Friday, 1 May 2009

Lets hang the Lloyd Board

"The merger between Lloyds and HBOS has been described in some quarters as a ‘shotgun wedding’. Lloyds Group Chief Executive Eric Daniels conceded that the merger proceeded swiftly on the basis of relatively little due diligence and that the Government was involved to the extent that it offered to waive the competition rules. We also note that the merger may have prevented the collapse of HBOS with the consequent loss of many thousands of jobs and also avoided the outright nationalisation of the company.

Nevertheless, from the evidence we received, if the merger has had injurious consequences for Lloyds TSB we consider that the responsibility for this lies primarily with the Lloyds Board."

So, Mr. Brown had nothing to do with it then?

The implication here is that the Lloyds board were offered a chance to monopolize the market and ended up handing the bank over the the government. Nevertheless, the greater good was enhanced because HBOS didn't go under. In effect, parliament neatly passes the blame onto a group of greedy banking half-wits. while at the same time, gently acknowledging the inventive way the government contained another banking failure.

However, lets wipe away the whitewash and clarify what really happened. The shareholders of Lloyds, in effect, had their property stolen by a government anxious to avoid a second Northern Rock fiasco. Their private property was used to save the reputations of this government. This merger exemplifies the moral degeneration of this country because parliament claims that a theft as outrageous as this can be passed off as "injurious consequences".

If we let this type of thing go unpunished, if we don't call the guilty to account, then we will slide into a cesspool of venal corruption. The lesson for unscrupulous politicians and businesspeople is simple; if you can get the presentation of a scandal right, then you can get away with anything.


Anonymous said...

"Nevertheless, the greater good was enhanced because HBOS didn't go under."

Nope! Why are politicians so stupid? What they have done to the banking industry, they did first to the British motor company and morris cars.

Then it was a short term politically inspired shotgun wedding between one critically ill company and one very ill company. Politicians invested so much political capital and spewed so much cash into the resulting abortion of a company that it took forty years to eventually die.

By that time it had served its purpose - get a lot mo MPs reelected.

We could do that then because there were other sectors of the economy that still worked.

Nick Drew said...

Ah, but Eric Daniels is so clever and valuable, they needed to give him a lot of money to stay ...

Chris said...

So true, and so pathetic... We enter a state of deflation today, in part because of ridiculous decisions like this... Something needs to be done about this. Is there no greater force that can look into this?

Anonymous said...

I think you are underplaying the gross culpability of Lloyds directors in failing to protect the shareholders' interests. They needed to resist government pressure and instead folded like the proverbial pack of cards.

roym said...

small shareholders might have been shafted yes, but the institutional guys didnt vote against it did they?

Anonymous said...

Um.. The shareholders could have sold their shares when the deal was proposed, but they didn't.
Shareholders control companies. It is really without meaning to portray them as victims.

dearieme said...

It was my impression that the Chairman and the CEO of Lloyds fell for the old "special offer just for you, guv, but it's got to close soon" trick. Sophisticated banking brains, eh?

Anonymous said...

The shareholders could have sold their shares???? Some undoubtedly - but what kind of nonsense is that? The directors are employed to make these judgements - precisely so that shareholders don't have to be constantly employed second guessing them!

Strategist said...

"The shareholders of Lloyds, in effect, had their property stolen by a government anxious to avoid a second Northern Rock fiasco."

The Directors are utterly and solely culpable. The idea that the government forced them to do a bad deal is spectacularly absurd. The government offered a sweetener which Lloyds directors, in their stupidity and greed, grabbed too hastily.

You are doing serious damage to your credibility as an even-handed Cassandra with sub-Daily Mail trash like this.

Man in a Shed said...

The voting card for the next general meeting of Lloyds just came through for my wife - I've advised her to vote no to everything.

A public hanging would be more satisfying though.

Anonymous said...

"Strategist", you seem to conveniently forget the sudden capital requirements that the FSA imposed, the massive spin about Lloyds and HBOS going under without the merger and the open threats Mandelson made when an alternative popped up. Whilst they didn't have BARCL's bravery to stick two fingers up at the government, the board didn't exactly made a decision in a vacuum.

Strategist said...

Anonymous, just remind me how much the board of Lloyds are paid by their shareholders?

Should that amount of "remuneration" cover the cost of hiring men with the "bravery to stick two fingers up at the Government" in the face of "massive spin" and "open threats" (or should that be "empty threats"?) from Mandelson?

Free market ideologues like yourselves should more than anyone be alive to the idea that if they signed the deal, they and they only are responsible and accountable.