Archive for the ‘The news’ Category

You won’t like me when I’m angry

April 5, 2010

» Life with the seedy men of the City

This article made me so angry. Aside from the obvious stereotyping which only works to discourage women from seeking jobs in the city, and the lack of emphasis on one of the key issues – a skills gap with not enough women applying for scientific and mathematical subjects at degree level – there’s just the bad journalism. The facile joining together of a parliamentary report about the under-representation of women and individual horror stories. It would be just as easy to link the report with my blog and say “investment banking is a beacon of equality”. Neither is true.

The report rings a bell at the moment because I am mentoring a graduate. The key job, as I understand it, is convincing her that this kind of rubbish is not true. So that’s really helped: discouraging women from applying to roles in banking because we’re all monsters.

I’m not even taking it personally that I’m dismissed as having the mentality of a teenager. Mostly because I do have the mentality of a teenager. It’s weird. It’s like it almost knows me.

However, quote of the day must be:

“It devolves responsibility to the City to remedy the problem, as reports did in the 1960s, since which time nothing has changed,” said Lawrence Davies, of the solicitors Equal Justice. “People who profit from discrimination do not get their houses in order until there is an economic imperative to do so. The average award in a sex discrimination case is £12,000, the cost of an average corporate lunch.”

I’m eating at all the wrong restaurants.

Advertisements

Open Europe: the Eurosceptic group that controls British coverage of the EU

April 4, 2010

» Open Europe: the Eurosceptic group that controls British coverage of the EU

An interesting article from Charlemagne, writing for The Economist. Regardless of your view of the EU, it is an interesting insight into how lobbyists influence the press.

MPs urge City boards to close gender gap

April 3, 2010

» MPs urge City boards to close gender gap

A report by the Treasury select committee finds “disappointingly few” women on City of London boards and evidence of a “significant” pay gap that is wider than elsewhere in the business world.

“The pay gap exists at entry level,” said John McFall, chairman of the committee, which will monitor the situation during the next parliament.

It’s a worrying situation. The idea of banks being full of alpha males who are casually bigoted is a widespread one, as is the idea that the hunger to win, the appetite for risk and bigotry are uniquely male traits. Harriet Harman’s comments that Lehman Brothers would not have failed had it not been Lehman Sisters is a classic example of reverse sexism based upon false information – shortly before its failure, Lehman’s CFO was a woman, Erin Callan*.

There certainly are financial firms which are still in the dark ages (as there are for any industry), but most banks are on the extreme end of the PC scale and obsessed with the idea of “talent” – their entire view on how they pay is that they are looking to hire the best of the best. The idea that a male graduate employee and a female graduate employee will be paid different things sounds wrong (not to say illegal), so something is going on within these statistics.

Banks, though, do not lend themselves to flexibility. However much they try, they are a slave to the financial markets which have fixed opening hours of 8am to 4.30pm. If traders need to do additional work they can either hope for a quiet market, or do it from 6am to 5.30pm. Not everyone is a trader, not everyone has the same restrictions (I don’t), but the hours of the market drive many other considerations and the more senior people get, they more restrictive those market hours become.

One should always be wary of an industry trying to defend itself against charges of prejudice by claiming special status. On the other hand, neat but untrue stereotypes are something else to be wary of, particularly when used as a basis for policy.

* To be fair to Erin, she wasn’t in the job very long and probably not long enough to make a difference.

Tory leader David Cameron details plan for bank tax

March 20, 2010

» Tory leader David Cameron details plan for bank tax

Opportunist. Still, some kind of levy seems only fair, although the assumption that only banks are too big to fail continues to baffle me (AIG? General Motors?)

I’m assuming the word “details” here is some kind of joke. As is the reminder that David Cameron is leader of the conservative party.

What really confuses me though is this:

Treasury sources say Mr Darling favours a tax over an untouchable insurance premium because he fears that banks could feel they were insured against the consequences of their actions and take even greater risks.

It’s analagous to saying “we oppose people getting car insurance because it just increases the risk that they’ll drive carelessly”. Although I suppose we all had so much fun in the last big bank bankruptcy that another one would be so much fun. Somehow, a chancellor favouring a tax always gives me a certain amount of cynicism.

High rolling risk and low rolling reality

March 8, 2010

Two important news stories, both of which were largely ignored:

» Hedge funds do not pose systemic risk, concludes FSA

» FSA plays down prop trading impact

Two well known villains of the finance world – hedge funds and prop traders – seem a lot less, well, villainous after the FSA did some investigation of them.

Goldman and Greece

February 23, 2010

… and I ain’t talkin’ about the musical.

There was an interesting article by the BBC’s Robert Peston on what financial services Goldman offered the Greek government. The services themselves are pretty dubious, giving the Greek government little real benefit aside from reducing its on-book debt. Even Goldman do not seem to pretend that it was anything other than, ahem, financial engineering.

Peston’s question was: is it ethical.

The answer is: probably not. But ethics are troublesome, and I don’t mean troublesome in that “oh dear that stops us making lots of money” way, but in that “oh dear ethics is inherently based upon a point of view and therefore is difficult to capture in an abstract sense which can be applied equally to all parties and all cases” way. Typically, clients’ transactions are judged in terms of “but would their or our government think this a bit dodgy” kind of way (a test the Greek trades would have failed). But when there is no government it becomes a bit of a tougher test to apply.

“Efficiency” is a key selling point of any financial product; typically that means the product is easier to manage, has lower risk, has lower transaction costs and, sometimes, less tax. In a Daily Mail sort of way this must  seem unethical – but this is no different to a retail bank saying “you can have an ISA (which is tax free) or a savings account (which isn’t)”. Is it wrong for that bank to help its customers minimise their tax bill?

Goldman, presumably, felt the emphasis was on the Greek government. Interestingly, their ethics don’t seem to be under debate.

Longevity forever

February 23, 2010

» Long live longevity

Back in the heady days of 2006, some experts were predicting that London would become the centre of a huge new global market in trading the “longevity risk” faced by pension funds. It could eventually outstrip the huge credit derivatives market, they said.

Investment banks got very excited about it. But nothing much happened. In recent months, however, there have been a number of big longevity insurance deals that could change things.

Yesterday, BMW’s UK arm revealed it had bought insurance from Deutsche Bank’s Abbey Life that will protect it against the risk that the 60,000 members of its pension scheme live longer than expected.

Hmmmmm, I foresee a financial product called a longevity swap.

This is how financial engineering starts: a specific requirement which gets resold and resold and resold. What is more depressing is that most people will think of these securities as “complex financial engineering”, an almost wilful misunderstanding of them. Yet just today I was watching a very nice advertisement hosted by that very nice Michael Parkinson about some very nice life assurance product (I was ill, if anyone was wondering what I was doing) where people paid a very nice regular amount per month and, after two years of paying, were assured a very nice life assurance payment on their death.

Insurance is all about risk, and so are the financial markets – measuring it, controlling it, charging for it. And generally, for a purpose (admittedly a purpose which can later by absorbed by the larger world of speculation). Financial products such as derivatives and swaps did not come into life for no apparent reason. It’s a point I always feel is underplayed: these fancy financial products are useful to someone.

Goldman Sachs, Goldman Sachs, clicking in the votes?

February 11, 2010

» Goldman Sachs, Goldman Sachs, clicking in the votes?

Between 3.41pm and 3.57pm yesterday, little more than 24 hours after the Robin Hood tax campaign’s high-profile launch, supporters noticed a sudden spike in the number of people rejecting the plan in their online poll. More than 1,700 came from a Goldman-registered server, with the rest from what appeared to be a personal address. It was unclear whether the stunt involved an individual or a number of people. Goldman said: “We have just received this information, and we are investigating the matter fully.”

Someone at Goldman Sachs has far too much time on their hands. They may find that may not be a problem for much longer.

I doubt Goldman would particularly care what we voted for in a poll, and certainly wouldn’t waste more than ten minutes trying to influence it: even Goldman is firmly aware that, as an industry, most individuals rate us lower than the leech.

Hector Sants to step down from top FSA post

February 9, 2010

» Hector Sants to step down from top FSA post

The FSA faced criticism that it failed to prevent the credit crisis by not restricting risk-taking at banks such as Northern Rock, which built up huge liabilities.

Mr Sants led the fightback and oversaw an overhaul of banking regulation, saying banks “should be very frightened” of the regulator.

I think it is only regulators who think that the regulated do not fear them. On the other hand, I fear a toddler wandering around with a automatic machine gun for a teddy bear, it doesn’t mean I am in awe of their judgement.

Regulators are basically a bunch of people trying to control a system they have never experienced and do not understand. Occasionally bankers all get together and complain about:

  1. The regulator never actually doing anything, seriously, if you follow regulation very carefully and studiously (and spend a lot of money on it) then you get really tetchy when other people don’t and seem to get away with it scot-free;
  2. Them never understanding anything;
  3. How much worse than the FSA all the European regulators are;
  4. The lack of firm decisions;
  5. How much data we submit which is blatantly ignored.

Except we don’t like to say anything because you never quite know how the regulator is going to respond. And, really, we’re very British in that we don’t like to say anything (but, tsk, do you see what they’re wearing). Besides, that teddy bear might go off.

Former BP boss Lord Browne admits sexuality fears

February 8, 2010

» Former BP boss Lord Browne admits sexuality fears

Lord Browne did not reveal that he was gay until the end of his 40-year career at the oil giant.

A correction: he was forced to admit it when he was allegedly blackmailed about it, and then committed perjury.

Lord Browne said there was “a fear that was engendered in people’s hearts about being gay”.

“In corporate life it wasn’t something you talked about, and in the oil industry is was not something you did,” he said.

I do. But there again, I’m not running a FTSE-100 company and he was so perhaps I should focus on acting macho. Hmmm, whining for most of the afternoon that a good man is hard to find was not, perhaps, the best way to start my new straight image.