I'm the PM and I support men in suits looting the markets
of the world. It's good for our balance of payments.
Young children, however, must not steal a bottle of water,
because that is evil incarnate.
Anyway, the hypocrisy is quite shocking, but Conservatively-
speaking, much expected.
read 'em:
The wrecking of
Barclays is organised looting by those at the very top
The way Barclays has been debased to enrich a few
hundred of its elite employees is also the story of Britain in recent decades
Barclays' top 238
employees took a total of £1.01bn home last year – or £4.27m each.
Aditya Chakrabortty
The Guardian, Mon 9 Jul 2012 20.00 BST
You'd have learned precious little from watching Bob
Diamond in parliament last week – apart, that is, from his love for his former
employer. If pressed, you or I might admit to tolerating our jobs, to getting
on with colleagues or, at the very least, to taking full advantage of the
company stationery supplies. For the multimillionaire banker, however, this
would be mere watery equivocation. The firm that had forced him out just the
day before was "an amazing place", packed with "wonderful
people". And, he told MPs over and over: "I love Barclays."
Sadly, no one asked the obvious follow-up: if that's
how you treat organisations you admire, what on earth becomes of the ones you
dislike? Because since arriving in 1996, Diamond
has debased what was a venerable, Quaker-founded high-street institution into
something else entirely: a financially precarious outfit with a reputation for dodging taxes and fixing
interest rates.
This transformation hasn't helped the Treasury, which is now forced to chase the bank for
taxes. It has harmed credit-starved firms, because Barclays now sticks them
at the back of the queue for loans. It is even bad for your pension fund, since the company's insecure
finances means it no longer makes good returns for shareholders. In
fact, the biggest winners from the metamorphosis of Barclays have been Diamond and his investment
bankers who – even this year, amid global financial turmoil – took home
multimillion-pound bonuses.
If this were a tale involving just a single boutique
bank, you could chalk it up as a dreadful shame. But the story of how one of Britain's
biggest businesses has effectively been wrecked largely to enrich a few hundred
of its elite employees is so much bigger
than that. Not just in scale, but also for the larger picture it suggests
of what has happened in Britain
over the past few decades: how the people at the top of some of our biggest
businesses have used their positions to extract money, rather than earn it, and
how politicians and regulators have connived at this organised looting.
All this goes against Barclays' official history: of
how a second-division bank has risen
within Diamond's decade-and-a-half to join the international premier league.
But what this story misses out is just how shaky
the enterprise looks. In a new paper called The Madness of Barclays, the Centre for Socio-Cultural Research (Cresc)
at Manchester University crunches through the company's accounts. What they
find is a giant, risky trading arm – the Barclays Capital that Diamond created – joined on to a safe, steady high-street
banking business. Importantly, that second business is supported by an implicit government uarantee, that protects
its savers.
The BarCap
trading arm generated just over half of the company's pre-tax income but it
also carries £1.8tn in
gross credit risk more than the UK's entire annual income. To be
fair, the bank has done its bit to reduce the risk of that exposure, but the
bulk of it lies with derivatives –
and the majority of those derivatives are tied
to double-dip Britain and crisis-hit Europe. You make up your own mind how
safe those are if even one of the doomsday eurozone scenarios regularly floated
in the papers comes true.
I have spelled all that out to make an obvious point:
the British state, through its implicit
guarantee of Barclays' high-street business, is allowing the company that Diamond created to run an enormous credit
risk that could sink the entire country. You usually see BarCap's
activities described as casino banking,
but it's a funny kind of
casino where the players don't put any of their money up. With all its
taxpayer backing, BarCap looks less a casino and more like a creamery.
Except the fat cats are very small in number. Barclays
has around 140,000 staff – and most of them never see the sort of huge payouts
that you usually read about. You probably knew that, but what you might not
have realised is just how small a group actually gets the rewards. But look at
the last company report: 238 employees
are identified as "code staff", 90% of them from BarCap. The code
staff took a total of £1.01bn
home, or £4.27m each. Compare that with the mere £113m the bank paid in
corporation tax in 2009.
Defending
the bankers, Boris Johnson wrote in yesterday's Daily Telegraph that we needed
them to lend money to the Apples and Microsofts of tomorrow. But that's not
what Barclays does, either. Of its loans last year, a little more than 7% went to businesses in wholesale, retail
or manufacturing. Nearly a third
went to other banks.
Yet, as Johnson reminds you, Barclays is the bank that
– up until the Lie-bor scandal – got applauded no matter what it did. Its
former chief executive, John Varley, was even in the running to replace Mervyn
King as head of the Bank of England. And a few months ago, David Cameron attacked what he called
the "dangerous rhetoric … that people in business are out for themselves.
We've got to fight this mood with all we've got." And he singled out Barclays for praise for running a large
work-experience scheme. The very next week, his Treasury minister demanded the bank close
tax-avoidance schemes worth more than £500m.
