Goodwin, Hornby, Stevenson And McKillop All Get Off Scot Free From Treasury Select Committee

Fred Goodwin has just received his own shredding at the hands of the Treasury Select Committee, along with Andy Hornby, Lord Stevenson and Sir Tom McKillop. Except it was more of a light tearing.

Proceedings began with an encouraging round of apologies, with the word “sorry” and everything, but the sincerity of these were swifly undone by the frustration and irritation shown by those concerned throughout, as well as by the willingness to pass the buck onto the FSA and the ratings agencies. And despite claims from one committee member that the press just thinks the purpose of the meeting was public humiliation, and that they really want to get to the reasons why the banks needed bailing out, the committee nonetheless allowed elements of generic banker-bashing to come in and reduce the debate to a circuitous mess.

First up was an attack on bonuses, which seems to be what everyone wants if not what the financial sector needs. Stevenson was ruffled, saying they moved into “a culture of long-term holdings” for bonuses; meanwhile Fred blamed the States for bringing over a culture of high remuneration, telling of the “angst” within the industry over the issue – it sounds horrid!

But then before going after McKillop and Hornby, the focus shifted, as it became often wont to do, to a different tack, forming a sloppily moderated debate that failed to follow anything to a sound conclusion. This allowed the contrite and flustered foursome to get back on track. Stevenson in particular became totally slick, refusing to be drawn on “emotive phrases” and even chuckling when “backed into a corner”.

Hornby started out badly, shifting in his seat like he’d soiled himself and his voice breaking and lisping, but a moronic line of questioning from John Mann allowed him to get some confidence back. Mann asked them whether there was anyone “more brilliant” that could have been on the board (almost certainly, but quantifiable how?), before moaning to Hornby that HBOS had messed up his change of address form. I suppose it’s better than waiting on hold in a call centre queue, but a select committee really isn’t the best place to air customer service gripes, John. It sounded like Hornby called his comments “facetious” – it got drowned out by other chatter, but if he did say it, then fair play.

Mann then tripped up Hornby by using the acronym “JSA” for Jobseekers Allowance, an attempt at showing how out of touch Hornby is with the common man when Hornby has to ask what it means, but who on earth uses “JSA” anyway? It was totally weak and an utter waste of time. Mann tried to be a crusader like Henry Waxman, but was just running up to Hornby and pulling his pants down – momentarily satisfying, but ultimately he ended up looking pointless and immature. Get that guy out of here!

Hornby, despite constantly using the “it was like that when I got here” excuse that John Thain of Citigroup recently used, went on to acquit himself well later when he cites what he did to increase liquidity and pull back leverage, and also admits more could have been done.

McKillop was a mixed bag, looking nicely tanned but bewildered and shaken at one point, having to be prodded by the moderator to answer a question. He also looked very shocked, understandably so, at one MP asking him if he’d taken any legal advice over criminal negligence; and when asked how much RBS overpaid for ABN-Amro, he fumbled and replied: ”Everything we paid, basically”, before saying the buyout was a “bad mistake”. But he did well later when explaining the shift from highly leveraged products towards focusing on generating capital back in late ‘07. 

As for Goodwin, it looks like the training from News Of The Screws man Phil Hall paid off – he seemed the most sorted of the lot, and was probably the least questioned of all. He didn’t back down from the questions over RBS’s international operations impacting upon the British taxpayer, and traded in generic apologies like ”You have to try and predict the future and you don’t always get it right”. Back to the Batcave he goes!

So while the men themselves held their own, it was often thanks to inane and useless points of debate that kept getting returned to, like the banking qualifications of the four men and their boards, as if someone was going to say “yes, we hired them all from the smoking area of the local Tesco, dropped the ball on that one”. It doesn’t matter what these guys did at uni, they’ve all had years at the helm of multinational banks! Move it on!

Finally John McFall finally realised it was the complexity of the international market that messed things up and began asking about that, not the fact that Fred did law and not business for his BA, but not until about three quarters of the way through. But before the end, some bozo starts asked them whether the screw-ups were because they all got enamoured with their own pedigree and reputations, which they’re never going to admit to even it were true! Gah!

There was a long rally where the FSA got batted back and forth – the foursome accused of incestuous and lacking risk management, with them defending their positions, and saying it was the fault of poorly assessed credit ratings and that the FSA had been in a “completely open society” with them, to use Stevenson’s words. At least this was getting towards the meat of the debate, though the issues were never locked down. Eventually they thrash things out to the point where Hornby sums up the situation by saying that it was no-one’s fault, just through being “property based on one side, [with a] reliance on wholesale funding on the other”. Which we already knew.

The moderator admits that the proceedings “haven’t assuaged the public’s anger”, but could this have been any other way? All we could have reasonably expected from this was some soundbites, rather than any genuinely constructive measures. It has bolstered the case against complex financial instruments, the need for less AAA ratings, and a more responsible attitude to liquidity and capital ratios. But we didn’t really need this debate for bankers to realise they need to be more transparent and prudent, and it didn’t make the rest of us feel better. There’s more action tomorrow, with the promise of more bonus bashing. It’ll just be for our own pleasure, rather than securing the future of the country, so can we get Paxo in to do it? It might actually feel a bit satisfying, rather than this feeling of wasted opportunity.

Posted by Ben Beaumont-Thomas in Hot Money | February 10, 2009 3:33PM |