Good bank, bad bank - what does that even mean?

Wasn't greed supposed to be "good"?

Simon Walker, the directors director, has criticised Barclays and RBS for paying their staff too much in both wages and bonuses. According to Mr Walker, who is director general of the Institute of Directors, this has caused a crisis of public confidence in capitalism.

In a candid speech about the behaviour and culture at big banks Walker said that “the proverbial turd cannot always be polished”, that the only way banks are going to look better in the eyes of the public is if they actually change instead of just pretending to.

The cause for Walker’s plea to the banks to change is the EU’s new cap on bonuses. He called it “wrong-headed and counter-productive” in that it would damage “good” and “bad” business alike.

Walker seems to have over looked the fact that these are meaningless terms when it comes to business. A “good” business is one that makes money (the more the better) not one that behaves in a moral way. Despite Google’s informal motto of “Don’t be evil”, no (big) business can (as we have seen from the search giant’s recent fines and accusations of ill-deeds).

Walker wants to encourage businesses in the UK to limit themselves, imposing caps on pay so the EU doesn’t have to come in and inflict limits on them.

He is against government action but for industry action. We should not be deceived into thinking that this is for any reasons other than selfish ones. If the EU begins imposing rules on how companies (not just the banks) are able to reward their employees for generating profits, where will it end?

From a business perspective the EU taking further measures will be disastrous in the long term and Walker is counselling UK business to recognise that they shouldn’t be greedy in the short term as they will loose out in the long term.

While he would like this to be taken as a call for a return to good business practice in the moral sense it is just a scantly veiled reminder to businesses that the money made over time, without EU rules will be far higher than the short term rewards many banks are currently doling out with both hands.

Photograph: Getty Images

Billy Bambrough writes for Retail Banker International at VRL financial news.
 

Photo: Getty
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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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