This week’s Pearl of Leadership Wisdom is on The Truth.
“The truth is rarely pure and never simple.” – Oscar Wilde
Despite this, leaders must deal with the truth.
The government has just slapped a 50% tax on bankers’ bonuses – payable by the banks, not the bankers. This seems to have quietened the thronging mass.
This will do nothing. The Chancellor, despite the stated objective of curbing bonuses, knows his actions will make no difference and is happy for this to be so.
Because the truth of the matter is that the rock star traders and their complicit bosses have stolen the banks. RBS is making £6 billion in profit in investment banking and paying out £2 billion in bonuses. We could curb bonuses in the banks we own, but the unpalatable truth is that to do so would damage them. This is the truth. The rock star traders have all they need in their heads. They can walk, and routinely do.
How has this happened?
Well, I’m no student of the banking sector, but what I do know is that it all started decades ago with firms like Lizard Frères relocating to New York after fleeing the Nazis in Europe in the 1930s. Lazard invented investment banking. It was owned by the partners. If they made £6b, then it was theirs to do with as they wished. Fine. Their capital. Their risk. Their profit.
Can I play?
Then the normal, staid banks thought they’d get in on this action. In time, as the talent pool mixed, the salaries in these new entrants rose to mimic those in the old, private banks.
Our issue with the bonuses is largely envy. I know. I am distressed to admit I feel it myself, more than a wee bit.
I don’t care…
But we shouldn’t care about this. The real truth is that, as the governor of the Bank of England Mervyn King has said, “If a bank is too big to fail then it is too big”. This is the central issue and I do not see anyone doing anything about it.
There is some talk of a “living will” to allow the orderly winding up of an ailing bank, but as this requires the intervention of healthy banks, I’m far from clear how this would work if there’s a mass suicide.
We did it once…
We have conditioned the banks to believe they cannot fail, and therefore, if anything, we have increased the likelihood of this happening again.
I don’t care what private organisations do, as long as it is legal. I don’t even care what publically owned banks do. But to manage them with the primary purpose of assuaging our envy is blinkered.
Didn’t see a thing, guv…
The only people who can wrestle back the banks from the employees are the shareholders, the vast majority of whom are pension funds, not governments. But the pension funds won’t do it – they’ll either stick around for the dividends or quietly walk away.
And each morning…
…the horrible truth remains. The banks are still too big to fail and no one is doing anything about it.
I want some truth. I want some leadership. I don’t see it from the government or the opposition. The Bank of England tried and was dismissed out of hand. The church has made some ineffectual noises. The journalists obsess about bonuses.
I don’t mind Darling’s 50% tax. He is in a difficult political position. What I do expect is for our leaders to identify and act on the core truth.
I thought it was only in films that huge corporations controlled the destiny of the world. I thought this was inherently rubbish as governments always had the last laugh – they can legislate.
It is time to start laughing.