THEY say what goes around comes around.
Even in banking. At the height of the sector’s collapse last autumn and the resulting controversy about government bailouts of banks, the argument which prevailed was that systemic financial risk trumped moral hazard.
Yes, it was bad to bail out banks who got into major bad debt trouble through cavalier, greedy risk-taking. But it was cutting off society’s nose to spite banking’s face if we let the irresponsible go to the wall and it took us all down with it.
Things have moved on. Now the sanctity of banking contracts (sic) is trumped by public taxpayer indignation.
Former deputy prime minister John Prescott put put this rather succinctly at the weekend when he claimed that part-nationalised banks such as Royal Bank of Scotland and Lloyds Banking Group had no obligation to honour contracts to pay senior (non-director) banking staff bonuses.
"If we hadn’t baile
d them out to save homeowners and businesses, their contracts would be worth nothing as they’d be out of work," Prescott said.
The opposing argument is that if certain banking staff have performed well and profitably in these unprecedented times should they not still be entitled to bonuses?
But you sense a public groundswell of feeling that this argument, particularly in the current desperately worrying jobs situation for so many people in society, is specious.
We are all not just members of an individual department at our place of work. We are members of an overall organisation.
If that organisation is doing badly - and billions of pounds worth of losses is doing badly, presumably - surely we should not be allowed to declare UDI from the wider troubles and take the extra cash.
But that is what some of our leading banks, also including Barclays, are saying. We must pay the bonuses to stop people defecting.
If that was the case, the public may justifiably believe it would be a case of rats deserting a sinking ship.
Some sort of fudge - with bonuses, but sharply-reduced ones, and some of it in shares not cash - looks to be where this highly contentious issue is going.
In the hostile audience surrounding banks at the moment this compromise arrangement, I sense, is likely to please nobody.
