Friday, 6 July 2012

6 July 2012

I don't know about you, but I'm glad I wasn't the Barclays buck this week.

That's buck as in "The buck stops here."

On Monday, there it was, sitting on the desk of Barclays chairman Marcus Agius.  This is where the buck stops, he said, so he quit.

Twenty-four hours later, that same little buck had bounced all the way to the desk of chief executive Bob Diamond. Actually, he said, on reflection, I think this is where the buck stops -- so he quit.

At which point, although I can't be sure, I think the buck bounced back to the desk of Mr Agius, who decided to de-resign, and take back the job that he had just quit, plus the job that Mr Diamond had just quit -- so maybe there are now two bucks on his desk.

The question is: will they stop there? Or will they soon be bouncing out of the building, and along to the Financial Services Authority? Or the Bank of England? Maybe the Treasury?

Perhaps in the world of modern banking, bucks don't stop anywhere. Perhaps by a mysterious process of metamorphosis, they turn into hot potatoes -- bouncing around in a political and financial limbo, condemned never to find a resting place.

In the court of public opinion, Mr Diamond is toast. Earning something in the region of £100 million over the past five years probably doesn't help his cause much -- and if he was hoping for some understanding from MPs on the Treasury select committee, maybe someone should have whispered in his ear that addressing them familiarly by their first names was not a good career move.

(Some people have suggested it was because he's American and not attuned to quaint old British parliamentary etiquette. So I checked with a US financial journalist: would he have used first names at a Congressional committee inquiry on Capitol Hill? Answer: You must be kidding.)

As for the verdict from the financial pages of our leading newspapers, well, let's say Mr Diamond is not over-blessed with friends at the moment.

Philip Stephens in the Financial Times: "The trading in the complex financial instruments central to the crash is now seen for what it is – a socially useless and financially dangerous way for small groups of people to make themselves absurdly richMr Diamond was the unacceptable face of banking. His departure is welcome and necessary for the health to be restored to Britain’s financial industry. "

Jeremy Warner in the Daily Telegraph: "There is no defence against what Barclays has been accused of, which strays way beyond the incompetence, hubris and recklessness of the banking crisis into outright deception, falsification and fraud … What useful social purpose do investment banking goliaths such as Barclays Capital serve, and how do you change them so that they are not just money-making machines for themselves?"

OK, so we get the message. Mr Diamond is no saint, and the kind of banking that he has come to epitomise ("casino banking" to its critics) does no good -- and a lot of harm -- to the health of the nation.

But here's what I want to know: how did we get here? It's not as if they were making their squillions in secret, hiding their cash under mattresses and at the back of cupboards. In those far-off days before it all went belly-up, bankers behaving badly were regular fodder for the gossip columns.

It is, after all, 25 years since Tom Wolfe published "The Bonfire of the Vanities" in which he laid bare the excesses of Wall Street. Come to that, it's also 25 years since Oliver Stone's film "Wall Street", in which Michael Douglas portrayed the loveable Gordon ("Greed is good") Gekko.

M'lud, I make no accusations at this point, but you may wish to consider the following article from The Times, published on 9 December 2009:

"Speaking to a gathering of top financiers, the Conservative leader [Mr David Cameron] told them: 'My father was a stockbroker, my grandfather was a stockbroker, my great-grandfather was a stockbroker.' The City, he assured them, was in his blood. Those present, who included Bob Diamond, president of Barclays, and Richard Gnodde, the co-chief executive of Goldman Sachs in London, purred their approval."

No, I don't say the buck should end up on Mr Cameron's desk. Or on Gordon Brown's, or Ed Balls's, or Shriti Vadera's.

But maybe we should consider why over a period of two decades or more, successive political leaders and financial regulators have observed Mr Diamond and friends in action and happily cheered them on.

Matthew Norman, writing in The Independent on Wednesday, claimed that Vince Cable, now the business secretary, has been a lone voice, crying in the wilderness, warning of the cataclysm to come. "He warned about unsustainable cheap credit … He pinpointed the structural weakness at Northern Rock and called for its nationalisation … For inadvertently declaring war against a Murdoch media stranglehold, he was ridiculed … By then, he had already spoken about casino banking in general, and Bob Diamond's appointment as Barclay's CEO in particular."

If he's right -- and you can be the judge of that -- it might be interesting to ask why St Vince was apparently such a lone voice. More interesting, I suspect, than observing the antics of Messrs Osborne and Balls in the Commons yesterday afternoon, which I did on your behalf.

I won't describe the scenes, because I know you are of a sensitive disposition. Let's just put it this way: they made bare-knuckle boxing look like a Women's Institute needlepoint awayday.

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