When the dust cleared after the extraordinary 2008 financial crisis (chunks of debris are still falling among us), there was one thing that all of us could agree upon. It was those bankers what done it. And retribution, mostly reputational, duly fell on the bankers. But in the long-term it was clear that a broader conclusion could be drawn.
Banking practice and its inadequate supervision was obviously the problem. But its relatively arcane and complex underpinnings were completely beyond the ken of most people – regulators in particular.
Too often, people who are investing are looking for people like them to invest in
I recall one banking technician, an insider, explaining to me how enormously complicated documentation would be passed up the line knowing that no one would read beyond the first page or two. If only, he said, people would insist on the whole procedure and its consequences being explained on one side of A4 paper, all would become obvious and very different decisions would be taken.
That was one cause of the financial disaster. But another was a broader problem of culture. The flamboyant, in-your-face bullying of characters like Fred ‘The Shred’ Goodwin, the chap in charge of the Royal Bank of Scotland through the whole disastrous and depressing saga, was its most obvious feature.
Report after report followed, as well as memoirs published by some of the main players, etc. But here we are 20 years or so later and the same unlearned lessons are plain.
One of the cultural problems identified in retrospect was that the way the banking system worked and the decisions made were the construct of, well, largely a bunch of bankers. The participants in a restricted strata of society will always, quite naturally, come up with what they and their chums agree with.
Women in the senior ranks of banking might have operated a more questioning approach
And bankers were mostly, and had been for generations, men. A solid phalanx of women in the senior ranks of the banking world might well have operated a useful, hold on a minute, are we sure we want to do this, hold your horses, slow down, leavening and questioning approach.
It is that cultural understanding that still produces small efforts at redressing the balance. In early December, chancellor Rachel Reeves launched a scheme to back female-led businesses. And almost two decades after the problem was identified she had to return to it.
Funding inequality
‘Men do not have the monopoly on good ideas,’ she said. ‘And yet they raise the money for their businesses because, sadly too often, people that are investing are looking for people like them to invest in.’
Have the lessons from 2008 been learned? Well, in early December it became known, via a report from the respected Conference Board in the US, that when opportunistic activist campaigns were launched against target companies, a disproportionate number were aimed at corporates headed up by women.
It is hard not to conclude that the men are closing ranks again
Women represent a very small proportion of CEOs yet, according to the report, some 15% of activist campaigns targeted companies with women in command. The percentage of female chief executives targeted was twice as high as the rate of representation of female CEOs in the top 3,000. It is hard not to conclude that the men are closing ranks again.
Meanwhile, in the same week, US regulators announced that one of the main safeguards, the leveraged lending guidance put in place after the banking crash, is now to be junked. Too restrictive, said the bankers – and they were backed by the politicians. The circularity of history and the determination to make the same mistakes again by the closed ranks of the banking world will have us done for once more.
