I take umbrage with his lack of moral fiber, he’s got another thing coming. Because he’s already minted and is directly responsible for his bank’s failure it makes me furious that my taxes will help keep him on the golf course until his dying day. Indeed, if he’s under five foot two and occasionally hangs out in the Shepherds Bush area, he better watch his step!