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!

FSA Fines Einhorn £7.2 million. Another regulatory failure!

The Financial Services Authority (FSA) has decided to fine David Einhorn, owner of the prominent US hedge fund Greenlight Capital Inc (Greenlight), and his fund £7.2 million for engaging in market abuse in relation to an anticipated significant equity fundraising by Punch Taverns Plc (Punch) in June 2009.

On 9 June 2009, Einhorn was a party to a telephone conference in which it was disclosed to him by a corporate broker acting on behalf of Punch Taverns Plc that Punch was at an advanced stage of the process towards a significant equity fundraising. This was inside information and Einhorn should have appreciated this.

A matter of minutes after the telephone conversation had concluded and on the basis of that inside information Einhorn gave instructions to sell all of Greenlight’s holding in Punch. At the time these instructions were given Greenlight held 13.3% of Punch’s issued equity.

Over the next four days Greenlight sold 11,656,000 Punch shares, thereby reducing its holding in Punch from 13.3% to 8.89%.

On 15 June 2009, Punch announced a fundraising of £375 million. Following the announcement the price of Punch shares fell by 29.9%. Greenlight’s trading had thereby avoided losses of approximately £5.8 million for the funds under Greenlight’s management.

The FSA accepted that Einhorn’s trading was not deliberate because he did not believe that it was inside information. However, this was not a reasonable belief. Investment professionals are expected to handle inside information carefully regardless of whether they have been formally wall-crossed. This was a serious case of market abuse by Einhorn and fell below the standards the FSA expects, particularly due to Einhorn’s prominent position as President of Greenlight and given his experience in the market.

Tracey McDermott, acting director of enforcement and financial crime, said:

“Einhorn is an experienced professional with a high profile in the industry. We expect someone in his position to be able to identify inside information when he receives it and to act appropriately. His failure to do so is a serious breach of the expected standards of market conduct."

Yet again the FSA has failed to prosecute a financial insider and seek a custodial sentence. This is now he expected and typical response from this most spineless of regulators, who feel that it is better to seek these pathetic financial penalties, than really go to the trouble of taking these financial spivs to the Old Bailey!

Here was a market professional who learned that shares he owned were about to become impacted by the news that the company was seeking an equity fundraising issue, thus diluting the value of his stockholding.

He immediately gave instructions to sell the entire holding, and in the end, made a saving of £5.8 million for the funds his firm managed.

Whatever you want to call it, this was a gross misuse of privileged information, and Mr Einhorn should have felt the complete weight of the force of the law against insider trading to fall on his head. He should have been prosecuted to within an inch of his well-shod feet, and if convicted, he should have been sentenced to a term of imprisonment. A couple of years at Her Majesty's Pleasure sharing a cell with a steroid-crazed body-builder with an IQ smaller than his hat size would have been a learning curve.

But what happened?

The FSA accepted a plea from him, and accepted that '...his trading was not deliberate because he did not believe that it was inside information...'!

Excuse me, que passa? What did he think it was then, a polite chat with an ever-so-friendly market broker passing the time of day? Who is kidding whom here?

The FSA then fined this uber-rich trader who made millions shorting Lehmann Brothers, the derisory sum of £7.2 million. To a man like Einhorn, this is chump change, he won't even feel the pinch. I'll bet that such a penalty will definitely teach him not to do such a thing again!

What this pathetic exercise ignores is that whether or not the FSA finally decided to prosecute for Insider Dealing, the profits Einhorn made from the deal were the proceeds of crime, whether you call it market abuse or insider dealing, they are still crimes at the time they were committed, and their proceeds can be laundered. As soon as Einhorn realised the proceeds from the sales, he was laundering the money, and any institution handling the deal should have made an immediate SAR if they had suspected the transaction.

Has the FSA investigated to see whether any SAR was reported? Bet not!

This kind of derisory action on the part of the Regulator brings them into disrepute yet again. If they have evidence that individuals have committed crimes, they must and should be prosecuting them, otherwise, what message does this send. Some way must be found to insist that evidence of criminality leads directly to the dock.

London is already the place where the ultra-rich come to lord it in non-dom tax-haven luxury. Where bankers whose publicly-owned businesses have made no profits can pay themselves obscene, million pound bonuses, because no-one has the bottle to get up and say 'No' very loudly and mean it! Where men who through arrogance and incompetence have taken once-great financial names to the brink of extinction, get knighted and given pensions of a size beyond the dreams of avarice! Where 98 of the FTSE top 100 companies can pay no tax to the Revenue. Where we welcome oligarchs who have raped and looted their former State assets, and then come to launder their ill-gotten gains through their ownership of British properties.

What in God's name has happened to us? Where once, we had a name for fair dealing, and integrity, we now have replaced it with greed, sleaze and double-standards. The best thing to do is to put the sign 'Casino' in flashing lights over every immigration desk in every point of entry in Britain. At least then we would be making some pretence at telling the truth of what this country's financial sector offers!

Joseph’s story

She’s sleeping now.

I managed to clean her up as much as I could,

And the women from the inn took away the birth straw.

They were far too busy after that to be bothered with her anymore.

The rooms were all full and the guests were shouting for their dinners and liquor and calling for service.

It was kind of the woman to give us some old birth cloths to wrap him in,

Said they were old, but clean, even if they had been used before.

She didn’t seem to mind.

The boy has blue eyes.

Seems like a healthy lad, at least as far as I can tell.

That’ll be a blessing anyway, it’s hard enough feeding her and me just now.

Business has really fallen off since the Romans started squeezing the last coins from our pockets to pay for all their foreign wars.

He’ll have to get used to hard work if he wants to keep his place by the fire and share what little food there is.

As I say, he looks sound enough, but what do I, an old man, know of these things, I never had a son before.

I wonder, were his father’s eyes that piercing blue.

I’ve known her since she was very young.

Her father recently asked me to marry her as I was still alone, even after all these years.

He made me a good offer because he already had three other girls and she was, well, she was the least comely,

And he simply couldn’t afford marriage portions for all of them,

That was how he put it.

When I agreed, he gave me a longer lease on the workshop and said he wouldn’t press too hard for rent,

If I wasn’t doing so well that quarter

Nice of him to do that, I thought

The only condition he wanted was to announce our engagement soon

Because she was expecting a child and he did not know who the father was.

Neither did she apparently, except that it came from heaven,

Or so she said, some daft story about an angel,

And her being chosen for a special task.

Don’t suppose it makes a lot of difference anyway.

I'd been having some really odd dreams about this time and I found that I didn’t mind about not being the father,

Although it took a bit of getting used to at first.

The men in the wine shop said I was a fool,

Said I could have held out for a lot more

Called her father a skinflint, said I was doing him a real favour

While the women talked about her in corners,

Making pointed references to certain dates in the calendar

And the arrival of a new cohort of Roman soldiers in the town.

But she simply put her hand in mine

And said she would be a good wife to me

And after that,

I found that it really didn’t matter at all.

She’s a strong little thing.

I’ll say that for her, and when we were told we had to make this winter journey to get registered for the new taxes,

She didn’t make a fuss, but just gathered her few bits and pieces

And went to see to the donkey.

She put what we needed in a bag and handed me the reins

And said we should start soon, as it looked as if the weather would be closing in.

She never once questioned the reason for having to go so far,

It kind of seemed like she was almost expecting it.

I thought we would make it all the way.

Except she couldn’t go on any longer as she was far too tired and her feet were bleeding.

And when her waters broke and the baby started coming, she simply asked me to find her somewhere to lie down,

And she said she would be alright if I didn’t stray too far away.

This inn was just down the road,

But the landlord said he was full up with paying guests

Unless of course I had enough money to pay for his best room

And by the look of our condition, he said he somehow doubted it!

I told him we were broke.

He just stood there with his huge fists on his hips and laughed

And shook his head and told me to get lost and not to waste his time.

His wife understood though, and said he should be ashamed and that we could use the stable

As long as we didn’t mind sharing with the animals.

She came with her mother and old cloths and hot water later

But as I said, they couldn’t stay long

She asked us not to think too hardly of her husband,

Said that he was a good man really.

She didn’t want me then.

Told me to go away and not to come back until it was finished.

I began to argue but she was insistent,

Said that this was something she had to do alone and that she would receive all the help she needed, but she didn’t say from where.

Just told me not to be too far away.

She was right of course, what was I really going to be able to do to help, what experience do I have of these things

She only screamed out once, a man’s name I think,

But I didn’t catch it.

Then, later, the strangers started to arrive.

You would have thought that they would had more consideration.

I mean it’s bad enough trying to manage a new birth,

On your own, in a cowshed, without constant interruptions.

First a crowd of smelly sheepherders, the poorest kind who live out on the hills all year round, not much better than brigands and thieves,

Men with rough hands and even rougher speech, and dressed in fleeces which stank

They all insisted on crowding in to see the child

And wouldn’t take no for an answer.

The landlord tried,

He wouldn’t let them in at first.

Said he ran a classy house and said they had no money to spend

and that they would only frighten his paying guests.

He took some real persuading, but they were very persistent.

Their leader kept going on about angels telling them about the baby and how they had to come and witness his birth.

It’s all nonsense of course, they’d probably all been drinking,

But they did seem genuinely pleased to see the boy

She didn’t say anything, she just smiled.

Just as she was about to go to sleep the professors turned up.

Said they had come a long way and pointed at a star they claimed to have followed, but among all the others blazing away on that freezing cold night, I couldn’t make it out.

They at least brought some presents, but these educated types have no common sense at all.

What is a simple carpenter going to do with myrrh? She can probably use the frankincense to air the clothes, but God knows what I’ll do with the gold.

I’ll have to hide it from the taxman, and hope no-one gets to hear of it.

They talked a lot of blather most of the time, or so I thought,

But isn’t that just like academics all over.

They did tell me not to go home to Galilee just now

Seems it isn’t safe because the King has been asking a lot of questions about some other king being born.

That rules us out of course

But I think I‘Il take their advice anyway, it doesn’t pay to pick quarrels with kings, priests or politicians.

It’s a lesson to teach the boy when he’s older,

No point in looking for trouble if you don’t have to.

I’ll have my hands full just teaching him the trade

Seems strange now looking at his tiny hands to think how will they ever get used to managing the skills of the carpenter.

But he looks strong, he’ll learn, and when he’s finished his apprenticeship, I’ll take him into the business with me.

That’ll be good, the two of us working together.

And when he has learned enough to be about his father’s business,

We should be able to bring in enough to rent the olive grove behind the workshop,

And maybe buy some goats for his mother.

I’ll teach him all my skills so he won’t hurt himself.

Just making a simple joint to hold two pieces of wood together is a complex operation,

If they are going to last and draw from each other’s strengths.

Using hammers and saws needs time to learn,

The slightest slip when working in wood can cause great pain,

I couldn’t bear to think of the flesh of his hands being torn by nails.

No doubt you’ll say its an occupational hazard for a carpenter

But he seems different somehow, I can’t really explain it.

Maybe I’m getting soft in my old age.

We’ll leave in a few days

When she’s stronger and there’s more colour in her cheeks and she can feed him properly.

I’ll thank the innkeeper of course, but frankly, he’s been acting a bit oddly since the professors left and keeps touching his forehead and calling me sir!

We’ll have to register another time, when it gets a bit easier.

We have to think of a name for him as well. I expect she’s already thought of that, but if she has, she hasn’t let me know.

She’ll probably say the angel told her.