♠ Posted by Emmanuel in Casino Capitalism,CSR
at 2/01/2012 10:14:00 AM
Pardon the title but I thought it appropriate for the subject matter. At any rate, here's something you don't see everyday. Typically, HM Queen Elizabeth knights not only those who've worked to improve social conditions in the Commonwealth alike Sir Bob Geldof and Sir Bono but also captains of industry. Of the latter we've had many Great British Industrialists who've been knighted--especially during the New Labour years. In 2004, one of those who were knighted was none other than the Royal Bank of Scotland's erstwhile agent of moral hazard, Fred Goodwin, for his 'services to banking." That was when New Labour was still in power and the neoliberal turn towards financialization of the British economy was still regarded as something favourable in the inner sanctums of the UK elite. It's taken some time, but it seems that the political winds in the growth-free UK have shifted enough to make this remarkable declaration come true. To be sure, it's been long-awaited one.The winds of change are always blowing, and they just carried Fred away. I suppose that making the taxpayer foot a GBP 45.5 billion bailout (about $71.4B) can make even Her Majesty the multibillionaire several times over cringe. And of course there's the not-insignificant matter of putting the financial health of the nation into dire straits while placing one of its largest industries into disrepute.
The official announcement goes as follows:
It will soon be announced in the London Gazette that the Knighthood conferred upon Fred Goodwin as a Knight Bachelor has been cancelled and annulled. This decision, not normally publicised in advance, was taken on the advice of the Forfeiture Committee, which advised that Fred Goodwin had brought the honours system in to disrepute. The scale and severity of the impact of his actions as CEO of RBS made this an exceptional case.It's funny how the former Fred "The Shred" Goodwin who acquired his moniker for cost-cutting now has to pay the ultimate price in terms of honours by being himself asset stripped. He joins a not-so-illustrious list of others having this dubious distinction alike Comrade Bob Mugabe of chicken commercial fame and Romanian dictator Nicolae Ceausescu. Political misdeeds usually get you ejected more readily, but Sir Fred's business disaster was so huge as to be non-ignorable politically.
In 2008 the Government had to provide £20bn of new equity to recapitalise RBS and ensure its survival and prevent the collapse of confidence in the British banking and payments system. Subsequent increases in Government capital have brought the total necessary injection of taxpayers' money in RBS to £45.5bn.
Both the Financial Services Authority and the Treasury Select Committee have investigated the reasons for this failure and its consequences. They are clear that the failure of RBS played an important role in the financial crisis of 2008-9 which, together with other macroeconomic factors, triggered the worst recession in the UK since the Second World War and imposed significant direct costs on British taxpayers and businesses. Fred Goodwin was the dominant decision maker at RBS at the time.
There's been a whiff of discontent--obviously from now old-line New Labour stalwarts--about the lynch mob quality of it all. Why pillory just Fred the Shred when there were so many others culpable in these financial misdeeds? I suppose it's to set an example. Then again, I'd personally prefer to have him hanged, drawn and quartered alike in the olden times--albeit for the modern high treason of the gravest sort of financial misdeed. Just as honours should go to the biggest contributors to the welfare of the Commonwealth, so too should they be removed from its most egregious offenders.
Unlike what some others say, it's not simply a boiling over of anti-business sentiment. There is a line that must be drawn when boundaries are crossed on the assumption of being too big too fail alike RBS during the global financial crisis. To those given more wealth or power on this earth comes more responsibility; that's all.
Indeed, it's a very British humiliation.
