The bonuses scandal: can we bank on the Coalition?

We’re at the OK Corral, but where’s Wyatt Earp?

The Slog has posted  quite a bit in the last few months on the subject of banker power, and a continuing unwillingness by the sector to accept its responsibilities to society. We have also seen Vince Cable lambasted by the right-wing media for daring to tell the truth about banking firms, despite his views reflecting those of the large majority of British voters. Now effectively demoted, Cable’s position has been undermined in a pernicious manner, most notably by the Daily Telegraph.

Last month, we saw bank leaders filibustering on the bonuses issue with requests for ‘clarification’, a subject upon which the Slog posted further. Then yesterday in the Financial Times, a front-page lead told how UK-based banks will now defy the Government, and pay whatever bonuses they feel like paying.

A very obvious gauntlet is being thrown down by the bankers here, and as yet the Coalition (unless I’ve missed something this morning) has been somewhat wishy-washy on the issue. The usual ‘warnings’ have appeared via various soundbite puffery, but the banks have been warned by Brown, Darling, Clegg, Cable, Cameron and even Osborne. I think it would be fair to say that, by now, most British families are all warned out on the subject. They’d like us to move onto another stage. Say, one involving public executions.

Having run a blatant pro-Bank campaign for the last three weaks – every afticle in which evoked blisteringly negative  comment threads – and stirred up the hornets’ nest against Cable, the Telegraph is sheepishly silent so far this weekend. The FT, however, got some juicy quotes out of the City for yesterday’s lead story, and so I thought I’d share these with you now.

The FT reports that ‘bankers have been emboldened by the apparently fading influence of the Liberal Democrats’, and thus decided that the Coalition isn’t in shape on the foot-down putting front. Read this and weep: (My italics)

‘“We don’t want to see a repeat of last year when no one felt able to take their bonuses,” said one senior banker, ‘there is a feeling in the City that these gestures were unappreciated by politicians and the general public.”‘

I’m intrigued by the use of the words ‘no one’ there. According to the CEBR, bank bonuses in 2009 were up 50% on those of 2008. They amounted to £6 billion, and were felt by the Government to be so far from appropriate, the Chancellor introduced a one-off tax on them in December of that year.

The second italicised section doesn’t lend itself to rational analysis. By this I mean I wouldn’t try to analyse a mad person until they’d been heavily sedated in some way. The sedatory form I have in mind in this instance is a baseball bat, because I cannot conceive of any socialised citizen expecting a medal for bonus restraint, when his very existence in a job is down to people who will not get any bonus for many years to come.

Said one asset management executive, “Now is a good time to ensure that top executives are appropriately remunerated so that they are not lured abroad or into hedge funds.” This one (a variation on the oh-my-God-they’ll-leave performance) is wearing very thin with the British people. And it really is about time the Government itself got out the  key to the sedation cupboard.

The British Government  is the biggest shareholder in Royal Bank of Scotland,  and also controls LloydsHbos.  And let’s remember that every UK-based bank is still living off the taxpayer: the National Audit Office estimates that over £500bn is still being poured in under various guises. Finally, the banks are due to make repayments to various bodies during 2012 – a repayment schedule most observers believe they have not a cat in hell’s chance of honouring at current growth rates.

Any broke business thus rescued in a private takeover would’ve faced a fiduciary duty clause on page one saying ‘no bonuses until you’re back on your feet, and even then not without our consent’. But this is Treasury and taxpayer money, and for bankers that doesn’t count.

With the exception of the meddling Telegraph, pretty well every newspaper with a brain this morning is insisting that the time for a shoot-out has come. ‘Osborne must defy the banks’ thunders the Mail. But Mr Osborne is…..skiing in Klosters.

This incident isn’t just another propaganda cause handed to the Left on a plate: it’s also a slap in the face or all those entrepreneurs who’ve been awarded a V-sign by our banks over the last year. Two close friends of ours (half my age as it happens) have got a cutting-edge, ecologically supportive export business off the ground and running at £1 million turnover in eighteen months flat. They just won a distribution contract – signed, sealed and guaranteeing to practically double their profits overnight. All they needed was a loan to finance set-up costs over the first quarter of 2011. The bank turned them down.

I’ve written many times to insist that reining in the banks isn’t a Left-Right politics-of-envy issue. It’s about unearned privilege versus hard done by citizens, big v small – and ultimately, money v civilisation. As a capitalist, I also see it as real business v notional money bollocks, and ethics v rank dishonesty.

But on a broader canvas, this latest cheek highlights the dysfunctional nature of elites in the West: they are either greedy to a near-feral extent –  or incapable of grasping any commercial economics at all. One might sum it up thus:

Assumptions of the Bourses and banks: ‘Anything that makes money must be good. Please leave your law-abiding morality shtick and precious ethics with reception’.

Assumptions of the Left: ‘Anything that costs government money must be good. Please leave your commercial perspective and common sense where they are – in your feet’.

I’d hazard a guess that over 90% of UK electors would reject both those philosophies as risibly inept. But they represent the sum total of realistic choice at the moment.

We must all beware inflammatory language in this situation; but there is nothing wrong at all with focused, positive anger. Senior figures in the City look increasingly like pampered ancien regime aristocrats with every week. And their counterparts in the US look (and talk) like Mafiosa. Because most of them are socio-historically ignorant, they cannot even begin to grasp what level of violent backlash they are storing up for themselves – and us.

We have five key minority groups in Britain in 2011; all of them have been handed carte blanche to be insensitive and disruptive to a ridiculous degree. They are Islamists, bankers, trade unions, MPs and senior Whitehall civil servants. With (respectively) their violent intolerance, crude superiority complex, agitprop antics, troughing dishonesty and crooked self-awarded pensions, they are destroying our country.

But worse, despite having been given this power and then evoked anger for abusing it, they just carry on regardless. They have no shame, feel no guilt, see no evil, recognise no higher authority, and refuse to hear the roar of thunder in the distance.

Every system in history that reached such a stage of privileged separation has collapsed in the end. We are too smug in Britain – too willing to offer complacent platitudes about the British spirit and sense of fairness. Both were dead and gone years ago; today, the five members of the Clanton Gang are running anyone they don’t like out of town. And to me, David Cameron doesn’t look or sound like the sheriff.