21 January 2012
The current cross-party campaign to have Sir Fred Goodwin stripped of his knighthood makes for entertaining viewing, but I don’t agree with it.
The current witchhunt is handy for the politicians. It gives the impression they’re doing something to punish a perpetrator of the banking crisis but it also has the advantage of diverting the public’s and the media’s gaze away from their failure to tackle much thornier issues (depending on the timing of the actual announcement, it might also divert people’s attention from the RBS’s 2011 bonuses as and when they occur!!).
I find myself agreeing with Lord McConnell, the former first minister of Scotland on this. In today’s Herald, McConnell was quoted as saying: “The reasons for what happened at the banks are more complex than just one person. Fred Goodwin made mistakes**, but so did a lot of other people at RBS, including people on the board who also have honours. They appointed him and agreed the strategy and have never been held to account.”
Goodwin became the “pantomime villain” of the banking crisis in February 2009 after the government of Gordon Brown, and the recently installed board of RBS led by Sir Philip Hampton, adopted a strategy of vilifying him, in the hope that pinning all the blame for RBS’s collapse on his shoulders would allow the bank to “move on”.
However, while I don’t go as far as arguing that Goodwin should be allowed to keep his knighthood — as Charles Moore did in the Daily Telegraph yesterday — I find the current witch-hunt and cross-party campaign to have Fred stripped of his knighthood to be not just unfair, but also populist, rankly hypocritical and a deliberate smokescreen.
As I have pointed out, Goodwin bears a huge amount of responsibility for the RBS collapse. He embodied many of the ‘values’ — greed, arrogance, cluelessness about structured finance, monumental hubris etc — that fuelled the bank’s demise. But as Jack McConnell points out, scores of others share the blame, including notably the bank’s utterly useless non-executive directors, its institutional investors (who never vetoed any of Goodwin’s policies), and of course its auditors Deloitte who seemed wilfully blind to its accounting shenanigans.
I agree with Financial News columnist William Wright who yesterday tweeted that the move to revoke Goodwin’s honour is “absurdly populist”. If the MPs were going to be even-handed about this, there would have to be a veritable bonfire of the titles.
They would also have to strip Lord Stevenson (ex-HBOS chairman), Sir James Crosby (ex-HBOS CEO), Sir Tom McKillop (former RBS chairman), Sir Steve Robson (ex-RBS non-executive director), Sir Callum McCarthy (ex-FSA chairman), Sir Victor Blank (former chairman of Lloyds) and perhaps even Sir George Mathewson (ex-RBS chairman) of their peerages and knighthoods. (The last named was mentioned in Wright’s tweet).
So what is it that the politicians are trying to divert people’s attention from? In my view, it includes obvious things such as the need for:
(1) A no-holds-barred Leveson-style, or Icelandic-style inquiry into the UK banks that failed, including HBOS, Lloyds TSB, RBS, Northern Rock, Bradford & Bingley and Alliance & Leicester. In my view such an inquiry — which would be a precursor to criminal action where appropriate — is essential if confidence in the banking system is ever to be restored. (And it’s long been apparent that attempts by the FSA to investigate the collapse of such banks are a total waste of time, given its complicity in their failures. That became glaringly obvious with the publication of its RBS report last month).
(2) Much more thorough reform the banking and financial sector, including a more “heuristic” approach to financial regulation. As I’ve argued before, the reforms proposed by Sir John Vickers’ Independent Commission on Banking miss the mark.
By the way, I think losing his knighthood will come as a severe blow to Goodwin. The gong clearly meant a lot to him. Soon after he was knighted in the Queen’s Birthday Honours in June 2004, journalists who persisted in describing him as plain old ‘Mr’ Fred Goodwin in articles were given a right bollocking by the bank’s press office!
** I disagree with McConnell on the use of the word “mistakes”. I would uses phrases like ‘a series of catastrophic misjudgements’ and ‘insane empire-building’.