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?
By Mehdi Hasan Published 12 September 2011
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!
Revolving door
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
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52 comments
@awake,
"a retail only bank means you would have to pay to use it- pay for cards, cheques, pay to send money here and there, pay to use the atm etc..."
You're wrong because you assume that the retail arm a) makes no profit and b) makes no charges.
To be fair to the SEC, since 2009 we have seen a major crackdown on insider trading, in particular at hedge funds.
http://money.cnn.com/2011/06/09/news/companies/insider_trading_sec/index...
And, also, we have continuing trials for fraud relating to the sub-prime market and its collapse.
http://www.bloomberg.com/news/2011-09-09/ex-bear-stearns-fund-managers-c...
It can't be claimed that nothing has been done. But these are difficult crimes to prove, because they look so much like stupidity (which as far as I'm aware isn't a crime, yet).
@awake
and then the insane politics of govt meant that taxpayers got saddled with the risk u said
is this the same politicians who all have their snouts in the trough and go on to executive banking positions once they leave office? or come from banking backgrounds? we all know they will end up working for someone in the financial sector
we have banking controlled governments all over the western world and if you cant see that my friend you havent got a scooby!
its a game. dont get sucked in. banksters rule the world and token individuals dont count. the whole system is corrupt
I don't think much has been learned from the whole financial crisis. We were told it was the end of cheap money, what happened to that? We now have even lower rates than the low rates which helped fuel the disastrous house price boom under New Labour.
Now there are calls for more QE, that should help give the bankers a bonuses a nice boost.
Lending is also gradually getting looser, how long before we see the 100% mortgage back?
This term universality and how we come to understand it's meaning is going to get even more confused generally it seems to me.
For example does conservative radical reform ie making the most of what we've got, include the current uncertainties that have been found wanting at the interface between the firms and the commons, so to speak? - Or does radical reform concern some point which can effectively separate certain definite forms of banking?
Instead of trying to separate forms of banking behaviour like they used to do with schools (eg girls and boys playgrounds) -why not try to acknowledge and respect more correctly the true differences between behaviour that is necessary and appropriate for " the firm" and behaviour that is rightfully becoming of the ordinary member of the public in " the commons".
It seems to me the behaviour of the proverbial CEO is somehow symbolic and is designed at the convenience of vested interests to misappropriate the normal powers and liberties of an ordinary member of the public.
Or put in the context of universality, it seems to me the behaviour of too many CEO's is really unbecoming of other ordinary members of the public.
'Three years since the crash and not a single "MP_ster” is in jail'
Actually, thats not true is it as the sticky fingered ones did get their collars felt and some of the greedy morally cooked ones did get found out. And oh yes, and quite a few of them lost their jobs, Oh yes, and others did get butt fuxked on national TV by Die Hard Alistair.
Hey, may every cloud does have a silver lining after all.
zeroz
thats my point. it will make profits from charging to do what we assume for free currently-
zeroz
ther's 2 ways to run a bank.
u directly charge for services, just like any other tradesman., or
indirectly- u build into products a margin to pay for the services-
u don't pays your money, u don't takes your choice...
intersting mr hassan
as usual there are some nonsense comments from people with chips on shoulder- u want to find a smoking gun?
How does writing in housing assets into a model at minimum value of 100% sound? i.e. your model cannot value the asset at below its purchase price, it can't be valued below that intial price- dosen't sound like proper banking practice to me... who signed off on these models? Mehdi try and be objective- you're leftist nonsense about a bank rally after the budget tales u off the scent- also the guy running HSBC is exactky the man u want on board, they are ome of the best run banks, they are known for NOT having a casino mentality- DO YOUR HOMEWORK!! u are on to something, don't let red mist blind you...
think mehdi, ehy the man at hsbc as a minister for trade and investment? HSBC- look at what they do, their clients... they are the natural choice, they grew out of FX for EM businesses round the world, there are not many better placed to see the flows. That 's a shrewd move...