Monday, February 18, 2008

A rock and a hard place

Old Labour may be cheering this morning that nationalisation is back but I wonder whether Tony Blair is laughing or cringing at the Northern Rock news. The most irritating aspect about this crisis is that in the old days it would never have happened. Four of the big banks approached the Bank of England in September to take over the Rock. The deal could not be done because of EU regulations about transparency. Compare that to what happened to Citibank in the US: it was badly shaken by subprime losses, it was bailed out by Saudi and Chinese investors without any prior agreement from shareholders, it made management changes and it got on with its business. Meanwhile over here, we've had the run on the bank widely televised, the Governor of the Bank of England almost having to resign over the issue and everybody calling for Darling's head. Prudent Gordon is being lampooned, after all it was his move to split the banking supervision between the Bank and the FSA in order to reduce risk which has proved to be a disaster. Gordon's golden rules have gone up in smoke as this pushes government debt levels above 40% of GDP, not to mention the fact that ministers will now have direct responsibility for home repossessions. The most galling thimg about this news, however, is that the consensus view is that there may be 3000 job losses in Newcastle whilst the man whom Gordon and Darling have brought in to run it, Ron Sandler, will get a salary of £90,000 per month. How do they justify that?

6 Comments:

Blogger kinglear said...

Easy - they will get a job at the same level whenb they finally get booted out. But mostly, remember that £90k per month is a lot less than the accountants and lawyers would get if called in for an Administration. Cf Courts, who need about £5m to get through, and have already had to cough up more than £35m to the administrators.
And here I was thinking the Banks had learnt their lessons from 1975, 1982, 1992 etc etc....

9:04 am  
Anonymous Anonymous said...

Public exposure per taxpayer = £3k

Salary per month for Sandler = £90k

Wiping the smile off Richard 'Beardie' Branson smug,supercilious face = Absolutely Priceless...

There are some things private money can't do - for everything else, there's the Treasury...

11:18 am  
Blogger Mopsa said...

£90k per month is bonkers - what can you DO with all that dosh? But it doesn't come close to the man at the top of Barclays - he gets £290k every week!

5:05 pm  
Blogger Winchester whisperer said...

Hi Mopsa - yes but he runs a £30bn international company and is employed by shareholders, not tax payers. Sandler's a temp...

5:18 pm  
Blogger Welshcakes Limoncello said...

I don't understand high finance, as you know, WW, but your last sentence emphasises who will really suffer from all this. It cannot be justified, as you indicate. Auguri dalla Sicilia x.

12:36 am  
Blogger Ellee Seymour said...

They should employ you as a consultant without a doubt.

5:49 pm  

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