Bank bonuses and the Barclays myth

We, the taxpayers, saved Barclays too!

From the BBC:

Banking giant Barclays has seen its full-year profits increase by 92 per cent to £11.6bn ($18.2bn) in 2009.

The news story goes on to add:

The bank, which did not take any direct state help during the financial crisis, said its total bonus payouts for staff had been reined in to £2.7bn.

First, the fact that multibillion-pound bonuses in the midst of a recession are described as having been "reined in" says all you need to know about the excess and greed that has blighted the banking sector in recent years.

Second, notice the key disclaimer slipped in, early on:

The bank, which did not take any direct state help during the financial crisis . . .

I've heard a version of this line again and again, in the context of Barclays, ever since the government's bailout of the banks in late 2008. Last night on LBC, for example, the business reporter went out of her way to remind listeners that Barclays hadn't taken any government money -- in other words, it is less culpable for the crash and less accountable to the public for what it does with its profits now.

What a load of rubbish.

Barclays, as the Beeb's business editor Robert Peston points out later on, in the same story, benefited indirectly:

. . . from a windfall generated by the emergency rescue of the global economy undertaken by governments and central banks, an emergency rescue that was needed in large part because of the havoc wreaked by the excessive risk-taking of banks.

The banking sector, which Barclays is part of, would not exist today were it not for the billions stumped up by British taxpayers in the form of bailout money, short-term loans, loan guarantees and quantitative easing. Even the Barclays boss, John Varley, has acknowledged the crucial role played by the government in rescuing the City as a whole:

There are two ways I would say the system as a whole benefited generically.

One was in the injection of liquidity undertaken by the Bank of England and a new structure put in place in March 2008.

And the other was the making available of guarantees from government for funding undertaken by banks.

It is important to recognise that in each case the banks were encouraged to use these new structures that were put in place and we did.

It is also important to recognise that we were required and we did pay a price for these things but I'm not trivialising the importance of the intervention. It was important.

So Barclays has to behave responsibly. Massive bonuses are unjustified, irresponsible, offensive and dangerous.

Let's not forget either that Barclays only avoided crashing like Royal Bank of Scotland through good fortune: had the former succeeded in buying the debt-ridden ABN Amro in 2007, instead of the latter, Varley might be as reviled and ridiculed today as Fred "the Shred" Goodwin. What a lucky man . . .

 

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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I dined behind the Houses of Parliament in my sexually connected foursome

My wife and I would sometimes dine out with another couple. We did not always check the significance of the date. 

I am self-employed and find that working from home, setting your own schedule, the days generally blur into each other, with weekends holding no significance, and public holidays, when those who are employed in factories, offices or shops get time off, meaning nothing. I am often surprised to go out and find the streets empty of traffic because it is some national day of observance, such as Christmas, that I wasn’t aware of. I find myself puzzled as to why the shops are suddenly full of Easter eggs or pancake batter.

Growing up in a Communist household, we had a distinct dislike for this kind of manufactured marketing opportunity anyway. I remember the time my mother tried to make me feel guilty because I’d done nothing for her on Mother’s Day and I pointed out that it was she who had told me that Mother’s Day was a cynical creation of the greetings card monopolies and the floral industrial complex.

Valentine’s Day is one of those I never see coming. It’s the one day of the year when even the worst restaurants are completely booked out by couples attempting to enjoy a romantic evening. Even those old-fashioned cafés you’ll find still lurking behind railway stations and serving spaghetti with bread and butter will tell you there’s a waiting list if you leave it late to reserve a table.

In the late 1980s my wife and I would sometimes dine out with another couple, he a writer and she a TV producer. One particular place we liked was a restaurant attached to a 1930s block of flats, near the Houses of Parliament, where the endless corridors were lined with blank doors, behind which you sensed awful things happened. The steel dining room dotted with potted palm trees overlooked a swimming pool, and this seemed terribly sophisticated to us even if it meant all your overpriced food had a vague taste of chlorine.

The four of us booked to eat there on 14 February, not realising the significance of the date. We found at every other table there was a single couple, either staring adoringly into each other’s eyes or squabbling.

As we sat down I noticed we were getting strange looks from our fellow diners. Some were sort of knowing, prompting smiles and winks; others seemed more outraged. The staff, too, were either simpering or frosty. After a while we realised what was going on: it was Valentine’s Day! All the other customers had assumed that we were a sexually connected foursome who had decided to celebrate our innovative relationship by having dinner together on this special date.

For the four of us, the smirking attention set up a strange dynamic: after that night it always felt like we were saying something seedy to each other. “Do you want to get together on Sunday?” I’d say to one of them on the phone, and then find myself blushing. “I’ll see if we can fit it in,” they’d reply, and we would both giggle nervously.

Things became increasingly awkward between us, until in the end we stopped seeing them completely. 

This article first appeared in the 25 May 2017 issue of the New Statesman, Why Islamic State targets Britain

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