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Stanley Fink, the former chief executive of Man Group, is a hugely able guy, but that does not make it a wise decision for him to become joint treasurer of the Conservative party with Icap's Michael Spencer. What he does in his own time is his own business. However, his reason for taking the post, as told to a newspaper at the weekend, was a “total determination” David Cameron should win the next election for the Conservatives.
Hence his enthusiasm for raising money to help make this possible. But he might do them a bigger favour by keeping his head down. Where the move might backfire is in the effect it will have on the country at large. The Labour party has struggled for years to persuade the centre ground of British politics it is not in thrall to those trade unions that provide it with its core income. Likewise, the Conservatives struggle to persuade that same centre ground it is not under the thumb of the nation's financiers.
Fink was a major figure in the development of the hedge-fund industry, and putting him in such a key position is not going to make the Tories' task any easier. The perception in the country at large is very much that the Conservatives get their money from big City interests whom they will seek to protect when the opportunity arises.
The mood among mainstream voters is that while they understand the need for a healthy financial sector, the individuals working in it and the rewards to which they feel they are entitled have lost contact with reality. They deserve to be punished not protected. This message has strong echoes of 1979 when Margaret Thatcher won her first election after a very similar backlash.
She understood that while people still supported the principle of trade unions, they were heartily sick of the way they abused their power. Indeed, David Kynaston, the respected historian of the City, recently pointed out how the overbearing arrogance of the trade unions toward Government and society that made such a nightmare of the 1970s and ultimately swept Labour from office has been paralleled in recent years by the overbearing arrogance of top earners of the City who equally behave as if they believe the sole purpose of government is to make it easier for them to earn even more millions.
Their willingness to bully, cajole and threaten Government when their interests are challenged, and their absence of a sense of responsibility toward other interests in society, are a mirror image of the way union leaders behaved then, and could provoke a similar voter reaction. So it is a moot point how wise Cameron is to have his party so closely identified with City money. He will get the City's votes anyway, but such links will do nothing to deliver him the centre ground he needs to win.
Giving banks a new focus
Auditors appear to have their uses after all. There seemed room for doubt about this with the news last week that Satyam, the giant Indian outsourcing company, had for several years been run as a massive fraud and the $1 billion it claimed to have did not exist.
US accounting watchdog Dennis Beresford said “it's a bit hard to miss $1 billion in cash”, a sentiment with which most would agree. Either the money is there or its not. Clearly, spotting fraud is too difficult but the auditors have sought to redeem themselves by telling City Minister Lord Myners they are unwilling to sign off the accounts of our biggest banks because of all the financial uncertainty.
This threat seems to have galvanised the Prime Minister. The air is now thick with leaks and predictions that before the month is out there will be in place a loan guarantee scheme for bank lending to small businesses, whereby Government will insure new securitisations against loss, and possibly a scheme modelled on the one at Citigroup where Government insures toxic debt to perhaps 80% of its value, putting a floor under banks' potential losses.
If it is really smart, the Government will also change the terms under which it injected new capital into the banks to remove the element of punishment. Then the banks might focus on lending again, rather than worrying about how to repay the Government.
Reader views (2)
Perhaps a condition should be aded for our banks that no bonuses will be paid until normal lending has resumed. It is the only thing our selfish and greedy bankers respond to.
- R Bear, Willesden England, 12/01/2009 17:07
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Only a few months ago Camoron was not going to get easy popularity by attacking the Hedge Fund Criminals who he had preiously been wooing. Then he ecided that the Public wre outraged so he wanted them punished. Now he has decided they are great guys who can make a lot of money for the Tories. You've got to admire a man who has the courage of his convictions. Especially when he has so many conflicting convictions.
- R Bear, Willesden England, 12/01/2009 16:16
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