EDITOR'S LETTERMerryn Somerset Webb
How we bashed the bankers
Last week, I sat on a panel at the Soho Literary Festival, having been asked to discuss how the bankers “got away with it” – “it” being extending too much credit; taking on too much risk; grossly overpaying themselves; and causing the financial crisis.
This was lots of fun (literary festival audiences are rather different to my usual wealth management audiences), but I had two problems with the premise.
The first is that bankers somehow caused the crisis single-handedly. There are six years’ worth of articles on this on Moneyweek.com so I will just say here that the banking industry had several partners in crime – stand up global asset managers and central bankers.
But the second is the idea that the bankers got away with their part in it. It isn’t really so. Not many banks went bust and not many bankers went to jail. But that doesn’t mean nothing has changed.
Take pay. Since 2011, the largest falls in income in the UK have been in the top 10% of wage earners. Most of that is down to falling compensation in the financial sector. The European Union has introduced a firm bonus cap and is now having a go at the “role-based” allowances system the banks introduced to replace super-bonuses.
Meanwhile, bank shareholders keep promising to keep an eye on compensation and are under so much pressure they might even do it.
• Read the full editor’s letter here: How we bashed the bankers