There were some revealing, and indeed disturbing, snippets and insights in today’s “Leading Questions” interview with the City minister, Lord Paul Myners.
Following a successful career at stockbrokers Wedd Durlacher, newspaper group the Telegraph, investment bank NM Rothschild and fund managers Gartmore, Paul Myners was asked to become a government minister by Gordon Brown on 3 October 2008, just days before Britain’s banking system imploded.
In this interview, with the BBC’s business editor Robert Peston and broadcast by BBC News earlier today, Paul Myners said that:-
- Royal Bank of Scotland’s former chief executive, Sir Fred Goodwin, informed him last year that nearly 200 of the bank’s employees earned more than he did. In his last year as RBS chief executive, Goodwin “earned” £4.2m.
- Goodwin insisted to Paul Myners on Tuesday, October 7th, 2008 that RBS had suffiicient capital to see itself through the credit crisis. Goodwin apparently told Paul Myners on that occasion: “[It’s a] subtle issue … it’s the wrong sort of capital”. Hearing this, Peston chortled loudly.
In addition to these candid remarks, Paul Myners (who is no friend of Fred the Shred’s, given their recent public spat over the latter’s outrageous pension) complained about the inadequate structures within the Westminster and Whitehall which, in the spirit of Yes Minister, often prevent necessary things from happening.
Paul Myners also called for “more radical” bank reforms than those proposed by, among others, the Walker review. This review, whose interim report was published last month, was commissioned by the government in February. The former Morgan Stanley International chairman, Sir David Walker, perceived as a “safe pair of hands” in Whitehall, was asked to lead it.
Rather than the woolly notion of “increased public disclosure” about the pay levels of high-earners in financial institutions who are not board members, as proposed in Walker’s interim report, Paul Myners told Peston he believes that banks ought to be obliged to reveal their names and compensation packages.
Paul Myners also suggested that, given the fact so many shareholders including hedge funds and algorithmic traders have such limited time horizons, that banks should give enhanced voting rights to more loyal shareholders. This is bound to be controversial with believers in the principle of “one share, one vote”.
Paul Myners also told Peston that:
- The City has lost sight of its role, which he see as “serving a broad and complex economy” and that the obsession with getting rich quick has damaged the integrity of the place.
- He confirmed his intention to do a degree in comparative theology, adding that “nurturing the soul is something that it would be a good idea to give more time to.”
I just hope this adopted son of a Cornish fisherman-turned-butcher and a hairdresser — who is of course an outsider in the City, contrary to the image conveyed by certain media outlets — can maintain his radical edge.
In an interview published by The Spectator last October, Paul Myners (who has come under fire for being a poacher-turned-gamekeeper, being a former board director of companies that used tax havens, and for his handling of the Goodwin pension debacle) was scathing about myopia and greed in the City of London.
In that interview he said: “We failed to recognise that our low inflation was imported from Asia, and ignored the inflation of asset values. Alan Greenspan said it was no job of central bankers to control asset values — only to deal with the consequences. Well that is what we are doing now.”
Asked if he had voiced his dissent at the Bank of England, where he was a member of the court until October, Paul Myners said: “I certainly voiced the view that things were getting out of control. It was clear that in a number of institutions the incentives were around personal gain rather than the strength of the institution.”
At that time — early October 2008 — it was regulators who received most of his ire. He told Judi Bevan: “It would have been a good idea if the FSA regulators had spent more time in the wine bars of Canary Wharf asking themselves if it was right that people were drowning themselves in Cristal,’ he says, almost growling. ‘We chased the false god of light-touch regulation.’
- To view today’s BBC interview in full click here