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SIR Fred Goodwin left Royal Bank of Scotland at the weekend. Soon he is due to appear before the Treasury Select Committee.
He has gone from being a superstar of the industry, the chief executive who drove RBS to become a world force, to being dubbed by some sections of the media as the "world's worst banker", the epitome of the now reviled breed that did so much to catapult us into recession.
Goodwin led a bank that this year will notch up a loss of £28 billion. His organisation has had to be bailed out by the taxpayer and is now under state control. When he appears before MPs, they will have a field day. The questions will be hostile and, pretty much regardless of his answers, he will be held up to public ridicule.
But anyone who supposes bankers as a breed have changed should think again. I recently had breakfast with the head of a US investment bank, which itself was bailed out by the US taxpayer.
In a private dining room in Mayfair, ironically not that far from the US Embassy, with his chauffeur waiting outside, he tucked into a full English breakfast. Amid oil paintings and antiques, he pronounced, in-between mouthfuls, that Fred's problem was that "he doesn't do people".
It's not just politicians and press that are scapegoating Goodwin: it's his fellow bankers.
True, Goodwin is not the cuddliest of individuals; empathy, you suspect, is not his thing. But that isn't why he was brought down or his bank reduced to begging from the Government.
He led RBS on a dizzying acquisition trail. He may not have "done people" but he was aided and abetted by his board, his advisers - notably Merrill Lynch, another bank now broken - and his institutional shareholders.
In private, too, bankers are turning on Gordon Brown and Alan Greenspan, the former head of the US Federal Reserve. When Brown was Chancellor and Greenspan was in office, they presided over an explosion of credit. They were the ones who encouraged the public and, yes, banks, to embark upon their giddy borrowing and spending path. I've heard that said, too.
In truth, they're right. However, what they're avoiding addressing, by pointing to the character flaws of Goodwin or accusing Brown and Greenspan, is why they should have attracted such venom.
The fact is, companies struggle and occasionally they have to appeal to ministers for assistance. Yet nobody is cursing the car bosses - not in this country anyway - or the small business representatives. When Woolworths went down, there wasn't much criticism directed against its directors. If anything, there was a measure of weary resignation.
Bankers, certainly this generation of them, have attracted opprobrium rarely seen before. In the past, they were respected, placed on a pedestal in society alongside the GP and the JP. Something has gone terribly wrong that they have reached such a low base of esteem.
It's got little to do, either, with the banks' current woes. Yes, the bank collapses and losses have provided the excuse - but the disregard for bankers was there, even in the good times.
Partly, it was the money. Compared with most people, save footballers, their earnings were off the scale. That provoked envy that spilled over into opposition.
Also, though, it was their attitude. Not all bankers are the same. Some, a few, are known, not only for the amount they gather in but also for what they give away. Most, however, specialised in spending on a level beyond the experience of ordinary folk.
With that conspicuous consumption came arrogance. Bankers thought they were better than the rest of us.
People aren't stupid. We became aware that not only were the banks taking the best seats in the house but also their occupants were looking down on everyone else. Money got them the best houses, schools, cars, villas, yachts, tickets, seats on the aircraft.
They occupied a parallel environment to virtually everyone else - with only celebrities, company chiefs and a few professionals, such as accountants, architects, doctors and lawyers, able to join them.
While we did our household chores, they picnicked at Glyndebourne, lolled at Wimbledon or studied the form at Ascot. They colonised the gala night at the Chelsea Flower Show, turning it into an exclusive summer curtain-raiser for bankers and their wives. Nothing was beyond them - their colossal salaries and bonuses saw to that.
Tom Wolfe called them Masters of the Universe. They believed him. In the lift at Lehman, the last time I was there, was a poster announcing where the latest crop of interns hailed from. There was a US basketball star, several Olympians, many national sports champions and representatives; a bevy of superb graduate academics, the list went on and on. They were, it seemed, destined to be global leaders and they had all signed up for Lehman.
Banks were able to spring from being small town, regional affairs to financial behemoths. They went from doing just retail banking - serving the High Street or Main Street - to investment banking, speculating and trading. Their rewards went skywards, as did their noses. They surrounded themselves with fawning courtiers. They believed everything they said about themselves - and what an unfortunately unquestioning media said as well. Humility was replaced by hubris.
The Master-Servant relationship was reversed. Clients who paid their fees tugged their forelocks in the direction of the financial advisers. Politicians, too, bowed down to these supposedly superior beings. To rub home their hegemony, they built vast palaces that doubled as their offices.
Last week at the World Economic Forum in Davos, the bankers by and large stayed away. What was telling was that those who chose to go were the more connected - such as Stephen Green, chairman of HSBC, who acknowledged the excesses of what he called "the go-go years" and said: "Banks have clearly done things wrong. Some of the practices did not contribute, by any reasonable standards, to human welfare."
But Green is a rarity. Getting all bankers to think along the same lines is proving difficult. A forced end to the payment of bonuses in cash would help. Technically, they're private companies and can reward their employees how they like. No amount of huffing and puffing from the media will achieve anything - indeed, it hasn't so far.
There are voices they listen to - their customers, shareholders and the supervisory authorities. If they were to make their criticisms known, the bankers may be forced to act.
Ultimately, though, nothing short of full nationalisation or at least the serious threat of complete state ownership may be the answer. It sounds extreme but we're not far short of that already. Only then, when they have to answer to civil servants who earn far less and must explain their behaviour to their new shareholders, the public, will they finally understand.
It's not what anyone wants - but if we think they have really got the message, we are deluding ourselves.
Reader views (9)
Chris and the other financial jounalists are missing the point. RBS and HBOS are bust and should have gone into controlled receivership. We have too many banks they are incompetent and all have offices everywhere built like the Parthenon. Also at a local level most of their functions could be done by the Post Office at a fraction of the cost. Brown and Darling, 2 clueless ex-commies, are asking the bankers advice on whether banks should be bailed out and how. Do Turkeys vote for Xmas?
- Alan, Llandrindod Wells
Maybe Chris Blackhurst or Anthony Hilton can tell us how the Co-operative Bank is fairing compared to its glitzier counterparts. There must be a laugh in there somewhere.
- W R Stevenson, London
If you want to make your home burglar proof ,seek advice from a burglar.The best people to advise on this crisis are those that perpetrated it.Their greed & overconfidence created this mess & not their lack of expertise.They are devious enough to see through the morass of problems & find solutions,although it may be advisable to keep their actions tightly monitored.The last thing we want is a bunch of amateur civil servants trying to run things & tramping around in a minefield.
- Ronald Whitten, Chesterfield England
Sir Fred used to be known as 'one of the City's most respected bankers'. This was after he fired 18,000 employees. What is clear in all this mess is that the reserve funds needed to be held by banks must be increased by legislation. What is also clear is that for banks to say they do not know what their holdings are of dubious financial instruments is sheer flummery. Nobody makes a sale of anything without it being recorded - unless they are being deliberately fraudulent.
- John Problem, Hackney Wick, London, UK
People at the top of whatever large business (including politics) surround themselves with yes men and quite simply because they are not criticised by anyone they go on making the same mistakes and people are too terrified to say anything to stop them. There needs to be a system of accountability which addresses this most fundamental and most damaging problem. 99% of top managers are bullies and execute management by fear although it is much more subtle nowadays.So they damage businesses and whole economies unchecked whilst they are regarded with reverence. I have met many of them - they are truly appalling.
- Raymond, London
I do think it is quite amazing what a mess many financial businesses seem to be in, and that they supposedly were surprised to find themselves in. Having to be 'bailed out' to a degree is maddening when you do look at how much some people have been paid. Having said this, I do not think the government or other public organisations should interfere too much, if at all, in the running on such financial businesses. Those in charge of the companies should not be rewarded for their errors and should be investigated and challenged to explain their strategies, but the government should not get involved further even if public money is involved.
I have seen first hand large public companies with serious public responsibilities over-run by years on very expensive projects, with managers being moved without penalty side ways to other roles due to consistent failure. No I don't think public companies should be involved in running a bank or other. Monitor perhaps yes, as now public money involved, but not leading the way.
- Sel, Wrexham, Wales
Actaully, the bankers deserve every bit of the odium they are getting. Arrogant beyond belief, paid beyond the dreams of avarice, greedy beyond shame, and utterly incompetent. The efforts to avoid blame and claim bonuses adds to the contempt.
Short termist, herd like, with no understanding of anything that is not quantifiable, its a tradegy that many talented people went into the souless, amoral and greedy world of finance.
The era of speclatular greed and incompetence is over. they question, as the rest of us sort out the wreckage, is how to build a better and more sustainable model. One thing is certain, geneflucting to finance is not one of the options.
- Rob, London, UK
Let them go bust.
Nataionalisation will only load their dud assets on the taxpayer.
Far better to sell off the good assets and let the rest go down the Swanee - taking their staff with them.
It will not be the end of the country or planet as we know it - there are plenty of solid financial institutions, and depositors are protected now.
RBS is BUST with shares at a few tens of pence. Taking HBOS into Lloyds was similarly dotty shackling a sinking ship to a floating one.
Those that have benefited should be made to return their bonuses, salaries, pensions, knighthoods, etc. The only thing to prevent this happening gain is the impoverishment of the guilty men.
- Michael Corby, London UK
The Bankers should be paid with the Toxic assets that they acquired for their Banks. Any Golden Handshake or Pension fund should be funded in the same way. Perhaps that might concentrate their minds. They calimed that they needed vast salaries and huge bonuses because they were running large successful Banks. Surely now that they are nearly broke Exectutive Rewards need to be scaled down accordingly. How many have volunteered for Pay Cuts? None, but I gather a few bailed-out Bank Executives asked for a Pay-rise. As a Part-owner I believe that the Taxpayer houldbe allowe to vote on the level of executive rewards.
- Arthur Andrews, Ilford England
