IT’S not all bad news. Sometimes, it’s like the country is on a downward spiral into permanent stagnation. But, occasionally there’s some really good news. For instance, have you heard that Goldman Sachs, the controversial cabal of international bankers, is pulling out of the International Financial Services Centre? Reliable sources say Goldman Sachs doesn’t want to do business in this country anymore. Whoopee!
Why are they leaving? Well, that’s something we should be shouting from the rooftops.
And they’re not the only bankers buggering off, I’m pleased to report. Several others are “handing back their licences”, according to Michael Somers, deputy chairman of AIB. And, he says, some of them have told him privately that it’s because of heavier regulation of their activities.
Not surprisingly, for a banker, Somers is dismayed. “I’m dismayed,” he told RTE’s business programme.
And this was reported sympathetically throughout the media, as though it’s a bad thing that various senior bankers, including the Goldman gobshites, are leaving. Sometimes, I wonder about this country.
The fighting Irish. The raging anger when the bankers crashed capitalism in 2008. The demands that bankers be fired, shamed, jailed – or worse. The anger at the light-touch regulation that allowed all sorts of cowboys to prosper, running their own banks into the ground. The insistence that there must be banking reform – this, we were told, Must Never Happen Again.
Well, folks, the notion that the banks should be kept on a tight rein is going out of fashion. Effective regulation is now dismissed as short-sighted. Support for regulation is caricatured as mere anti-banker rhetoric.
During the Celtic Bubble, bankers had a free hand. They acted with disregard for anything except their own interests. That’s not because they’re bad people – though some of them had the morals of jackals and the brains of peat briquettes. It’s because people who are paid massively, lauded as geniuses and given the run of the country will act accordingly.
Now, the pleas are mounting for lighter regulation and bigger salaries for bankers. And there’s no sign that this Government strongly disagrees.
An outsider was appointed Financial Regulator – Matthew Elderfield. Saviour of capitalism, a stickler for the rulebook, we were told. Best of all, he had no connection to the usual cronies.
And when Elderfield quit recently, after just three years on the job, to take a position with a UK bank, many were surprised.
Is his move just personal ambition or is there something more going on? Has Elderfield seen straws in the wind and did this make him decide to move to more solid ground?
Last week, Elderfield made a speech warning that the cost of lax supervision was many, many times the cost of proper regulation. Bizarrely, the media reported this as just another view – balanced against the view of the bankers, that regulation has gone too far.
I’ve had goldfish with better memories than some media folk.
Goldman Sachs, throughout this global crisis, epitomised the morals of the banking business. In Matt Taibbi’s memorable phrase, the bank is like “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.
According to The New York Times, Goldman helped that government manoeuvre and the deal was “hidden from public view because it was treated as a currency trade, rather than a loan”.
Why would Goldman do that? Because the Greek politicians “paid the bank about $300m (€230m) in fees for arranging the 2001 transaction, according to several bankers familiar with the deal”.
When Greece imploded, Goldman had moved on to other things, its executives fattened on their notorious bonuses.
The fact that Goldman Sachs and others are leaving the IFSC – well, an active, concerned government would have ministers fanning out across the globe, gleefully welcoming this news. Yell it from the pages of the Financial Times and the Wall Street Journal.
Take a bunch of Reuters and AP reporters to dinner, send Michael Noonan into the Bloomberg TV studios with a big grin on his face.
“We’re glad to see the back of those bastards,” he would say.
And it would ask the question: what are Goldman Sachs hiding? What are they up to that can’t stand the light of effective regulation?
An active, concerned government would use the flight of such people to advertise a financial-services system that won’t be allowed do the kind of things that destroyed economies.
The departure of such types would be a platform from which to promise a financial-services set-up that you can trust.
The framework of regulation – including Elderfield’s position – remains in place. The bankers find this restrictive – so, the pressure is on.
Yesterday, John Bruton, a former Taoiseach, now a hired mouthpiece for the banking business, rebuked President Higgins’s call for an end to the policy of austerity (pushed by banker-friendly types, such as Mario Draghi, a Goldman Sachs old boy). Attack unemployment, Higgins suggested.
Stay the course, Bruton says. He’s on a Dail and ministerial pension of €140,000, on top of his reported six-figure salary for bigging-up the bankers. And he says: “Austerity is always painful.”
The lesson of the banking crisis seemed for a while to be obvious to all. We need banks that serve the economy – not the bankers.
We need boring banks, banks that assess risk, support customers and serve the wider economy – not banks that are fixated on spectacular deals that feed the egos and the wallets of elite layers of hustlers.
Two distinct models of banking. An old one, that kept capitalism relatively stable for decades. And a casino model that emerged from Thatcherism, tied to bloated rewards for the few.
That cut-throat model, which placed the welfare of banks above that of the people, led to the crash. And to the ruinous bank guarantee.
And to the subsequent policies of forcing the debts of bankers and bondholders on to the people. And the costly, disastrous attempts to balance the books through austerity.
Remarkably, the cut-throat model has survived. We needed a clear-out of senior bankers, not as a punishment or as revenge, but to evict a type of specialist we don’t need, who subscribes to a model of banking, and a model of society, that has massively damaged us.
Many of the those who ran the banks into the ground have gone, but their values remain – and are lauded in the highest circles of government, business and the media.
Who replaces Elderfield, and the ground rules under which he or she works, will matter. There will be no sweeping disposal of regulation – we on the outside won’t even see the screws loosened.
Should those bankers now leaving in a huff return in a year or two, we’ll know then that we’re in even bigger trouble.