The very first City Grump featured an excellent pamphlet entitled “The White Swan” by James Featherby, a partner of some 20 years in City Firm Slaughter & May. In face of the latest disgraceful behaviour by the banking community, never has his message been more apposite.
“We are familiar with the concept that medical ethics needs to keep pace with advances in medicine. Put simply, the quality of our economic and business values has not kept pace with the sophistication of our finance,” to quote Featherby. “A business that looks first to serve its own interests will not endure, and a business that imagines it operates in a vacuum, separated from the well- being of its customers, will sooner or later meet its nemesis.
The members of the British Banking Association and their star apologist, Angela Knight, may not realise it yet but their nemesis is fast approaching. Just look at what the establishment’s principle financial mouthpiece, the Financial Times, has to say on LIBOR rigging:
“[It’s] the financial equivalent of contaminating the water supply.” (Jonathan Gutherie)
“It is about culture and morality (…) it may be necessary to retire this generation of flawed leaders.“ (editorial)
“There are plenty of other parts of the debt and derivatives world that remain opaque and clubby, and continue to breach those basic [Adam] Smith principles – even as bank chief executives present themselves as champions of free markets. It is perhaps one of the great ironies and hypocrisies of our age.” (Gillian Tett)
You can tell we will not go on having our commercial lives run by these people. All this comes just before the FSA’s much pushed-for pronouncement on the likes of Barclays’ miss-selling of interest rate swaps to SMEs, as highlighted in a City Grump of 15th March. Truly, ‘ethics’ has become a county in England.
But I’m optimistic that we are at that darkest hour before dawn. The (almost) non-existent ethical standards of many of our current generation of business leaders, whether it is in relation to rigged markets, tax avoidance, bloated remuneration packages, or simply not being able to recognise right from wrong is now being written large for all to see.
Our world is changing and, in the near future, we will once again understand that good values are good for business. Let Mr Featherby have the last word on this: “For a while one of our top European banks had as its strap line ‘success demands more’. That produced a relentless and aggressive management culture…and a culture that had no perspective because it was simply exhausted”.
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