‘Margaret had no love for the banks,’ Nigel Lawson wrote in The View from No. 11. The idea that the amoral greed of the City and the banking crisis it fuelled should be blamed on Margaret Thatcher has been much bandied about this week. Let me try to put it in -perspective.
In her early years in power, Thatcher thought of the City as another enclave of the ‘wet’ public-school types who so annoyed her in the Conservative party. The high-street banks were, in her view, a complacent cartel that reported over-large profits during the 1981 recession (hence the windfall tax), refused to contribute to Tory coffers, and did nothing to promote recovery. Dining at Barclays in 1982, she harangued directors on the need for bolder lending — my father found it ‘sexy’. When a Barclays branch later leaked details of one of Denis’s companies to a Sunday paper, her hostility increased.
Meanwhile, she saw the stock exchange as another smug closed shop — when what she wanted was a dynamic market that would sell privatisation issues, raise capital for conquering British businesses and give Wall Street a bloody nose. If she instinctively disliked pin-striped idlers and Bank of England Keynesians, she was attracted to raffish dealmakers who flattered her: the likes of Sir Michael Richardson of Rothschilds and the transatlantic takeover player Lord Hanson. But she also wanted examples made of those who transgressed, hence her urge to see criminal convictions in the aftermath of the 1986 Guinness scandal.
In many respects, she got what she wished for. Heightened high-street competition made a mortgage market fit for a home-owning democracy. London-based investment banks led the triumph of privatisation at home and abroad. The City’s renewed status as pre-eminent global financial centre owed much to foreigners’ admiration for the Thatcher spirit. Yes, it’s true: the bonus-hunting, the gambling with other people’s money and the cult of financial sophistication were all by-products of the reforms she instigated. But all could have been quelled by wiser managers, and politicians less dazzled by City money, in the decades that followed. In finance, as in so many other fields, Margaret Thatcher was a positive force for change; it was human nature that led those changes astray.
The worst of the lot
Speaking of which, ‘History may judge the HBOS men to have been the worst of the lot,’ I wrote ages ago — and I called the FSA ‘grindingly slow’ in its investigation of the 2008 collapse of the Lloyds-Halifax-Bank of Scotland combo. The regulator did finally slap a £500,000 fine on Bank of Scotland director Peter Cummings last year, but I’m astonished that the spotlight has only now come to rest on Cummings’s bosses, former chief executives Sir James Crosby and Andy Hornby, and former chairman Lord Stevenson. Following a damning report by the Parliamentary Commission on Banking Standards (which, as I’ve also noted before, makes all the running in this arena), Vince Cable at last finds himself sufficiently ‘outraged’ to ask his civil servants whether, if it’s not too much trouble, the HBOS trio should be banned from company directorships.
How feeble this is as a way of warning bank bosses that the businesses they run are part of the social fabric and can only ever be judged by long-term results rather than short-term market acclaim. The point is not that they should never be bold, but that they should be so only in the knowledge that, no matter how fêted they may be at the time (as Crosby was when he left HBOS in 2006), history will one day hold them publicly and painfully accountable for the ultimate outcome. That hanging sword of fate has the potential to sharpen boardroom pencils more effectively than any regulator.
Prince of networkers
Attention focuses on Crosby, who has volunteered to forfeit his knighthood and a slice of his pension. But the most complex character in this story is Dennis Stevenson, the Blair era’s prince of power networking. Chairman of the Pearson publishing group as well as HBOS, he even held the historic title of Governor of the Bank of Scotland; yet some in the City always had doubts about him. ‘In their eyes,’ wrote Chris Blackhurst in the Independent in 2004, ‘he’s a career back-seat driver: a consultant, a strategist, an adviser, a fixer, a schmoozer, a portfolio juggler, a chairer of meetings.’ His defence that he was a part-timer above the fray has merely nurtured the view that he should never have been chosen as a chairer of banks in the first place. Meanwhile, his Who’s Who entry offers a glimpse of the Establishment at work. Until last year, despite his City fall, Stevenson continued to chair Whitehall’s Arts and Media Honours Committee: that explains the paucity of gongs for banker-bashing journalists.
Mind you, the British power elite rarely offers the kind of black comedy the French are currently enjoying. In the Dordogne this weekend, I find everyone discussing the disgrace of the former Socialist MP for nearby Villeneuve-sur-Lot, the cosmetic surgeon turned budget minister and ‘tax enforcer’ Jérôme Cahuzac, who makes Chris Huhne look a pillar of integrity. Not only has Cahuzac admitted to keeping €600,000 in Singapore (and resigned from his masonic lodge) but he’s alleged to have tried to place another €15 million in Switzerland. Reyl & Cie, the Geneva bank which looked after his affairs, is believed to have a glittering client list of French and Belgian politicos and tycoons. The scandal has rocked the already wobbly regime of François Hollande and prime minister Jean-Marc Ayrault, while word is that everyone who’s anyone in Paris has long suspected Cahuzac of hiding his fortune — but until he got into a Huhne-style divorce-revenge wrangle, no one blew the whistle because so many of his opponents were up to similar tricks. C’est la vie!