This article was published in The Daily Mail on 20th February
Sir Mervyn King, Governor of the Bank of England, this week renewed his assault on Britain’s banks, for failing to provide the lending to small businesses which is indispensable to their growth, and often survival.
New figures show that last year net lending fell by almost £11 billion. This was in defiance of promises made by the institutions’ bosses under the so-called Project Merlin deal, to increase funding for companies.
Meanwhile, the Office Of Fair Trading has called on banks to change their working practices, to simplify the jumble of numbers with which they muddle us, so that customers can make a clear calculation about whether they would be better off changing financial services providers.
In addition, though their bonuses have fallen from stupendous to merely disgusting, bankers are still giving themselves rewards for their own services out of all proportion to their usefulness to society or their shareholders.
I recently read a pundit’s appeal for an outbreak of truth and reconciliation in the on-going war between the City and the public. The writer argued that, after all the abuse we have heaped on bankers, it is time to call a halt, recognise their importance to the economy and let them get on with their jobs.
My answer to that, and probably yours, would be: time enough for reconciliation when these people stop robbing us blind and mend their ways. As long as they carry on exactly as before, there is not the smallest reason to stop kicking them.
I have sometimes made mention in the Mail about my own tribulations at the hands of the financial services industry. I now have a nice new grievance.
On January 31, an endowment policy matured. Like everybody’s holdings of this kind, mine would deliver only around 60 per cent of the ‘target figure’ that the crooks who sold it to me promised two decades ago. Indeed, I stand to get little more than the paper amount I have paid in since 1992.
I signed all the maturity forms back in December and had them duly witnessed. It turns out that the provider, Barclays Life, has been sold to another firm called ReAssure.
This week, I telephoned them to ask where my money was. After a few minutes, I was told: ‘We’ve just got the paperwork back from Barclays. We’ll be dealing with it today.’
So I would get the cash immediately? ‘No, that will take three to five working days.’
I hit the roof. This is how the financial services industry gets rich. By the time I receive the miserable wreck of my endowment money, ReAssure will have had use of it for more than a fortnight past the due date.
I warned the company it would be reading about itself in print, which prompted an automated response letter: ‘Your complaint is important to us and will be fully investigated by one of our complaint handlers.’
Now, I will admit that my solvency is not threatened by ReAssure’s tardiness and Barclays Life’s miserable performance. But for lots of people, much less equipped than I am to extract revenge, such payments are of vital importance. These institutions are brutes run by brutes, each one as bad as the other.
My second barrel at the bankers derives from an experience a month ago.
One of the most notorious bank bosses, a man whose remuneration is delivered in an armoured truck, invited me to lunch. Stupidly, I thought he wished to confess the error of his ways. I could not have been more wrong.
‘I am becoming extremely concerned, Max — you don’t mind if I call you Max?’ he began with headmasterly gravity, ‘that Britain is turning against capitalism and the payment of appropriate rewards.’
I said: ‘You mean you think people like me are unjust in criticising your remuneration?’ Yes, he answered, saying my denunciations upset his children when they read them.
I told him that a few days earlier I had met an industrialist — one of the really good ones — and told him I was booked to lunch with this particular banker. ‘Ask him,’ responded the industrialist, ‘how he can conceivably justify his obscene display of personal greed.’
My banker host refused to give up. ‘I ask you this, Max,’ he demanded, ‘do you or do you not believe Britain needs a healthy and vigorous financial services industry? Would Britain be a better place if we take this bank to New York?’
I replied that I was sure that Mervyn King does not think anyone should be frightened by such a threat, which my host has often made before.
I added: ‘Are you suggesting we have only one choice: to clap prettily as you collect untold millions every year, or watch you take the bank somewhere else in a huff?’
The banker batted stubbornly back: ‘Are you against paying people the going rate for what they do?’
I gave serial answers: first, almost no one criticises entrepreneurs who make fortunes by taking personal risk. Instead, our spleen focuses on privileged employees who play with company money, not their own, and who pay themselves grotesque sums for doing so.
Second, had he not noticed what is happening in the real world? Everybody else is getting hammered. The European financial system is hanging by a thread. We are entering what looks like a long period of austerity. Unless bankers want the peasants storming their Winter Palaces, is it not prudent to be seen to curb their appetites?
Finally, in addition to screwing their customers, bank bosses have ravaged shareholder value. My friends who understand these things say that the banks’ balance sheets are not worth the paper they are written on, because no one knows the real value of their declared assets. They are scarcely presiding over success.
My host said portentously that since he signs off his bank’s accounts, he is sure they accurately depict their condition. He travels the country meeting clients and customers, and he claims to find them pretty happy, too.
He himself is an entrepreneur: he has built a terrific investment business at the bank and created lots of jobs. He and his team deserve to be properly rewarded.
Unless bankers want the peasants storming their Winter Palaces, is it not prudent to be seen to curb their appetites?
I left our lunch bewildered that my host should have chosen to waste 75 minutes of his valuable time to tell me that he regrets nothing, and give me a dressing-down for casting aspersions on the proper workings of the capitalist system.
‘When I voluntarily waived my bonus for two years, nobody gave me any credit,’ he said crossly. He and his kind — for there are many more like him out there — inhabit a land so remote from the rest of us that no United Nations interpreter could bridge the communications gap.
I see no hope of a reconciliation between bankers and the balance of mankind unless — or until — they suffer a shock, a divine thunderbolt, a revelation of a severity which will make St Paul’s experience in transit to Damascus look like amateur stuff.
These vastly pampered moguls really believe they are worth the money, and cannot comprehend why most of the rest of us so passionately hold them in contempt.
The answer is that we must keep kicking until they get the message, and the Governor of the Bank of England obviously thinks so, too.