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.