The indoor pirates

If you totally screw up a bank, a Labour minister will grant you a pension of £700,000 for life. If you screw up a social services department, a Labour minister will sack you without compensation. It has taken a decade for the government to mimic Animal Farm. As we peer in through the windows of Downing Street, we can look "from pig to man and from man to pig ... but already it is impossible to say which was which". Some are more equal than others. Politician and banker have become one.

Writes Simon Jenkins

A friend of mine interviewed the No.4 of a high street bank recently. This bankers view, was that governments need banks, and so recent circumstances won't change much. You kind of choke on your cup of tea don't you? Or find that piece of cake going down "the wrong way".

But I wonder, I wonder if we are reaching a natural breaking point? I wonder if people feel that Marie Antoinette is telling the starving people to eat cake?

In a New York Times piece today William Cohan writes

Can it possibly be true that veteran Wall Street executives like Messrs. Cayne, Schwartz and Fuld — who were paid an estimated $128 million, $117 million and at least $350 million, respectively, in the five years before their businesses imploded — got all that money but were clueless about the risks they had exposed their firms to in the process?

In fact, although they have not chosen to admit it, many of these top bankers, as well as Stan O’Neal, the former chief executive of Merrill Lynch (who was handed $161.5 million when he “retired” in late 2007) made decision after decision, year after year, that turned their firms into houses of cards. 

One does becomes reluctantly radicalised in the face of extreme circumstances. Because,

Could these Wall Street executives have made other, less risky choices? Of course they could have, if they had been motivated by something other than absolute greed. Many smaller firms — including Evercore Partners, Greenhill and Lazard — took one look at those risky securities and decided to steer clear. When I worked at Lazard in the 1990s, people tried to convince the firm’s patriarchs — André Meyer, Michel David-Weill and Felix Rohatyn — that they must expand into riskier lines of business to keep pace with the big boys. The answer was always a firm no.

That is why bankers will become known henceforth as The Indoor PIrates.

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