Blaming the right bankers is too tricky: let's just pick one

Andrew Bailey thinks it "more than odd" that CEOs have avoided blame.

So far, those at the very top of failing banks - chairmen and chief executives -  have for the most part avoided going down with the ship, and today the Prudential Regulation Authority's Andrew Bailey has called them out. It is "more than odd", he said, speaking at a conference in London, that people at the very top of the chain have avoided formal charges while those beneath them shoulder the blame.

It is to my mind a very striking observation and difficulty with the crisis that no formal action has been taken against any chief executive or any chairmen of a failed institution. Not because I have a personal vendetta against them but it is more than odd that action has been taken against people lower down institutions but not at the top.

The explanation he'd been given, Bailey said, was that there was a “problem with the trail of evidence”, which allowed bosses to “delegate responsibility as well as tasks”. This was evidence, he said, of a “flaw in the system” peculiar to banking.

Blaming your juniors is hardly a custom specific to a single industry - but in this case, over misdemeanors that seem to spring directly from company culture,  it seems particularly logical to blame those at the top. (This recently did happen at HBOS - and today Bailey said he "welcomed" Vince Cable's investigatation of a boardroom ban for the "HBOS three" at the top, Lord Stevenson, Sir James Crosby and Andy Hornby.) Follow this logic any further, however, and things start looking a little less clear cut. Here's the FT on some further causes of the collapse of HBOS:

Three accessories after the fact not named in the report are Westminster, the City and the financial press. HBOS’s board were buccaneering heroes to many in the Noughties. Sir James’s New Labour chums secured his knighthood in 2006. Gung ho investors pushed HBOS shares higher between June 2004 and 2007 than any bank stock, Standard Chartered excepted. Business journalists mostly bought the bank’s bullish story, including Lombards past and present.

But if the blame is to be so broadly spread, it becomes meaningless. Blame too few, though, and it becomes scapegoating. Here's Robert Peston:

Here's the thing: if the HBOS troika are to be blacklisted from the City, why not ban those who ran the other failed banks, RBS, Bradford & Bingley and Northern Rock?

The important thing, as Peston points out, is to mete out the cathartic punishment so necessary to the public without damaging banks too much. As the potential for blame stretches to an entire industry and beyond, there will be an element of scapegoating here, and it would be moral to place this scapegoating at the top. But we must be careful not to set off a domino effect - if we blame x - why not blame y? - and risk harming too many powerful players in too many institutions. Perhaps the solution is just to pick one banker and drive them into the wasteland outside the city (hackney marshes/Essex?), and then have done. Suggestions on a post-card.

Photograph: Getty Images
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Theresa May defies the right by maintaining 0.7% aid pledge

The Prime Minister offers rare continuity with David Cameron but vows to re-examine how the money is spent. 

From the moment Theresa May became Prime Minister, there was speculation that she would abandon the UK's 0.7 per cent aid pledge. She appointed Priti Patel, a previous opponent of the target, as International Development Secretary and repeatedly refused to extend the commitment beyond this parliament. When an early general election was called, the assumption was that 0.7 per cent would not make the manifesto.

But at a campaign event in her Maidenhead constituency, May announced that it would. "Let’s be clear – the 0.7 per cent commitment remains, and will remain," she said in response to a question from the Daily Telegraph's Kate McCann. But she added: "What we need to do, though, is to look at how that money will be spent, and make sure that we are able to spend that money in the most effective way." May has left open the possibility that the UK could abandon the OECD definition of aid and potentially reclassify defence spending for this purpose.

Yet by maintaining the 0.7 per cent pledge, May has faced down her party's right and title such as the Sun and the Daily Mail. On grammar schools, climate change and Brexit, Tory MPs have cheered the Prime Minister's stances but she has now upheld a key component of David Cameron's legacy. George Osborne was one of the first to praise May's decision, tweeting: "Recommitment to 0.7% aid target very welcome. Morally right, strengthens UK influence & was key to creating modern compassionate Conservatives".

A Conservative aide told me that the announcement reflected May's personal commitment to international development, pointing to her recent speech to International Development staff. 

But another Cameron-era target - the state pension "triple lock" - appears less secure. Asked whether the government would continue to raise pensions every year, May pointed to the Tories' record, rather than making any future commitment. The triple lock, which ensures pensions rise in line with average earnings, CPI inflation or by 2.5 per cent (whichever is highest), has long been regarded by some Conservatives as unaffordable. 

Meanwhile, Philip Hammond has hinted that the Tories' "tax lock", which bars increases in income tax, VAT and National Insurance, could be similarly dropped. He said: "I’m a Conservative. I have no ideological desire to to raise taxes. But we need to manage the economy sensibly and sustainably. We need to get the fiscal accounts back into shape.

"It was self evidently clear that the commitments that were made in the 2015 manifesto did and do today constrain the ability to manage the economy flexibly."

May's short speech to workers at a GlaxoSmithKline factory was most notable for her emphasis that "the result is not certain" (the same message delivered by Jeremy Corbyn yesterday). As I reported on Wednesday, the Tories fear that the belief that Labour cannot win could reduce their lead as voters conclude there is no need to turn out. 

George Eaton is political editor of the New Statesman.

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