Get involved: send your pictures, video, news and views by texting TGNEWS to 80360 or you can email us Click here for details »
Not all our problems are bankers' fault
10:42am Wednesday 15th February 2012 in Jackie Doyle-Price
At the risk of making myself very unpopular by siding with a banker, I would like to share with you my irritation that Stephen Hester has been bullied out of accepting his bonus by politicians.
To you and I it is a large amount of money, but he has been brought in on a contract and if he has honoured his obligations he should get the reward.
To be honest, it is a lot less than many footballers get. Ultimately the sooner Stephen Hester sorts out RBS, the sooner the taxpayer can walk away from it and we will all be a whole lot better off.
I want him to do well so we can get our money back and then some. Taking someone’s legitimately earned pay isn’t the best way to incentivise performance.
There is also some hypocrisy here. There is an inference that the recession was caused wholly by the banks and with Government playing no role.
It is true there has been a global contraction in credit which has affected every country. But the reason why some countries have been impacted more is because of their dependence on credit, be it Governments or individual households.
Here in the UK, the oversupply of credit fuelled a property price boom which encouraged people to borrow more than they could afford and to keep taking money out of their houses on the promise that the value would continue to increase.
Constant property inflation at such levels simply couldn’t be sustained.
The longer it went on, the more painful the correction was likely to be. In these circumstances, the Government should have encouraged caution, but no-one wanted to call time on the optimism.
Even when the regulators tried to warn banks they were in risky territory, they were told to back off by the Government.
In the end it was the markets. They woke up to the fact the bonds HBOS and Northern Rock were selling were junk and stopped buying.
Against this background, demands by politicians for responsible capitalism ring rather hollow.
Until politicians show responsible leadership and admit their role in things that have gone wrong, we will be viewed with as much contempt as the bankers.