Financial crisis: From chaos to complacency

Image by Downing Street via Flickr

The Guardian, Monday 29 June 2009

Last October, Gordon Brown was furious with bankers. "I'm angry at irresponsible behaviour," he told GMTV, as he unveiled a £500bn plan to rescue a banking system near collapse. "Where there is excessive and irresponsible risk-taking, that has got to be punished. The day of big bonuses is over."

Last week, the angry man of politics nodded through a huge bonus package for the boss of one of the worst-hit British banks. RBS is 70% owned by the government, which makes its chief executive Stephen Hester a civil servant in all but name - yet if he plays his cards right he will pocket nearly £10m. So much for Mr Brown's righteous anger. Just a few months ago, the prime minister flew to Washington and called on Congress to "outlaw shadow banking systems and offshore tax havens". Today, the Treasury will publish a new voluntary code of conduct for banks, to dissuade them from constructing intricate tax-avoidance schemes. Again, Mr Brown's fine words translate into too-little action. This is not the general anti-avoidance principle tax campaigners have been demanding. Banks that duck out of the new gentlemen's agreement will face no sanction more severe than a bit of closer attention from Her Majesty's tax inspectors. As a government tax source told this paper a few months ago, "There are less than 100 inspectors actually tackling avoidance, against thousands of professionals advising companies on how to do it." Barclays - which has a huge structured-capital markets arm devoted to helping customers with tax - or any other bank may well decide that these are odds worth taking.

Financial crisis: From chaos to complacency | Editorial | Comment is free | The Guardian

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