Banking

Was it right to shred Fred?

by The Business Blog, with Trevor Sturgess Wednesday, February 1 2012

So Fred Goodwin has joined traitor Anthony Blunt in the Hall of Infamy wherein languish the handful of once revered people stripped of their gong.

But what has the former Sir Fred the Shred done to deserve a criminal’s fate?

He had hubris - what successful businessman hasn’t? He shredded jobs. Nothing unusual there then.

He wanted to expand his company’s global reach and market share. So what’s strange about that? We criticise local business people for lacking ambition, and preferring a lifestyle enterprise.

By many accounts, he was not the nicest of people. But show me a nice boss and I will show you an under-performing business. Yet he has ex-racing ace and nice bloke Jackie Stewart as a friend who obviously shares a love of life in the – former - fast lane.

So why has Fred been shredded by the Establishment?

One reason only of course, Political symbolism. Somebody had to pay for the crash, for the misery inflicted on so many, for the taxpayer bailout, and frankly, for embarrassing politicians who deserve to be embarrassed.

I’m assuming that Fred did not set out to wreck the economy, to ruin the Royal Bank of Scotland with a takeover too far. With hindsight, military planners would not have asked our troops to go a Bridge Too Far at Arnhem with disastrous consequences. How many generals were demoted and ridiculed after that Dutch debacle?

Did Fred set the level of his own pension pot? It was more likely a remuneration group, Have they been stripped of their honours for living in a false world of astronomical rewards?

Stephen Hester is used to six-figure payouts. That’s what happens in financial services yet their practitioners do not merit the remuneration so out of kilter with rewards for people in equally necessary jobs and craftspeople paid little or nothing beyond their normal salary, wage or fee. Hester and his kind would get nowhere without the support of the humble teller at his local branch.

These bankers may well give away lots to charity and keep employees of Rolls Royce and Lamborghini happy. But the public don’t see that.

Fellow banker Stephen Hester should have had the wit to see the storm that would brew over his bonus. Why didn’t his PR people see it coming and advise appropriately?

Perception in today’s world is reality. He would have earned plaudits for either turning it down or giving it to charity. In the end, he was forced to yield by media and political denigration.

Fred’s public humiliation was symbolic and political and in a fairer world undeserved. Hester’s decision was forced and should have been taken earlier.

Both episodes damage business credibility and, when it is only business that creates the wealth of the country to help the sick, the young, the jobless, the elderly and the disadvantaged, that is an unhappy place for our wealth creators – and there are many in Kent.

In his rags to riches to rags disgrace, Fred is only human, a risk-taker who ultimately got things wrong. That’s what happens to entrepreneurs.

However much we deplore banking greed, he deserves a measure of sympathy rather than the gleeful grins of a crowd cheering a public hanging.

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Categories: National Politics | Work | Banking

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