Thought for the day

It's not often that I'm in agreement with a speaker on Radio 4's "Thought for the Day". Today, however, the slot was filled by Dr. Mona Siddiqui from the University of Glasgow with a talk about banks and bankers. 

One section in particular resonated with me:

But all this anger at one man and his pension is neither right nor moral. Even if the moral pressure forces him top give away some of this wealth to a charity or a good cause, it wouldn't really change anything - once we had his redemption, we would look for another bogeyman, another avenue to vent our frustration at a crisis which many of us still can't get our head around. Sir Fred for the time being is an easy distraction from the real crisis of a downward spiralling economy.

She goes on to suggest that we (people in general - every one of us) have a moral duty of care over the economy, which I think is true. Perhaps if we have kept that in the forefront of our minds, we would be in a less drastic position now?

Blame 2 - this time it's personal

I promise to stop going on about this soon... Well, as soon as the press calm down about looking to attribute blame for the current economic circumstances (I refuse to call it a crisis) - which is not likely to be very soon.

This time it's Robert Peston (yes, him again) writing in his blog on the BBC's web site. Writing about HBOS's results (which are awful - but who is surprised) he says:

As I've said before, it is amazing that the Financial Services Authority, the
City watchdog, didn't feel it was appropriate to rein in HBOS's corporate
lending department.

Well - as I've said before, it is amazing that the shareholders didn't feel it was appropriate to rein in HBOS's lending department. Surely they are the first line of defence? Or how about the Board - or the Non Execs?

It would not have been easy. Try to imagine suggesting dumping and running from the Sub Prime market (and its associated off-shoots) in, say, January 2006. As a Chief Executive of any global banking setup you would first have been laughed at, and second would have been fired as your stock price didn't keep pace with your competition. It can't however, all be the fault of the FSA.

Update: 

Mr. Peston is at it again - with another rant against Sir Fred Goodwin. I don't suggest that he's blameless, nor that he should avoid any form of personal permanent inconvenience for some of his decisions. What concerns me is the focus on one man - Mr. Brown and friends must be very happy. The more focus on Sir Fred, the less on them. Come on BBC - context please.

Let's blame... the Bankers

Wouldn't it be great to be able to blame the meltdown/recession/depression/economic cock-up (select your favourite) on one person or one group of people? To have one face to throw things at and to be able to curse fluently at the right person. That would be great.

Sadly I don't think it's that simple. Do I think that the Bankers were stupid or even complicit? Yes - certainly. There are, however, other people to blame too - us. The shareholders. "Wait", you say. "I wasn't a shareholder". Well if you have a pension (and if you don't, that's pretty worrying), you probably were a shareholder. I was. So at best, I too was complicit in the risk-taking that was going. After all, we the shareholders were demanding high returns - double digit growth(!) - from a mature bank. Now come on - we're all intelligent people and we know that high return demands high (or at least higher) risk. We the shareholders were demanding high returns and were willing to look the other way when confronted with the obvious increase in risk.

Shame on all of us, I say.

Will it change? No, probably not. I imagine that we, as a nation and as a group of investors, will be more cautious in the future. In the end, however, we are a greedy race. My point is that while it's fun to shout and throw things at the bankers (I'm not suggesting that we stop) - we can't wash our hands of all blame. We should examine our own positions and our own demands and accept our responsibilities.

Sermon over for today.