Simon English: If the bankers are loathed, they are the ones to blame

Wednesday 04 January 2012 11:00 GMT
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A * old joke for a new year: why should you get immediately furious at your bank? Because it saves time later. People have been complaining about banks for as long as they have existed. It seems unlikely 2012 will be the year it stops. Of all the institutions created by man, banks seem the hardest to control, the least answerable to any kind of democratic process. Even bankers find this to be so.

John Steinbeck put it like this back in 1939: "The bank is something else than men. It happens that every man in a bank hates what the bank does, and yet the bank does it. The bank is something more than men, I tell you. It's the monster. Men made it, but they can't control it."

That's from the The Grapes Of Wrath. As a farm is repossessed and a family ruined, even the bankers are apologetic. "We're sorry. It's not us," they plead. "It's the monster. The bank isn't like a man."

If you buy bankers a glass or two of red and get them to loosen up – actually, let them pay – you'll hear remarkably similar stuff, at least from the more self-aware of them.

They wish the places they work weren't awful. They wish banker pay wasn't so absurdly out of control. They wish they weren't rewarded for concocting things that are not in the long-term interests of either the bank or the client, but since they are... hell, I don't make the rules, they mutter.

The funny thing the Occupy Wall Street crowd and those outside St Paul's Cathedral might find is how many of the folk they are protesting against agree with at least some of what they have to say. This is most common amongst the mid-ranking worker bees, guys who are well-paid but still mortgaged, men who aren't millionaires in any meaningful sense.

But you'd hear it at the very top too, if you could listen in.

One banking analyst told me the other day that he had heard very, very senior people at both Barclays Capital and the Royal Bank of Scotland recently admit to him, unprompted, that the entire industry has got a serious problem with banker pay. That rewards have long since stopped to have any connection to ability or results.

For public consumption, they will argue otherwise, say it is a matter of market forces they simply cannot control. In private, they are as likely to roll their eyes and concede the point as nearly anyone. Why don't they come clean? Partly out of self-interest. If the other guy's pay isn't going to go down, why should theirs? There is also a huge reluctance to be the first mover. As if they might be stoned to death by their banking brethren for speaking the truth.

This whole issue is going to get another airing soon, not least when we get results from Barclays in February. How much is it going to admit to paying its staff? Will it dare to show restraint, to try to apply the brakes so that others may do the same? Or will it stick to the usual defence, that it has just got to pay what these people are worth, ignoring the evidence the industry keeps providing that these fellows plainly aren't as clever as all that.

A statistic: top executive salaries at Barclays have gone from 13 times the pay of the average British worker in 1980 to 169 times that amount. Presumably, Barclays would have to argue, to justify its present stance – that guy in 1980 was getting seriously underpaid. This is the kind of thinking that leads folk to throw mouldy cauliflowers at passing financiers.

If bankers are loathed, they really have only themselves to blame. Not many people have a good word to say about their personal bank. Which must mean something.

To Hunter S Thompson, it meant this: "Banking is a shallow money trench," he wrote, "where thieves and pimps run free and good men die like dogs." He was exaggerating of course. Not all good men. It's possible to have sympathy with (individual) bankers, if not with the whole sorry lot of them. But in the end, as Steinbeck was suggesting, if they aren't masters of their own actions, their own destiny, who can be?

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