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.

Getty
Show Hide image

The Women's March against Trump matters – but only if we keep fighting

We won’t win the battle for progressive ideas if we don’t battle in the first place.

Arron Banks, UKIP-funder, Brexit cheerleader and Gibraltar-based insurance salesman, took time out from Trump's inauguration to tweet me about my role in tomorrow's Women’s March Conservative values are in the ascendancy worldwide. Thankfully your values are finished. . . good”.

Just what about the idea of women and men marching for human rights causes such ill will? The sense it is somehow cheeky to say we will champion equality whoever is in office in America or around the world. After all, if progressives like me have lost the battle of ideas, what difference does it make whether we are marching, holding meetings or just moaning on the internet?

The only anti-democratic perspective is to argue that when someone has lost the argument they have to stop making one. When political parties lose elections they reflect, they listen, they learn but if they stand for something, they don’t disband. The same is true, now, for the broader context. We should not dismiss the necessity to learn, to listen, to reflect on the rise of Trump – or indeed reflect on the rise of the right in the UK  but reject the idea that we have to take a vow of silence if we want to win power again.

To march is not to ignore the challenges progressives face. It is to start to ask what are we prepared to do about it.

Historically, conservatives have had no such qualms about regrouping and remaining steadfast in the confidence they have something worth saying. In contrast, the left has always been good at absolving itself of the need to renew.

We spend our time seeking the perfect candidates, the perfect policy, the perfect campaign, as a precondition for action. It justifies doing nothing except sitting on the sidelines bemoaning the state of society.

We also seem to think that changing the world should be easier than reality suggests. The backlash we are now seeing against progressive policies was inevitable once we appeared to take these gains for granted and became arrogant and exclusive about the inevitability of our worldview. Our values demand the rebalancing of power, whether economic, social or cultural, and that means challenging those who currently have it. We may believe that a more equal world is one in which more will thrive, but that doesn’t mean those with entrenched privilege will give up their favoured status without a fight or that the public should express perpetual gratitude for our efforts via the ballot box either.  

Amongst the conferences, tweets and general rumblings there seem three schools of thought about what to do next. The first is Marxist  as in Groucho revisionism: to rise again we must water down our principles to accommodate where we believe the centre ground of politics to now be. Tone down our ideals in the hope that by such acquiescence we can eventually win back public support for our brand – if not our purpose. The very essence of a hollow victory.

The second is to stick to our guns and stick our heads in the sand, believing that eventually, when World War Three breaks out, the public will come grovelling back to us. To luxuriate in an unwillingness to see we are losing not just elected offices but the fight for our shared future.

But what if there really was a third way? It's not going to be easy, and it requires more than a hashtag or funny t-shirt. It’s about picking ourselves up, dusting ourselves down and starting to renew our call to arms in a way that makes sense for the modern world.

For the avoidance of doubt, if we march tomorrow and then go home satisfied we have made our point then we may as well not have marched at all. But if we march and continue to organise out of the networks we make, well, then that’s worth a Saturday in the cold. After all, we won’t win the battle of ideas, if we don’t battle.

We do have to change the way we work. We do have to have the courage not to live in our echo chambers alone. To go with respect and humility to debate and discuss the future of our communities and of our country.

And we have to come together to show there is a willingness not to ask a few brave souls to do that on their own. Not just at election times, but every day and in every corner of Britain, no matter how difficult it may feel.

Saturday is one part of that process of finding others willing not just to walk a mile with a placard, but to put in the hard yards to win the argument again for progressive values and vision. Maybe no one will show up. Maybe not many will keep going. But whilst there are folk with faith in each other, and in that alternative future, they’ll find a friend in me ready to work with them and will them on  and then Mr Banks really should be worried.