Killing all the bankers
The new spirit of vengeance and approbation towards bankers that’s sweeping the nation, stretching from the usual suspects all the way up to David Cameron, is, I suppose understandable. That doesn’t necessarily make it right, however. Employees contracts shouldn’t be torn up because a new shareholder has taken control of the company. They can certainly be amended going forward – that’s pretty much standard practice – and I’d expect a lot fewer ‘guaranteed bonus’ contracts next year, if any at all. But we shouldn’t be tearing up all principles of employment law to satisfy the baying journalistic mob. More worrying a response is this, articulated by Simon Carr in the Independent.
Yet there is something our leaders might say to these insulate beneficiaries. "We'll save your firms from bankruptcy but as your new owners we've got new rules. Existing bonus contracts are void. You'll get a utility salary with nothing on top. You won't leave for jobs elsewhere because there aren't jobs elsewhere. And if there are, you won't get them because you'll have a court case pursuing you. Yes, chum, if you bale out we will prosecute you for a) trading while insolvent, b) fraud and/or theft, or c) misfeance. Now unravel these securities and derivatives and get this bank back on its feet."
Briefly, preventing them from resigning/retiring/finding another job would be illegal (restraint of trade) a prosecution for trading while insolvent would apply only to directors (who mostly aren’t the ones taking bonuses, that’s the traders with guaranteed bonuses), fraud is incredibly hard to prove, theft doesn’t apply here (“dishonest appropriation of property with intent permanently to deprive” – just doesn’t wash) and misfeance isn’t even a word. Even if he means misfeasance, that only applies to members in public office. Finally, and fortunately, our legal system isn’t yet quite so in thrall to the executive that they allow show trials on trumped-up evidence. It can be handy, when bandying legal terminology around to, you know, have a fucking clue what you’re talking about.
Many think regulation is the answer. No, revenge is the answer. You can't specify what people should do in every situation. It is incentives that guide employees. The risk of catastrophic personal loss in the event of losing the money they were entrusted with – only that will produce the culture of responsibility politicians are after.
Great. The abolition of the limited company, the invention that has been responsible for so much of the wealth creation in the modern world. Well, if we do as Carr suggests, and make banks' directors or, as he seems to suggests, all bank employees, personally liable for all corporate debts, we’re going to be seeing a few changes round here. Yes, we probably won’t see so much financial debt packaging (which, arrgh, we won’t be seeing so much of anyway), but among the other things we won’t see will be mortgages for journalists (notoriously bad risks, plus they're low-paid), loans to start-up entrepreneurs (ooh, couldn’t possibly justify that sort of risk old boy), credit for the low paid (are you crazy? That’s my house we’re talking about). In other words the rolling back of the financial revolution. Well, as I pointed out here, I’m all right Jack. I’m a nice upper-middle class boy with a steady job and a good income. Not so rosy for everyone else though.