First of all the committee members belong to that discredited fraternity known as politicians; whose collective behaviour in the last parliament leaves them with little or no moral authority to challenge the behaviour of bankers; whether they were bailed out by the government (i.e. taxpayer) or not. As we know Barclays resisted the government’s overtures and carried on doing business successfully without any government handout.
The questioning of Mr Diamond by the Great Thick-skinned in the committee room was meant to shame rather than to enlighten. One member demanded to know whether the head of Barclays would be accepting his annual bonus, seemingly ignorant of the fact that he had forgone this entitlement for the previous two years.
Another member of the committee reminded a puzzled chief executive of the biblical adage relating to camels and needles; expecting, no doubt, to seriously undermine his moral authority. Instead, the question was greeted with laughter from other committee members.
Barclays is among the top ten banks in the world. It could, given the wrong kind of environment, transfer its operations abroad to the detriment of a British economy that has relied upon the financial sector for it success over the past decade.
The bonuses the banks pay their high flyers are deserved if they add to the profitability of the banks and financial houses. Let us appreciate, as part of the calculation, that the much loathed successful banker who rakes in £2 million in bonus payment, has to give half of it back to the exchequer. In fact 20% of all taxes harvested by the exchequer comes from the financial sector. If we over regulate that sector billions paid in taxes would find a new home abroad, leaving both our NHS and education budgets somewhat short of funds.
IT IS EASY TO BLAME the banks for the economic mess the world finds itself in today. But the truth is, that the banks form only part of the equation when it comes to how we came to be in this mess. Remember those 100% mortgages which helped create the property bubble?
We the people were also part of the equation leading to failure. We were the willing authors of those pieces of fiction known as mortgage application forms, where we exaggerated our true worth while the banks and building societies gave us a nod and a wink.
The politicians comprised the third part of the equation. It was they who allowed the recklessness to continue in the financial markets. They did so because while the bubble was inflating they harvested the popularity
The politicians in power cannot be blamed for milking economic success , however transient it proves to be. But what is unforgivable, is for them to put the whole blame for the ensuing mess upon the shoulders of the banks. The politicians dare not acknowledge their own costly failures, and they certainly do not wish to portion any part of the blame upon us, the people. For to do so would be political suicide. So it is the banks and only the banks which are now in the politician’s sights.
BOB DIAMOND was the epitome of self-restraint before the Treasury Select Committee. He sat Aurelian like absorbing the brick-bats. He knew that his one ambition in life was creating wealth. To him, unlike some of his 13 complainants, he grasped the fact that the more wealth that is created for his company, the more taxes come into the hands of the treasury; resulting in greater public expenditure; and if this mechanism is undermined in any way by politicians courting populism, then it would be the public that would suffer.
Wealth and its creation has always been a problem in this country since the 1960s. Having once been the author of capitalism, this country fermented an antipathy toward it in the 1960s that is still with us today. The bankers are seen as the yielders of greed. But many a business, small or large, has profited from their activities and been able to invest part of their profits in the abilities of the very men and women whose bonuses they despise.
Many of the works of these individuals profit pension funds. Those who garner for themselves the bonuses the public resent them having, have increased, by their activity, the financial volume of those funds, and through their labours have provided a comfortable pension for many retired people.
We, as a country, are blessed with the financial expertise that has kept us afloat for hundreds of years. Apart from the ordinary citizen, the financial sector has helped build our manufacturing base. To many of our people the image of the cigar smoking top-hatted capitalist demon has once more breeched the surface of popular prejudice.
If we abandon our financial sector, which over regulation will conspire to achieve, then we will become the authors of our own destruction and will truly deserve our ruination.
We are blessed in this country with a financial sector second only to New York. If the people and the politicians wish to abandon or disadvantage it in any way then the British people will suffer the consequences, which is why the Chief Executive of Barclays, Bob Diamond remained calm and collected throughout his interview with the select committee . For Barclays will survive whatever judgement the Treasury Select Committee arrives at.
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