Three years since the crash and not a single “bankster” is in jail
Where has all the anger over grotesque bank bonuses gone? Why has there been no accountability?
As we approach the tenth anniversary of 9/11, there has been much talk of how "everything changed" that day. But what of 9/15? Has anything changed since 15 September 2008, when the bankers crashed the global economy? The 11 September 2001 attacks resulted in the deaths of 3,000 people; 9/15, according to World Bank studies, caused between 30,000 and 50,000 excess infant deaths in sub-Saharan Africa alone in 2009.
Yet the depressing truth, as we approach the third anniversary of the implosion of Lehman Brothers, is that bankers have dusted themselves off with taxpayers' cash and carried on as before. They are masters of the universe once more. Within nine months of the crash, financial journalists were reporting the new buzzword of a born-again industry: "BAB", or "bonuses are back". In July of this year, the Office of National Statistics revealed that City bonuses had totalled a whopping £14bn in 2010 - up from £12bn in 2008.
“There was a period of remorse and apology for banks," announced Barclays boss Bob Diamond to a roomful of startled MPs in January. “I think that period needs to be over." Apologists for the City like to claim that Barclays and its boss - described by Peter Mandelson as the "unacceptable face of banking"(this was before Mandelson then went on to advise him!) - are free to do as they wish because the bank wasn't bailed out. Yet, as a new report from the New Economics Foundation points out, Barclays has enjoyed an indirect subsidy - in the form of "too big to fail" government guarantees and cheap loans - worth around £10bn from the British public. You're welcome, Bob.
Greed is good
Diamond was being disingenuous. There has been no real remorse from his fellow bank bosses. Few have been held to account for their failures; even fewer punished. Fred "the Shred" Goodwin made off with a taxpayer-funded pension pot worth around £16m and has since been employed as a senior adviser to the international architecture firm RMJM. Adam Applegarth, the disgraced ex-chief executive of Northern Rock, landed an advisory job with the New York-based private equity firm Apollo Management. Andy Hornby of HBOS went on to serve as chief executive of Alliance Boots. And Eric Daniels, boss of the bailed-out Lloyds, quit only in February - and is still being paid almost £100,000 a month for doing nothing.
The proverbial Martian, landing on earth for the first time, would be stunned to discover that these were the men whose greedy, reckless and incompetent behaviour helped bring the world economy to the edge of the abyss. But bankers have benefited from a transatlantic culture of impunity. Here in the UK, coalition ministers pretend to be taking firm action against them. They point to their new "bank levy" - while omitting to mention that the combined effects of cancelling Labour's bonus tax and slashing corporation tax has effectively been to give the banks a tax cut. In fact, bank shares rallied after Chancellor George Osborne's first Budget in June 2010. Three months later, David Cameron appointed Stephen Green, the chairman of HSBC, as his minister for trade and investment.
On 12 September, the Independent Banking Commission, headed by Sir John Vickers, is expected to recommend that banks should be forced to "ring-fence" their retail operations. There will be no break-up of the banks; no formal separation of retail and investment banking; no restraints on pay or bonuses. But even Vickers's "soft" proposals have been greeted with howls of protest from the bank lobby. Osborne is now considering kicking the reforms into the long grass until . . . 2019!
Some of us had high(er) hopes for Barack Obama. But, on becoming president, Obama hired as his chief of staff Rahm Emanuel, who had earned $16.2m working as an investment banker between 2000 and 2002. When Emanuel quit last October, Obama replaced him with William Daley, the former Midwest chairman of JPMorgan. Meanwhile, Peter Orszag, the President's budget director, left the White House last year to become vice chairman of global banking at Citigroup. The door between the White House and Wall Street continues to revolve.
Candidate Obama spoke of ending the "era of greed and irresponsibility on Wall Street"; President Obama, however, has praised the bonus-hungry chief executives of Goldman Sachs and JP Morgan - both big donors to his presidential campaign - as " very savvy businessmen". "I, like most of the American people, don't begrudge people success or wealth," said the President in February 2010.
Perhaps he has a point. Where has all the anger over grotesque bank bonuses gone? Why has there been no accountability? No retribution? As Charles Ferguson, director of Inside Job, the award-winning documentary on the crash, said in his Oscar acceptance speech in February: "Three years after a horrific financial crisis caused by fraud, not a single financial executive has gone to jail and that's wrong." Here in Britain, we have had "exemplary" sentences for the "feral" youths who rioted and looted last month. But why not subject the swindlers of the Square Mile to similar treatment?
Will we ever stand up to the "feral" financial elite, those whom Ferdinand Pecora, the famed investigator of the US financial industry in the 1930s, referred to as "banksters"? I wouldn't get your hopes up. As Lord Skidelsky, biographer of John Maynard Keynes, argued in parliament in March: "As things stand, the banks are the permanent government of the country, whichever party is in power."
Mehdi Hasan is senior editor (politics) of the New Statesman