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Bankers refuse to take all blame
By Laurence Fletcher |
April 19, 2009, Sunday
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Print Edition
Print Edition
BANKERS may rank below journalists among the professions least trusted by Britons but they refuse to accept all the blame for the worst financial crisis in 70 years.
Conceding they have done their fair share in creating the crisis, many of those who have been the target of recriminations argue the system had political architects.
The argument may be predictable but, given the symbiotic relationship between global finance and political power, it is one that can undermine governments that played a role in the events leading to the credit crunch.
"For the politicians on both sides of the Atlantic to say it's 100 percent the fault of the bankers is a bit disingenuous," said Scott Moeller, director of mergers and acquisitions research at Cass Business School in London.
No politicians have placed all the blame for the crisis on bankers but some have pointed the finger. In February Michael Fallon, a member of the Treasury Select Committee - a cross-party group of British members of parliament - said bosses at HBOS and the Royal Bank of Scotland were "in denial ... about the extent they have failed."
Public anger toward bankers has been brewing. In October protesters greeted Lehman Brothers Chief Executive Richard Fuld with signs reading "Shame" and "Cap greed" as he arrived to testify to lawmakers about Lehman's bankruptcy.
Easy targets
"It's not fair to blame bankers for all the ills when clearly government policies have encouraged home ownership, encouraged people to take out loans to buy things maybe they can't afford," Cass' Moeller said.
A British survey of public trust toward professions - conducted in March by researchers for the Bar Standards Board - put bankers near the foot of the table although they were above politicians.
Prime Minister Gordon Brown served as Chancellor of the Exchequer (finance minister) from 1997 to 2007 and said he had ended the "boom and bust" cycle. He must call an election by June 2010 and his ruling Labour Party lags the opposition Conservatives by at least seven points in opinion polls.
Brown has a finer line to tread than President Barack Obama, who took office after the collapse of Lehman Brothers and is seeking to repair damage caused before he entered White House.
Protests at the Group of 20 summit of leading industrial countries in London earlier this month showed bankers still had some work to do to ensure the blame is shared.
Demonstrators smashed windows and daubed "thieves" on a branch of the Royal Bank of Scotland, which has become a symbol of bankers' excess after its former head Fred Goodwin clung to a lucrative pension despite record losses at the now state-controlled bank.
"This ... has gone too far and the issue has become immensely personalized. Some banks have a responsibility but not the sole responsibility," said Angela Knight, chief executive of the British Bankers' Association. "We are obviously an easy target."
Some financial professionals believe they have been tarred with too broad a brush by people seeking to express a general frustration with capitalism.
"Whether you're an investment bank, whether you're Fred Goodwin, whether you're a private equity firm or hedge fund, it doesn't matter," said Andrew Newington, managing partner of private equity firm BC Partners. "You appear on a placard ... with a noose around your neck."
Protesters at the G20 summit also hanged and set fire to a mannequin dressed as a banker outside the Bank of England in London.
Bank workers say they are normal people just trying to make a living.
Lloyds TSB, a retail and comm-ercial bank, said in February many of its employees earned about 17,000 pounds (US$25,250), compared with a national average of 25,100 pounds. But then Goldman Sachs employees are expected to earn more than US$675,000 on average in 2009 if the bank pays staff as it did in the first quarter.
Those who blame central bankers and politicians argue they fostered the system and reaped the benefits during the boom years even as they are now debating tighter regulation.
Conceding they have done their fair share in creating the crisis, many of those who have been the target of recriminations argue the system had political architects.
The argument may be predictable but, given the symbiotic relationship between global finance and political power, it is one that can undermine governments that played a role in the events leading to the credit crunch.
"For the politicians on both sides of the Atlantic to say it's 100 percent the fault of the bankers is a bit disingenuous," said Scott Moeller, director of mergers and acquisitions research at Cass Business School in London.
No politicians have placed all the blame for the crisis on bankers but some have pointed the finger. In February Michael Fallon, a member of the Treasury Select Committee - a cross-party group of British members of parliament - said bosses at HBOS and the Royal Bank of Scotland were "in denial ... about the extent they have failed."
Public anger toward bankers has been brewing. In October protesters greeted Lehman Brothers Chief Executive Richard Fuld with signs reading "Shame" and "Cap greed" as he arrived to testify to lawmakers about Lehman's bankruptcy.
Easy targets
"It's not fair to blame bankers for all the ills when clearly government policies have encouraged home ownership, encouraged people to take out loans to buy things maybe they can't afford," Cass' Moeller said.
A British survey of public trust toward professions - conducted in March by researchers for the Bar Standards Board - put bankers near the foot of the table although they were above politicians.
Prime Minister Gordon Brown served as Chancellor of the Exchequer (finance minister) from 1997 to 2007 and said he had ended the "boom and bust" cycle. He must call an election by June 2010 and his ruling Labour Party lags the opposition Conservatives by at least seven points in opinion polls.
Brown has a finer line to tread than President Barack Obama, who took office after the collapse of Lehman Brothers and is seeking to repair damage caused before he entered White House.
Protests at the Group of 20 summit of leading industrial countries in London earlier this month showed bankers still had some work to do to ensure the blame is shared.
Demonstrators smashed windows and daubed "thieves" on a branch of the Royal Bank of Scotland, which has become a symbol of bankers' excess after its former head Fred Goodwin clung to a lucrative pension despite record losses at the now state-controlled bank.
"This ... has gone too far and the issue has become immensely personalized. Some banks have a responsibility but not the sole responsibility," said Angela Knight, chief executive of the British Bankers' Association. "We are obviously an easy target."
Some financial professionals believe they have been tarred with too broad a brush by people seeking to express a general frustration with capitalism.
"Whether you're an investment bank, whether you're Fred Goodwin, whether you're a private equity firm or hedge fund, it doesn't matter," said Andrew Newington, managing partner of private equity firm BC Partners. "You appear on a placard ... with a noose around your neck."
Protesters at the G20 summit also hanged and set fire to a mannequin dressed as a banker outside the Bank of England in London.
Bank workers say they are normal people just trying to make a living.
Lloyds TSB, a retail and comm-ercial bank, said in February many of its employees earned about 17,000 pounds (US$25,250), compared with a national average of 25,100 pounds. But then Goldman Sachs employees are expected to earn more than US$675,000 on average in 2009 if the bank pays staff as it did in the first quarter.
Those who blame central bankers and politicians argue they fostered the system and reaped the benefits during the boom years even as they are now debating tighter regulation.
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