Now that we own the banks Alex Evans
October 14, 2008 | More on Global system, UK | 5 comments
My erstwhile DFID colleague Owen Barder knows a thing or two about finance and financial services (he has, after all, been a private secretary to the Chancellor of the Exchequer and then Tony Blair’s economic affairs private secretary at Number 10, among other interesting jobs). Over on his blog, Owen’s now ruminating about the fact that since Gordon has nationalised our banks, we’re all shareholders. And he has a message for his new employees.
To the managers of the banks
Every time I have suggested things you might do differently, I have been told that this is impossible as you are under an obligation to pursue the interests of your shareholders.
Now that I am – unexpectedly – one of your shareholders, I expect you’d like to know what I would like you to do. Here are seven new instructions to be getting on with.
1. Short-term profits are not important: what is important is long-term value. I would like you to stop chasing short term arbitrage opportunities and overnight trading and focus on identifying and investing in the best-run, most productive and valuable enterprises. There will be no trading in derivatives or other purely financial products.
2. Cut executive pay immediately. From now on, nobody in the bank will get paid more than four times the salary of the lowest-paid employee. If you want to award yourself a pay rise, you’ll have to increase the salaries at the bottom.
3. All our branches and subsidiaries overseas will pay local taxes, in full. There will be no clever arrangements to transfer profits to tax havens to avoid tax.
4. No more junk mail trying to persuade people to take out new credit.
5. It is no longer our objective to inflate house prices. An increase in house prices is not an increase in net wealth: it is a transfer from those who do not own houses to those that do. We will try to dampen the housing market, not reinvigorate it.
6. Every bank that is “too big to fail” will be split up into smaller banks. We are going to reverse the cycle of mergers and takeovers that has created these monolithic institutions that have held us all to ransom.
7. There will be no lending for businesses or individuals involved in industries that are harmful to our society and planet. That means no lending to any of the following: the arms trade, advertising and marketing, tobacco, extracting or burning fossil fuels, or the motor industry. Instead, please invest more in clean technologies, technologies appropriate for developing countries, non-profit organisations and community groups.
I know that you have many new shareholders, and it will take time for you to get to know us all. My views won’t necessarily be shared by all your new bosses, but you can be pretty sure that lots of your new bosses think more along these lines than the old lot.
I was a bit hesitant about becoming a bank-owner, but now that it has happened, I think I’m going to enjoy it.
Work hard – but not too hard.
Yours,
Owen
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Oh come on. Given the UK’s sterling performance in arms sales, the idea that the government would ask banks to divest from the arms industry is a bit much. Indeed, a major boost to the arms industry would presumably create jobs and raise British exports, improving the balance of payments. After all, FDR only finally hauled the U.S. out of the Depression by joining one of the great job creation schemes of all time, World War II.
Richard – They won’t: but they should!
Owen
FCO: “The UK Government is an acknowledged lead player and places a high priority on combating small arms and light weapons proliferation.” http://ukunarmscontrol.fco.gov.uk/en/the-uk-disarmament/small-arms-light-weapons
One R. Gowan, in the FT: “To build new coalitions, European diplomats and leaders will have to be open to criticism about their own human rights records, removing accusations of double standards.”
http://www.ft.com/cms/s/0/5477f6a6-84c9-11dd-b148-0000779fd18c.html?nclick_check=1
Owen: I don’t deny that they should…
Alex: UK may be good to halting small arms and light weapons, but the real money and British expertise is in heavy weaponry, aircraft, armoured 4X4s, no?
And that must be the other Richard Gowan, the one who believes in human rights
Brilliant commentary.
Here’s to a re-imagining of what exactly fiduciary duty means.