Friday, February 27, 2009

Fred the Shred: When Heart Overcame Head

I wasn't going to revisit the subject of Sir Fred Goodwin's pension, but Devil's Kitchen has written a very powerful counterblast to my rant against him yesterday, in which I suggested that Parliament should step in and grab back his £650,000 a year pension.

The great thing about the blogosphere is that someone, somewhere, will spot a weakness in an argument, and DK has certainly done that in spades and I'm not afraid to admit that he has made me think again. An Englishman's Castle has also weighed in, calling me a "statist thug", How Did We Come to This thinks it is all a diversionary tactic, while Prodicus thinks I need to "suck it up". He quotes Sir Thomas More in A Man for All Seasons"...
"What would you do? Cut a great road through the law to get after the Devil? ... And when the law was down, and the Devil turned round on you - where would you hide, Roper, the laws all being flat? This country is planted thick with laws from coast to coast, Man's laws, not God's, and if you cut them down -- and you're just the man to do it -- do you really think you could stand upright in the winds that would blow then? Yes, I give the Devil benefit of law, for my own safety's sake!" - Sir Thomas More in A Man for All Seasons
I suspect I should have allowed my head to write that blogpost, rather than my heart.


Plato said...

Great quote and judging by how I first felt - I'm just glad that I was nowhere near a keyboard.

What I think is shameless is the use of this ploy by HMG to deflect attention away onto a single individual. Sir Fred certainly and royally effed up RBS, but he was not alone.

Perry Neeham said...

You're a gent Iain.

Oldrightie said...

What I think is shameless is the use of this ploy by HMG to deflect attention away onto a single individual. Sir Fred certainly and royally effed up RBS, but he was not alone.

My thoughts exactly. We will never recover our economy whilst paying such massive sums to individuals for failure. Yet the world of enterprise only mimics that of politics. Something is good and greed is good if you get away with it.

Paul Halsall said...

I'm trying to see if the quote came from St. Thomas More himself or was composed by Robert Bolt. Still the sentiment is right.

Anoneumouse said...

The Daily Mash worth a read

Jonny Mac said...

Prescott on the Today programme suggesting that they should stop paying the pension and let him sue made me choke on the cornflakes. I mean, brilliant - they stop, he sues, he wins, because he has a cast iron case, and so on top of the pension court costs are paid too. Blethering twat.

davidc said...

jonney mac@

and guess who would pick up the tab for costs etc !!!!!

Victor, NW Kent said...

Fred Goodwin is a convenient sacrificial lamb to offer up so as to divert attention from the real culprits.

We should not be distracted from pursuing Brown and his immature policies of governance.

After the 10P debacle - a decision so obviously bad that I was very from alone in pointing out its flaws within a day. It took Brown and Darling the best part of a year and a backbench revolt for them to comprehend.

WV = nongent. I love it.

Unsworth said...


Excellent reaction on your part. I'm impressed - and believe me that takes a lot.

This 'Government' is absolutely desperate to put the blame for everything elsewhere. It's not good enough. Brown has totally buggered the economy, he and his henchpersons are gross incompetents, and he is now in full McCavity mode.

These disgusting people throughly deserve each other. The real pity is that we all will be bearing the costs of their mendacity and stupidity for decades. If the electorate has any sense it will never, ever, vote for a Labour government again. Three times is enough.

Look at what they have done to this country, the barren wasteland of their political and moral destruction. That is the truly shameful aspect.

Hacked Off said...

The whole thing, annoying though it is, is being used as a diversion to detract and distract from the third or is it fourth "bail out" whereby the idiots are pouring yet more money they don't have into the banks black hole, giving the bankers a lifeline they do not deserve and saddling the taxpayer with all the losses.

Your grandchildren will still be paying for this a hundred years hence.

The Penguin

Pogo said...

Spoken like a gentleman Mr Dale.

Devil's Kitchen said...

Good for you, Iain. And believe me, I understand how your heart might rebel...


Weygand said...

It's not as simple as that.

The government had the power to veto the extra £8 million.

According to Robert Peston, Myners claims that the government told RBS it was against special rewards for Goodwin and that the Bank (mis)represented to him that the whole pension pot was part of Goodwin's contractual entitlement - when it now appears this was not the case.

It is quite in keeping with basic legal principle to set aside an agreement when the consent of one of the parties had been obtained by misrepresentation of the other.

Were it to be established that the government had been misled, it would be quite proper to take any legal action (including in parliament) - notwithstanding the opinion of our thespians.

The problem is that if there was misrepresentation by RBS but not by Goodwin, the remedy would be against the bank (which the government mostly owns) and not against Goodwin.

There would, of course, be no justification in any action at all if the government was simply too stupid or negligent to have made proper enquiry.

Richard Edwards said...

The government must be rolling around laughing at thee idiocy of the Conservative party. They truly are the stupid party.

In Parliament on Wednesday Brown and Blair's prints were revealed all over the crime scene of the banking collapse. Even the Labour appointed Lord Turner pointed the finger at them. What to do I suspect wondered a few people. This is an open goal for the opposition. I know, we'll give them a read herring. So Godwin coated in fish bait in the form of the usual leaked letters from HMG to friendly journos. The result? A carnival of moral indignation from the usual intellectual pigmies and the regulation story - the real story of outrageous incompetence - is buried.

Wake up.

Scary Biscuits said...

You're absolutely right that the law shouldn't be torn apart out of anger just to get at Sir Fred.

However, it should have been done legally by ministers. As the letter on Guido's page shows, clearly they have been lying when they say they had nothing to do with it. Even now the legal power exists to cancel not just Sir Fred's but that other $1 billion of bonuses that was last week's scandal (they're still being paid despite Govt spin denying it).

RBS should be put into administration, which is the proper place for insolvent companies. Then all its debts, including pensions and bonuses, not to mention $4 trillion of non-sterling liabilities with the capacity to bankrupt Britaiin, would be legally cancelled.

That is the proper way to draw a line under this sorry affair. Anything else just keeps making it worse, as yesterday's £300 billion additional bailout made clear - and it will surely not be the last.

Ministers are wrong when they claim that the banks are crucial to our economy because they support businesses. This is true only of clearing banks, which form only a small part of banks like RBS's operations. Administration would allow the profitable clearing operations to be seperated from the disastrous merchant banking. As a majority of companies keep positive cash on hand to fund current operations, clearing banking generates cash that can be used to give other companies overdrafts. Thus, money is released to fund small businesses without requiring a penny from the taxpayer.

Unsworth said...

@ Weygand

What that amounts to is a claim by Peston that RBS (who, in particular?) has lied to Myners.

Watch out for the writ-storm. Peston will be covering his arse big time.

Bob Piper said...

Jonny Mac, you're right, but Prescott was simply following the lead given by one David Cameron who said, on 9th February that... "bankers needed to wake up and smell the coffee" as he urged ministers to tear up existing bank executive contracts at semi-nationalised banks to prevent them receiving any bonuses this year. In fact, I blogged about it at the time:

Blethering Twat... was it?

Guthrum said...

Its infuriating I know Iain, but when the State starts interfering with the Law of Contract, we are doomed as a free people.

Good on you for changing your mind so publically

cassandra said...

The pension story is a clear smokescreen to cover some very uncomfortable facts about the prime mentalist and his close involvement in the RBS fiasco, hundreds of billions of taxpayer pounds are at real risk of being p****d up the wall for no benefit, one of the original excuses for the bail out was jobs, tens of thousands are going to be shed, the toxic sludge scam may well break Britain for a couple of generations!
The BBC are leading a concerted deflection/smokescreen effort and the no10 spinners are using their dark powers to muddy the waters and draw attention away form the real scandal and it aint Fred the shreds payoff which Brown&Co must have known about.
The BBC is trying to smear the Tories already for bringing up the facts behind the stupendous series of blunders by the crazy loon at no10.
What did Brown know and when did he know it?
What orders did Brown give and when did he order it?
Did the government excersise due dilligence in checking the details of the bailout?
Simple questions to ask and simple evidence to dig out, I would hope that DD and GO are directing a tsunami of FOI requests at the nulab regime at this very moment!
The truth is out there and its attainable, the obstacle of the BBC has to be overcome but that can be done if the right tricks are used.

Cynic said...

Nice man that you are, I think you are resiling too soon Iain. There are two issues here.

First, Sir Fred has an original pension that is his and it should not be for the state to interfere in that. It would be the illegal appropriation of property. In any case he would win any legal appeal.

The real issue is the apparent top up. It appears that this payment was approved by Myers. There are several issues here:-

1 Last night the Government were spinning that Myers was falsely told that this was an unavoidable contractual entitlement. So the question is who told him this and what checks were made by him and his officials. If they just accepted this at face value without basic due diligence then this was grossly negligent. If it was the officials fault then then should be disciplined and Myers, as responsible Minister, should resign.

2 if the Government line that they were misled is true, then someone somewhere misled them. That person may, depending upon the full facts, have committed a criminal offence. So have the Government reported this to police and asked for a criminal investigation? f not, why not? Millions of pounds of money have potentially been lost.

POolitically this can also all be clearted up very quickly. Let'ssee:-

1 the briefing note that went to Myers before he approved it

2 his approval

3 the minutes of meetings/ emails/ letters in which the alleged falsehood was conveyed to his Department

Unsworth said...

@ Piper

"Prescott was simply following the lead given by one David Cameron"

Oh yeah? So Prescott agrees with Cameron and has now crossed the floor of the House? What else does Prescott agree with?

Blethering Twat...

Wyrdtimes said...

If only others could admit their mistakes so well. well done old bean.

Cynic said...

By the way I also agree with the comments above that this is a diversion tactic.

The PM would not want too much attention paid to a policy that is secretly pumping billions into Scotland to support jobs so close to his own constituency.

Of course, it's all in the public interest, dontcha know.

Jonny Mac said...

Bob P, please don't mistake me for a Tory. If Cameron said that, then it was a twattish thing to say. But Prescott's "let him sue" position is so ill-conceived, that he remains several heads in front of Cameron in the Goodwin Twat Stakes. And the nature of the naked politics of it - let's bully Goodwin to deflect attention from how we ballsed up - is very nasty.

The Editor said...

Why don't we just have a good old bipartisan pop at Fred:

Whatever the government has messed up, this is his problem at the end of the day.

Man in a Shed said...

Also like the quote. What is often forgotten is that the law provides the shelter under which we enjoy freedom.

Whilst I'm sure Fred the Shred's pension isn't an issue that Labour have manufactured, it is both an embarrassment, a distraction and a useful convenience at the same time.

We need to be very careful now, as the law may soon be all the holds back the state as it strikes out at all of us in desperation.

PS If anyone wants to make real trouble they could suggest Lord Mandelmort hands back his pay off from the EU.

cassandra said...

This uber costly nulab fiasco brings up a series of very interesting points about the BBC, their efforts to cover up for Brown and nulabour and the Tory fear of the BBC and their inability to get their message past the BBC brick wall surrounding Brown and nulabour. The BBC are experts in intimidating and diverting any Tory who gets on the BBC,
the Tories seem to lack fire and determination and appear frightened of the BBC interviewers, always defensive and nervous even, its strange isnt it that the Tories have never managed to show up the BBC for the nulabour supporters they are?
The BBC tactics are always the same so why havent the Tories found a way to outflank them?

JoeF said...

One clearly can not go seizing past salaries, bonuses, pensions etc that have been lawfully agreed, even if not deserved, without making a travesty of the law.

On the other hand one can ask all those who have been responsible for the crisis to voluntarily hand back bonuses/ pensions/ etc- of course if those asking did it themselves they would have alot more credibility.

Gordon Brown should hand back his last 10 years salary and his pension rights, to show a good example, as he was clearly in great part responsible for this crisis. Then he can fairly criticize anyone also responsible who does not do the same.

disgusted said...

well done, Iain. These show trials are rather repulsive. Brits still seem to prefer burning down their neighbour's house to building up their own.

I haven't heard any MPs calling for their own pensions to be linked to share prices / national average earnings in the name of "fairness".

Bob Piper said...

Jonny Mac, I didn't mistake you for anything. However, the fact that Prescott has thought through the inevitable consequence of ripping up the contract, rather than just spouting nonsense without thinking, merely goes to show he is a more thoughtful blethering twat than Cameron. Whether that is better or not is a matter of conjecture, of course.

Dick the Prick said...

Good man Iain.

I genuinely am worried about the toxic debts and global unemployment figures.

$3.5 trillion isn't an injection - it's deferred taxation. The talking heads predicting growth at the back end of 2010 remind me of that standard analysis: 'well, they would say that though wouldn't they?'

Nigel said...

Well said Iain.

The real issue, of course, is the rather more serious problem of the dodgy debt. Here are some rather interesting (and worrying) figures from the FT:

But now, at long last, one shard of reality has just emerged to piece this gloom. In recent weeks, bankers at places such as JPMorgan Chase and Wachovia have been quietly sifting data trying to ascertain what has happened to those swathes of troubled CDO of ABS.
The conclusions are stunning. From late 2005 to the middle of 2007, around $450bn of CDO of ABS were issued, of which about one third were created from risky mortgage-backed bonds (known as mezzanine CDO of ABS) and much of the rest from safer tranches (high grade CDO of ABS.)
Out of that pile, around $305bn of the CDOs are now in a formal state of default, with the CDOs underwritten by Merrill Lynch accounting for the biggest pile of defaulted assets, followed by UBS and Citi.
The real shocker, though, is what has happened after those defaults. JPMorgan estimates that $102bn of CDOs has already been liquidated. The average recovery rate for super-senior tranches of debt – or the stuff that was supposed to be so ultra safe that it always carried a triple A tag – has been 32 per cent for the high grade CDOs. With mezzanine CDO’s, though, recovery rates on those AAA assets have been a mere 5 per cent...

Anonymous said...

Sir Fred is blameless in all of this, why pick on the poor bloke?

OK , so he used 32 words to make one gesture.

yellowbelly said...

Sir Fred Goodwin's pension is a distraction to divert attention from Bank Bailout III (or is it IV)?

This is from RBS 2007 Accounts:

"All UK based directors, with the exception of Guy Whittaker, are members of The Royal Bank of Scotland Group Pension Fund ('the RBS Fund') and are contractually entitled to receive all pension benefits in accordance with its terms. The RBS Fund rules allow all members who retire early at the request of their employer to receive a pension based on accrued service with no discount applied for early retirement."


Anyone with an iota of knowledge of how pension schemes work (that obviously excludes Myners, Brown, Prescott and Darling!) will know that to pay a pension for longer than had been anticipated will need a top-up to the fund, to compensate for 3 factors. In simplistic terms:

1) Pension to be paid for 10 years longer than anticipated.

2) 10 years less investment growth.

3) 10 years less contributions.

Obviously the actuarial assessment of the one-off cost of these three factors came to the GBP8million figure touted around.

It was his entitlement by right. If Myners could not figures this out, then he is an oaf! What did he do during his time at N M Rothschild, Gartmore, Bank of New York, Coutts and NatWest?

"Paul Myners was appointed Financial Services Secretary to the Treasury in October 2008.

Prior to this he was chairman of the Guardian Media Group, publisher of The Guardian and The Observer newspapers, and chairman of Land Securities Group. He is a former Chairman of Marks & Spencer and Deputy Chair of PowerGen. He held a number of third sector posts, including Chair of the Trustees of the Tate gallery and Chair of the The Low Pay Commission and the Personal Accounts Delivery Authority, all of which he relinquished on his appointment.

Paul worked as a teacher with the Inner London Education Authority from (1971-1972). From (1972-1975) he worked for The Daily Telegraph as a financial journalist, he then went to work for N M Rothschild & Sons merchant bank. In 1985, he moved to Gartmore, a pension fund manager, becoming its Chair in 1987.

He has held directorships with Bank of New York, IMRO, Bridgepoint, Coutts, Lloyd's Market Board, NatWest, O2 and Orange.

Paul was educated at Truro school and the University of London. He has an Honorary Doctorate in Law from the University of Exeter and is a Visiting Fellow at Nuffield College Oxford."

Jonny Mac said...

Bob P - I like it. "A more thoughtful blethering twat than Cameron". We have the tag line for Prescott's blog at Go Fourth, I think.

Unknown said...

Two things that are refreshing about you:

You let your heart rule from time to time

You are not afraid to apologise

The sooner you get into parliament the better.

Anonymous said...

A proper gent - I didn't really mean it.

Breaker said...

This is truly to your credit Mr Dale. Listening to differing opinions and changing your mind accordingly when you read a better truth.

I'm sure we'd all like to see something like that in government...

Anonymous said...

Fred Goodwin received his knighthood from this government "for services to banking."

As this has now been shown to be a false premise, would it be too much to expect Fred to hand it back?

Or has he no shame at all...

Anonymous said...

SFG will be paying nearly £300k in tax on his pension income.

Sobers said...

I'm all in favour of this new 'no pensions for failure if paid out of taxpayers money' meme. This will decimate our future public sector pensions bill. Think of all the public employees who mess up their jobs. We won't have to pay them a penny when they retire. It'll be great. No pension for most of the current Labour govt, probably none for any politician. If pupils fail exams, no pension for teacher. Social worker fails to stop child abuse, no pension. Doctor makes medical mistake, patient dies, no pension. This is the way forward!

Cynic said...

Perhaps on reflection I was wrong earlier.

So, by the way, can we also seize Alistair and Gordon's salaries and pensions for their mistakes too? And those of most of the senior civil servants in Treasury and FSA?

In principle its exactly the same but in practice its just a bigger hole - much much bigger

I feel a campaign coming on!!

@molesworth_1 said...

One of your best ever posts. Exemplar