Last month Britain was swept up in a maelstrom of rage after it was revealed that Fred Goodwin, the chief executive of the Royal Bank of Scotland, was due to receive a generous pension to the tune of a staggering £703,000 a year. The problem? The Royal Bank of Scotland is now 70% owned by the British taxpayer. Cue outrage from all sides: while the tabloids and broadsheets alike foamed at the mouth, government ministers went a bit mental and promised to suspend the rule of law. The controversy over Goodwin’s pension wasn’t just a matter of one man’s greed, however; it was a focal point for the public feeling of helplessness, disbelief and disgust brought on by the realisation that the mighty, all-knowing financial powers we entrusted with our money are actually just a load of out-of-their-depth greedy idiots who’ve gone and squandered the lot.
Well, now the United States is having their “Goodwin” moment – and who knows where the chips will fall?
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no comments | tags: bonuses, Credit Crunch, finance, Recession, U.S. bank bailout, U.S. politics, US Treasury, Wall Street
There’s an episode of South Park where one of the kids’ dads, Randy, keeps getting into fights at baseball games. Every time he gets dragged off by the police, he drunkenly castigates the cops, shouting, outraged: Is this America? Are we in America? I thought we were in America!
That episode has been on my mind a lot lately, as I just can’t quite believe that the United States, traditionally a country with an extremely suspicious attitude towards socialism and anything associated with socialist ideas, should be having a genuine public debate about nationalising banks. As Randy said, I thought this was America. This isn’t just a back and forth on the pages of the New York Times, either. Obama himself has been publicly chewing over the idea:
Sweden, on the other hand, had a problem like this. They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again. So you’d think looking at it, Sweden looks like a good model. Here’s the problem; Sweden had like five banks. [LAUGHS] We’ve got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would — our assessment was that it wouldn’t make sense. And we also have different traditions in this country.
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3 comments | tags: Obama, U.S. bank bailout, U.S. politics, Wall Street
