Defending the indefensible...

Posted by Morgan on 27th Feb 2009
The blog has been a bit quiet of late, Mark and I have both been on holiday and we have actually done some work as well. But we are back...

Let's start with the topical Sir Fred Goodwin, ex-boss of RBS. Now its hard to feel sorry for a banker. This applies to pretty much any banker but especially one who steered his ship into the rocks with what must be the worst M&A deal in history. The acquisition of ABN Amro for £49bn, that closed in October 2007, just as the full extent of the credit crisis was starting to become apparent.

Sir Fred was paid handsomely, took an age to accept responsibility for RBS' plight and finally fell on his sword in October 2008. It transpires he left with a £16m pension pot and an early retirement package that is worth £650k a year. Unquestionable this is payment for failure which is certainly "unfortunate and unacceptable" to quote Lord Myners the City minister, albeit I take his words out of context. What he actually said is that it is "unfortunate and unacceptable" that Sir Fred will not give it back. 

So how can I feel sorry for Sir Fred. Well he negotiated his severance package with RBS and the government, got it agreed, packed his bags and left. Apparently Lord Myners was personally involved. So on the day that the government announce a £325bn insurance scheme, which is quite frankly a tax payer funded give away, as a final effort to save RBS they choose to leak details of Sir Freds severance deal to make him public enemy number one! Deflecting attention away from the other Scots on this short list Messes Brown and Darling.

The government claimed it was unaware of Sir Fred's leaving present, although it was approved by Lord Miners? They now claim they misunderstood the terms? Quite frankly neither ignorance or incompetence are acceptable excuses. The Treasury obviously appreciate that they have mismanaged the management of the banking sector to the extent that the best option left to them is to try and make Sir Fred to fall guy.

If you had a £650k a year pension that you had earned legally and were asked to give it back I suspect you would do as Sir Fred did - think abut it for all of thirty seconds and say "No." Especially when the guy asking the question agreed to your package and is now trying to make you the worlds most hated figure.

It has been obvious for some time that the government's strategy is to politicise the credit crisis in order to try and save the next election from the jaws of defeat. When any individual becomes caught in the flames of the political spin machine, flames that are fanned rigorously be the press, they deserve some sympathy. Even if they do have a £650k a year pension to fall back on.

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