Liars, Damned Liars and City Bankers

Unless you have been on some remote island without access to communications, you cannot have escaped noting that there is a significant backlash in the media and in financial circles against the wholly justified complaints about the Financial Sector for the way they have mistreated their customers, repeatedly engaged in fraudulent practices, paid themselves obscene bonuses and generally conducted themselves in a manner which is guaranteed to generate disgust and antipathy among right-thinking people.

The backwoodsmen have come out of the trees and have started their predictable calls for a cessation of 'City Bashing' for fear that it is likely to 'damage the good name of the City of London'! Foreign business won't want to come here to work, we are told, if they get the feeling that the British people are 'anti-business'! Don't take any notice of these protestations, there was some tame back-bench M.P or industry spokesman saying exactly the same thing at the time of the South Sea Bubble!

The financial sector, we are told, is responsible for earning huge sums of money for the benefit of the British economy, and their profits go to maintain a high degree of tax revenues for UK plc.

Well, that's what we are told, and it is a persuasive argument, I mean it's difficult to argue about the Corporation Tax that these institutions must be paying!

Well, I don't think anyone who points out that the financial sector is run by a gang of spivs, wide-boys, dodgy croupiers and con-men is necessarily 'anti-business'! Anti-liars however is another matter all together!

I am not apologising for these hard words, because today, we have been entertained to another classic case of Banker's lies, and guess what, they are all about tax!

It seems that HMRC have clamped down on two shoddy tax avoidance schemes that were being adopted by UK banks. In the present case, Barclays Plc said it was the bank at the centre of two tax avoidance schemes, loopholes that the government had said they would close and raise more than 500 million pounds in tax that would otherwise have remained unpaid.

Barclays said it had notified Britain's tax office about its plan to buy back its own bonds, on which it and other banks have made hefty profits in recent years. Well, there's nothing particularly admirable about this, anyone seeking to promote a tax-avoidance scheme has to run it past H.M Treasury first, so Barclays were only doing what they were supposed to do anyway, although it is interesting to note that Barclays had already started to adopt the use of the scheme, prior to seeking approval! Perhaps they hoped that the Treasury wouldn't grasp the nettle and legislate retrospectively!

The Treasury said on Monday the scheme and another one were "highly abusive." That is putting it mildly. These were nothing short of an attempt to create a wholly artificial tax-avoidance scheme, and at a particularly hard time when the Government is expecting the rest of us to pay our fair share to get us out of the financial mess the bloody banks created in the first place!

Why do I accuse the banks of gross mendacity?

Well, Barclays and other banks have signed up to the Banking Code of Practice on Taxation, which contains a commitment not to engage in tax avoidance. They have now been shown to have broken that code and that was 'unacceptable', a Treasury spokesman said! He went on;-

"All the banks have signed a code of conduct, they have said that they wouldn't be engaging in aggressive, artificial tax avoidance arrangements of the sort that we have seen disclosed to the HMRC, and in those circumstances, when we were aware of what this bank was doing, it is right that we took strong action," he added.

The Treasury is willing to shut down more bank tax loopholes schemes, Treasury official David Gauke said on Tuesday.

"We are willing to act because in these particular circumstances the behaviour is not acceptable and we are prepared to step in,"

More damaging however than the financial hit could be the reputational damage. Only last November, Barclays boss Bob Diamond was pontificating on the need for banks to accept responsibility for past mistakes and show how they can contribute to society and economic growth to improve their standing with the public.

This is the sort of thing bankers say in public! What they do in private is completely another matter, as this shabby exercise of fiscal dodgy-dealing demonstrates.

The Treasury spokesman said;-

"I suspect the bank in question is regretting what it has done. It's not going to do them any reputational good and they've not made any money out of it,"

That's all very well, but it does not punish the banks enough for this shameless attempt to get out of their responsibilities to the country. Remember, banks are underwritten by H.M.Government, well, no, actually that's you and me who have to cough up if they look like failing. There is a price for this unique privilege, which is that the greedy bastards pay their taxes, in full, and on time.

What all this tells us is that they still don't get the real picture. They still haven't understood why so many ordinary, hard-working people, hate them so much. Cameron and his cabinet of millionaires need to wake up and realise that these continuing examples of double standards and fiscal sleight of hand are seriously damaging the perception of legitimacy that banks and governments need, in order to stay in business. That legitimisation comes from the people, and if they begin to get the impression that all the banks' protestations of honour and commitment are just another bunch of cheap lies, which is what they have just been proven to be, then they will rightly withdraw their willingness to accept anything the financial sector says, and they will carry on bashing the bankers for all they are worth, and rightly so!

So, let us start by recognising some unpalatable facts before we consider easing off our criticisms of the Square Mile.

Remember how much we are told the banking sector contributes to the tax take of this country? In 2011, our banking sector contributed only 7% of Corporation Tax receipts to H.M Treasury, yes that's right, the munificent amount of 7%! Mind you, 30% of the FTSE 100 companies paid no Corporation Tax at all, so we should be grateful for small mercies, but whichever way you look at it, it wasn't very much.

HMRC have done us all a very good service by this unusual exercise in retrospective tax clawbacks. They have not only recovered a figure close to half a billion pounds in unpaid tax, but they have demonstrated, in the clearest of terms, what a bunch of lying, cheating bastards are running the UK Banking Sector, and have confirmed the wisdom of keeping up the pressure on their wrongdoings and exposing them at every turn!

Banking snake-oil purveyors force to disgorge some of their profits.

Lloyds Banking Group is to claw back almost half of the bonus paid to its former chief executive in 2010 because of the bank's role in the mis-selling of payment protection insurance (PPI).

Former CEO Eric Daniels will be stripped of 40% of the £1.45m payout he was given two years ago. He will have to give back £580,000, but still leaving a bonus of £870,000.

In total, the state-backed bank will strip 13 of its executives of the bonuses they were awarded following the scandal that cost it £3.2bn in compensation claims last year. In a classic case of bankers' double-speak and PR gobbledegook, Lloyds said the decision was based on the principle of "accountability".

A statement from the bank said: "The board wishes to emphasise that its decision is based entirely on the principle of 'accountability' and in no way on culpability or wrong-doing by the individuals concerned."

Of course, why on earth would anyone think any different? That's what happens when you don't do anything wrong or culpable, you have to cough up a load of loot which your institution acquired by conning ordinary people into buying a series of financial products which were no use to them. The bank have got to trot out this bromide because if it was thought to be anything else, like, saints preserve us, a crime, then it might open some very grimy doors indeed!

Other directors will have either 25% or 5% of their 2010 bonuses taken back, resulting in losses of between about £100,000 and £250,000 each. The bank will announce further claw-backs for the 2011 bonus season on Friday.

This decision will put pressure on Royal Bank of Scotland, which is 82% state-owned and was the second largest player in the PPI market behind Lloyds, to take similar claw-back measures. It will be instructive to see what happens. Lloyds' earnings are expected to be hit by the losses incurred from the PPI scandal when announced later this week.

It is the first example of a big British bank taking back bonuses since 'claw back' options were introduced in executive pay packages in the wake of the 2008 financial crisis. The decision follows pressure from the toothless and barkless banking watchdog, the Farcical Supine Authority, to retract some of the bonus pay-outs for executives in charge during the scandal which has cost the industry more than £9bn in compensation claims.

It is the first example of the FSA demonstrating it has the powers to clamp down on failures by banking executives. But frankly, it is nothing to shout about, because it is far too little, and far too late, and in any event, the FSA should not be just taking back what the bank executives should not have received in the first place. PPI was a product most often sold alongside loans and mortgages by banks, ostensibly to cover repayments if borrowers fell ill or lost their jobs. But it was found to be completely worthless insurance for too many customers, opening the way for a flurry of compensation claims by buyers. Not content with having fleeced their customers, the banks then mounted a hugely expensive and cynical court case to try and avoid the consequences of their actions. In April last year, the banks lost the case in the High Court to stop customers demanding compensation.

Let us be clear, any money which is realised as a result of a fraud being practised on any person, is the proceeds of a crime, and the PPI episode was nothing more than an institutionalised exercise in wholesale fraud. The FSA should even now be deciding who is going to be charged with conspiracy to defraud as a result of this case. Except the problem is that the practice was so huge and so widespread, and so many people in our rotten retail banking system were involved in the fraud, from the people at the front counter who flogged these dodgy policies, to their managers who urged them on to meet meaningless sales targets, to the executives who connived at these dishonest practices, all the while watching the profits piling up on their balance sheets.

I make no apology for calling our High Street retail banking system 'rotten', because for too long, the ordinary client has been treated as a dupe and a sucker, while his financial needs have been exploited and abused, whether in pensions provision, where his funds have been diminished by a whole series of secret and opaque costs and charges; or a series of so-called mis-selling scandals, occupational pensions, PPI insurance, whatever you call it, they've flogged it!

Fred the Shred - Victim of his own hubris! - The revenge of the pink wafer!

Some commentators have whinged piteously that Fred 'the Shred' Goodwin had committed no crime, and that taking away his putty medal, was an act of spite. Not so, the Shred committed the worst offence of all, he was guilty of acts of hubris, and he has been righteously punished.

In ancient Greek, hubris was most evident in the public and private actions of the powerful and rich. The word was used to describe the actions of those who challenged the gods or their laws, especially in Greek tragedy, resulting in the protagonist's fall.

Hubris, though not specifically defined, was a legal term and was considered a crime in classical Athens. It was also considered the greatest crime of ancient Greek society. It often resulted in fatal retribution or Nemesis, ancient Greek for "ruin, folly, delusion," the egregious actions performed by the individual, usually because of his or her hubris, or great pride, leading to his or her down-fall or disgrace.

Crucial to this definition are the ancient Greek concepts of honour and shame . The concept of honour included not only the exaltation of the one receiving the honour, but also the shaming of the one overcome by the act of hubris.

In its modern use, hubris denotes over-confident pride and arrogance; it is often associated with a lack of humility though not always with the lack of knowledge. An accusation of hubris often implies that a form of disgrace will follow, similar to the occasional pairing of hubris and nemesis in Greek society. The proverb "pride goes before a fall" is thought to summate the modern use of hubris. It is also referred to as "pride that blinds", as it often causes one accused of hubris to act in foolish ways that belie common sense. In other words, the modern definition may be thought of as, "that pride that comes just before the fall".

Examples of hubris in fiction, most famously in Marlowe's play Dr Faustus, portrays the eponymous character as a scholar whose arrogance and pride compel him to sign a deal with the devil, and retain his haughtiness until his death and damnation, despite the fact that he could have easily repented had he chosen so.

In so many ways, the Shred portrays a modern day Dr Faustus, whose arrogance drove him to push through the deal with ABN Amro, even when counselled against so doing, literally signing his own deal with the devil, and then, when found out, maintaining his arrogance and haughtiness, even when challenged in public in front of the select committee hearings, refusing to acknowledge his own personal culpability. If he had chosen that opportunity to make a heartfelt apology, to admit his failings, to take the blame fairly and squarely and say 'mea culpa' loud and long, he would have kept his knighthood.

Any man who can berate his staff and write threatening memos warning of dire retribution because someone put a pink wafer biscuit on his coffee tray, deserves to be punished by the gods. Taking away the Shred's knighthood is, even now, not enough punishment for the mess this overweening man made, but it's a start!