Posts Tagged ‘politics’

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.

Paulson repeats claims that Britain ‘screwed’ US over Lehman rescue

February 1, 2010

» Paulson repeats claims that Britain ‘screwed’ US over Lehman rescue

In On the Brink, the first book by a key player in America’s $700 billion banks bailout, Mr Paulson concentrates on the crazy months surrounding Lehman’s filing for Chapter 11 bankruptcy protection on September 15, 2008.

Barclays negotiated to buy Lehman during the weekend before the bank’s collapse, but the talks fell apart after both countries put up obstacles to a rescue deal. The British bank eventually bought Lehman out of Chapter 11.

Yes, all those barriers. Surely buying the firm that is about to be the world’s biggest bankruptcy is not really that big a deal? Do we really need to vote on it?

Not being a shareholder, it’s hard to speak on their behalf. One of the few things I own is this laptop – if it had decided to buy Lehman Brothers (and, let’s face it, that would be weird in so many ways) then I might feel some resentment at not being consulted, but then my laptop screws me over in all kinds of ways so it wouldn’t surprise me if it was planning a short squeeze (oo-er) on Goldman as I write. Perhaps I should have a say, But then I am just the owner.

It is odd, a few years ago people thought Paulson was machinating on behalf of Goldman Sachs. Now it seems he was just a nutter.

Goldman says reports of CEO testimony improper

January 17, 2010

» Goldman says reports of CEO testimony improper

There are two ways to interpret Goldman Sachs’ activity here:

  • They ruthlessly and unpleasantly sold products they knew were going south
  • They hedged their position

Personally, I believe the latter. Mostly because, as a broker, Goldman’s main job is to help its clients buy or sell the assets the client wishes to buy and sell. Deciding an investment strategy is the client’s job (or their adviser, or asset manager, or whatever). Judging the quality of the assets is the job of a credit ratings agency. Obtaining the assets is Goldman’s job.

If you go to a fishmonger and want to buy salmon – and the fishmonger tells you he thinks salmon is disgusting and you’d be better off going for cod – then you may be wondering when you invited the fishmonger to lunch or asked him for advice on your menu (you may do many other things, from follow his advice or, if you are a serial killer, batter him to death [batter – food pun, ha ha] with a lump of fish, but you get my point). You want salmon, he sells you salmon. He then buys more salmon from his supplier to restock – and his activities of buying and then selling at the same time are unlikely to lead to him being denounced by, well, everybody.

The fact is, investment banking is not a commune. Some hedge fund wants to go long CDOs or the latest cool stocks? Let them. Just don’t expect the broker to do the same thing. We don’t expect our doctors to get our illness, lawyers to become a party to our contracts, estate agents to move in with us. Brokers are risk averse. They’re not going to pin their entire profits on their clients’ investment strategies or even ask them what they are. Many businesses are the same – they are there to help you buy and sell, they are not there to share your tastes. It is when those riskless businesses screw-up, like Lehman, that things get very fishy indeed.

Sorry is the hardest word to say (at least, meaningfully)

January 15, 2010

I am, apparently, overpaid. My employer does not think so, I am less certain, the public is really rabidly, absolutely, 100% doubt-free need-no-truth-drug call-me-a-liar-if-an-atom-of-doubt-crosses-my-mind certain. This is odd, because they do not know me and most people find my job difficult to describe. However, their basic assumption that I am not saving the world is safe, so this is hardly a Batman-esque public anger at the anti-hero ironic situation; other assumptions that I am as evil as a James Bond super-villain probably need further scrutiny in the court of public opinion.

It has been a tough week to be a banker. Well, no. It’s been a tough week to be a solider, or a Haitian, but bankers? I appreciate the public isn’t exactly in love with the banks (which is a shame because they used to be soooooo close) but it has been tough in the same way that the coffee shop running out of your favourite syrup has been tough. The investment banks are outraged but are not saying so for fear of being lynched (an unusually self-aware move): the world, strangely, did not tremble.

The rest of the script is supposed to work this way: I express remorse at mistakes made, look awkward on the subject of bonuses but insist they are necessary, try not to be too obnoxious and hope it all goes away.

Except I am not sorry. I did not take the government’s dollar. I am happy with the salary I am paid (although to be fair, I still have the mental age of a teenager so find being paid at all is a somewhat perplexing experience) and my employer is happy to pay it (as are others would-be employers). I did not create a housing bubble, encourage mortgage dealers to lend money they would never, ever get back. I did not gave credit ratings to unsound securities. I did not take out a mortgage I would never repay. I did not speculate on house prices (either by buying personally, or trading). I did not create regulators who are too proud to admit they do not understand the markets. I did not change how I viewed risk dependent upon my salary (or my bonus). I did not put my money in Icesave accounts. I spend some of my salary and when I do I try to benefit others. I pay tax. I try to do the right thing. I am not sorry.

That’s money honey

January 1, 2010

I didn’t even want to be a banker. Not that there’s a pin-striped press gang wandering the streets of London, forcing people into a life of international finance against their will, coshing people with a stock portfolio before leaving them, possibly brain-damaged, in a marble foyer with a blackberry and a Charles Tyrwhitt loyalty card.  It’s just I sort of drifted into it.

They were handing out free beer. I didn’t even know who they were – they weren’t in disguise, it’s just my interest in banking was limited to my student overdraft – and as a student a free anything, especially beer, was of interest. I gave them my CV, and, not thinking I was their type I thought it was a pretty reasonable deal. When I returned from two interviews in London, the second of which made me absolutely certain I was not their type, I forgot about the first interview and did a rather good impression of a sour grape, swearing I was never going to work there even if they paid me, which does seem to imply I had misunderstood the basic premise of a summer internship.

At the time my views were social democratic / liberal. I could just short-cut that awkward phrase and describe myself as a lefty, but like so many labels it keeps bad company: Arthur Scargill, Harriet Harman … Stalin. It’s like describing yourself as a euro-sceptic, which, let’s face it, however sceptical you are about the European Union, is also shorthand for “I’m a right-wing xenophobic nut-job who dislikes foreigners”.

I did the internship for the money. I was a student and I needed it. Then I went back the following summer. Then they offered me a full time job.

So perhaps it was the money after all, but I prefer to think it’s more complicated than that. I used to have a manager who said “money only demotivates people, I’ve never met a person whose performance was improved by the prospect of more money“, and I suspect he is right. When it comes to remuneration people either seem to feel that they have got the right level or not enough, and that other people have too much. I have yet to meet anyone who feels they are overpaid. Money is like freedom: it’s always good to have more and it’s awfully easy to take it for granted when you have it.

I stayed for the work. I get bored easily and every day people would bring me new, intriguing, fiendish puzzles to solve – which brings forth a strange mental image of someone dumping a stack of “Puzzler Monthly” on my desk every day.

“More puzzlers, boss?”
[Through a cigar poking from one corner of his mouth] “‘Fraid so, Ninja.”
“This just ain’t right, boss.”
“This is a bank, Ninja, not a holiday camp. I should have hauled you have the coals for that wordsearch you did yesterday, dammit man.”
“Sorry boss.”
“We’re all sorry, Ninja, but it don’t get the puzzles done.”

What I’m really trying to say is that I’m not greedy, that there’s reasons other than the money. Greed may be good, but it is a surprisingly shy character trait.