Disrepute

The media are taking great delight in naming Sir Fred Goodwin, now stripped of his knighthood.

Sir Fred is said to have brought the so-called honours system into disrepute.  In being dishonoured, he joins an altogether more select group: people convicted of serious criminal offence, or outed as Soviet spies.  Not that even serious crimes disqualify you: chattering classes may have questioned Jeffrey Archer’s peerage, but he’s just one prominent case in a system where honours for criminals are perfectly normal.

But there’s no suggestion he belongs in that group: rather he got super-rich as a leader of the credit boom, with a perfectly legal license to print billions backed by thin air.  Shouldn’t that put him firmly in the regular group: people whose honours are not in question?

Evidently what really brings the honours system into disrepute is not Sir Fred himself, but the odour of (deservedly) bad press that surrounds him and his obscene pension.  As usual, getting caught is the real crime.  He’s been scapegoated.

(Aside: his successor Stephen Hester is being scapegoated too: in the pocket, where it matters.  Well OK, he’s a long way from the breadline, but he’s an individual taking a hit on behalf of his ultra-bloated business.)

Do I feel sorry for Sir Fred’s dishonour?  No!
Do I sense gross establishment hypocrisy in the act?  Yes!

Sir Fred needed to be stripped not of the knighthood but of that pension: the reward for failure that everyone else can now trot out in support of their own demands – whatever those might be.  And maybe he should be joined by some of those who presided over the bubble and eventually gave him the pension rather than put his bank into administration where debts like that pension liability could’ve been capped.

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Posted on February 1, 2012, in uk. Bookmark the permalink. 5 Comments.

  1. As I see it, it’s not so much about being a crook as about “ratting on a deal”. Sir Fred was knighted originally for “services to the banking industry” (and hence, the implication is, to the British economy). Since those “services” turn out to have been smoke and mirrors, it’s logical to conclude that he didn’t deserve the honour.

    The pension, however, is a matter of contract, which makes it harder to touch. In retrospect perhaps putting RBS into administration would have been the right answer (though on a personal level I’m quite glad it didn’t happen, as it would probably have cost me a few grand), but it’s too late to revisit that decision now. The only way around it now would be some kind of legal charges that could result in hefty fines… but that would be insanely complicated, obscenely expensive and ridiculously uncertain.

  2. Vet, I disagree. If he didn’t deserve it, then neither did many, many others who still have it. He’s been singled out because of his high public visibility.

    As for the matter of contract, a bankrupt organisation can’t – by definition – be held to such debts. In the case of a bank there was statutory protection for small depositors (at a much lower level than today), and a well-defined order of priority amongst other creditors. And indeed a market for assets in administration – witness the number of bidders for Northern Rock when it first went bust, or Barclays’ acquisition of Lehmann assets.

    In retrospect? Some of us thought it bloomin’ obvious at the time that bailing out bust banks only made things much, much worse. See this blog for a range of posts on the subject, for example:
    https://bahumbug.wordpress.com/2007/09/18/race-to-the-bottom/
    https://bahumbug.wordpress.com/2008/09/30/king-canute-takes-a-step-back/

  3. Okay, so I looked up the deposit guarantee scheme. Seems it was beefed up in 2007, some months before the RBS bailout – so I would have been fine. Probably better off, in fact, since I’d have been galvanised to invest the money somewhere more productive (e.g. here).

    I don’t disagree that Formerly Sir Fred has been scapegoated. But I think there is a rationale for that scapegoating, it’s not just a kneejerk response to media pressure.

  4. The way I see it, his knighthood, revoked or no, affects me not in the least. However, his financial arrangements have cost the country concrete amounts per tax-payer, which does affect me.

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