Last year, the UK had its first bank run in over a century. Meanwhile, the government agency charged with ensuring financial stability - the Financial Services Authority - gave its directors pay increases of around 22 percent.
I just loved the quote from Hector Sants after receiving his 37 percent increase. (He is now on a slightly-above-the-national-average wage of ₤661,000 a year.) "I am determined that the FSA will not be defined by the Northern Rock incident, but rather by our response to it."
What exactly was that response? The FSA gave supervisory responsibility for NRK to a couple of people working in their insurance department. Afterwards, it produced a report outlining a litany of appalling supervisory failures. Once the bank collapsed the Bank of England had to pile in with ₤35 billion to save the bank from total destruction.
The worst isn't over. With NRK's balance sheet deteriorating, and arrears rising, the UK tax payer is now bracing itself for massive losses. In other words, the FSA failed miserably, forcing the Bank of England to stabilize the situation and leaving the Treasury to clean up the long term mess.
What kind of collective failure would it need for FSA directors to pass on their bonuses? Would the total collapse of the UK personal lending market be sufficient? Do we need a couple of further bank failures? This kind of "paying for failure" is so deeply ingrained into public life that no one cares any more.
Where is the outrage?
8 comments:
The taxpayer is presently financing the recovery in many banks' balance sheets as the Bank of England's bail-out money, provided at well below money market rates, is re-lent at market rates. The taxpayer is bailing out the banks as in the secondary banking crisis in the 70's.
B. in C.
Alice,
I think I've got a pretty good idea where some of the outrage is.
Nick
This is one of the reasons why the public sector tends to be (but is admittedly not always) systemically less efficient than the private sector.
In the private sector, serious enough failure results in the organisation going bust.
In the public sector it's often used as the basis to argue that increased funding is necessary.
Damn. I was pretty sure the essense of my outrage over here in Canada would have made itself felt over there by now...
... I promise to rage harder.
BTW, which tax payers will be the biggest bagholders ever? The UK? The US? Spanish maybe? A fun guessing game.
Ben, thanks for the comment. BTW, I love your site.
http://benbittrolff.blogspot.com
Alice
Outrage will be coming back into fashion very, very soon. All it takes is for Little England to realise at last that the housing boom was a complete mirage. Not long now.
What is the point of the FSA?
Its just symptomatic of the entire govt machine - look at the report on the lost child benefit data discs:
"The investigation found "no evidence whatsoever" of misconduct or criminality by any member of HMRC.
Nigel Jordan, a senior official publicly blamed for the loss, was completely exonerated by the inquiry.
Instead it blamed the loss on institutional problems and said it was "symptomatic of a wider problem". "
Usual whitewash - no-one to blame, more funding required for "training" etc etc.
I can't wait for the day when the govt runs out of money and all the useless spongers on the taxpayers back have to go and find real jobs actually doing something productive. Oh Happy Day!
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