7 Sep 2011

The Bankers’ threats to a Chancellor who thinks ‘they’ve got away with it’

I have now read almost all of Alistair Darling’s memoir. Most of the press for it has been dominated by his uncharacteristically acerbic asides about his colleagues.

The stuff about bankers is far, far more important and of direct relevance today, as our politicians could launch the biggest shake-up of Britain’s banking system in decades. Darling was, after all, the man who signed the cheques. There’s some astounding detail.

* The angry phone call from one of the world’s top bankers after Darling brought in the bonus tax, where the banker seems to threaten not to buy UK Government debt. Extraordinary.

* HBoS trying to buy Bradford & Bingley, even as it was in deep trouble itself.

* HBoS requiring £16bn of overnight funding to keep going.

* Confirmation that RBS cash machines were two hours from closing in October 2008.

* Darling overruled official Treasury advice to bailout £7bn worth of savings in Icelandic internet accounts.

I interviewed him today, and he went further, saying that “some bankers have got away with it, because the architects of some of these problems are still around”.

On ring fencing he said: “The idea floated about that putting off bank reforms till 2019, you might as well not do it.”

But most damningly he contrasted the lack of reciprocity from the banks that expected help when they were on their knees, but refused to help clean up the mess from Northern Rock and Bradford & Bingley.

“They said no, they think government is a nuisance until they needed to be bailed out,” he told me.

Food for thought at a time when the social contract between banks and taxpayers is up for grabs as never before.

Follow Faisal Islam on Twitter @faisalislam

* Declaration: my brother-in-law is publisher of Back from the Brink, and I got an acknowledgement for some journalistic advice.

7 reader comments

  1. Philip Edwards says:

    Faisal,

    “…the social contract between banks and taxpayers is up for grabs…”?

    When was this “contract” signed? Where can we see a copy of it? Which clause allowed the banker to threaten a democratically elected government?

    Am I missing something?

    Or should that read “social con trick”?

  2. muggwhump says:

    Isn’t it high time the media took a long hard critical look at the amount of power the banks have over all our lives?
    It seems to me that we live our lives ‘for’ the banks in a way that would have seemed unbelievable even 10 years ago.
    They certainly have the whole of Westminster/Whitehall wrapped around their little fingers, so that means we all are too. We have no choice.
    The debt we’ve had to take on as a society for bailing out the banks will hang over us for generations, this includes by the way the £150bn a year we are still borrowing today without which the economy would shrink, we wouldn’t be able to repay our loans and the banks would have to take a loss.
    Look at housing, both this and the last government have ploughed in billions to ‘stabilise’ house prices for the banks, millions who can’t afford to live anywhere being taxed to provide ‘shared equity’ mortgages for the few…pricing themselves onto the streets at the same time.
    Not to mention the creeping privatisation of our public services allowing the city in to cream off a profit from money that should be going on our care.
    How is any of this making our lives better?
    What kind of lives will our…

    1. e says:

      Muggwhump, I’m so glad there are people prepared to question what kind of lives our children and grandchildren will struggle with if our politicians continue to fail in their duty to rain in the power of irresponsible corporate megalomaniacs.
      As I go into my 8th month of unemployment I have become heartily sickened and totally demoralised by the sea of officialdom that I am obliged to wade through, which as a matter of course questions my motives and attacks my integrity whilst having nothing by the way of work to offer – how damaging an experience this must be for the young who don’t have a personal history of employment with which to protect their self-esteem.

  3. Charles Jurcich says:

    Faisal,
    Please can you investigate this “Yuan Trading hub” in the city?

    Is it going to make tax evasion easier?
    Is it mostly bankers that will get the jobs?
    What do we get out of it?
    Have we become our own yuan denominated tax haven?

  4. Mohammed Ali says:

    FTT Petitiion http://epetitions.direct.gov.uk/petitions/15397

    (Complete reasoning text available)

    The capital raised by the FTT would support national deficit reduction. This in turn would return confidence into bond markets as they can see solid returns will be possible, thus reduce interest rates. With a stable bond market, the currency markets would become stable as the currency itself is stable, i.e. the US Dollar & Euro. Now having a stable deficit reduction plan & a more secure currency market, the investment/trading markets will stabilise as well, as they can see stability in the countries they are trading in. In summary, the FTT is the Golden Arrow which would stabilise markets & support government deficit reduction plans. I also hope China will be a great supporter of the FTT as they need stability & strength in the US Dollar & not look too favourably at banks which try to escape it. The banks that do try to escape the FTT are their own worst enemy

  5. bournemouth bob says:

    What shocks me is the arrogance of these bankers, having invested our money in complicated financial products that many did not understand they then turn to us, as ordinary taxpayers, for help to bail themselves out of their self generated situations, demand huge bonuses and then to add insult to injury refuse to loan money to the ordinary man in the street and then to add insult to injury seem not to understand why they are so hated……The banks that we saved should not be able to pay any bonuses until every last penny lent has been repaid. Perhaps then these people will understand the misery they have inflicted on us and maybe just maybe learn to you use the word I have not yet heard……”sorry”. As I am about to retire and have been self employed all my life I have no chance to rebuild my capital base now…..thank you Northern Rock, Nat west, Lloydstsb.

  6. Jim Flavin says:

    hopefully the seperation of the casio end will go thro – that should help – but the bdamage is done . BBC radio this moring reported that incomes will decline for next ten years – in other words at least ten years and beyond – all becuse of these bankers / devolopers / gamblers . The arrogance and Hypocrisy are breathtaking . Here is waht is going on – behind the hypoctritical words – who in heck elects these ”people ”
    ”On 13 September, one of the world’s biggest arms fairs opens in London, backed by the British government. On 8 September, the London Chamber of Commerce and Industry held a preview entitled “Middle East: A vast market for UK defence and security companies”. The host was the Royal Bank of Scotland, a major investor in cluster bombs. According to Amnesty international, the victims of cluster bombs are 98 per cent civilians and 30 per cent children. The Royal Bank of Scotland has received £20 million in public money. The blurb for the bank’s arms party reads: “The Middle East is one of the regions with the greatest number of opportunities for UK defence and security companies. Saudi Arabia… is the world’s top defence importer, having spent…

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