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AN ACCOUNTANT, BUT NO BANKER
on 2 October 2013
Iain Martin's account and analysis of the rise and fall of The Royal Bank of Scotland, and included in the hubris, Fred (The Shred) Goodwin, "Making It Happen", leaves no doubt that the underlying all-pervasive problem was allowing and encouraging an accountant, the said Fred Goodwin to be in executive control of a trade viz banking that as a professional accountant he had little or no grounding, experience or aptitude in.
Whist a good finance man and also a first class project manager as he exhibited with the integration of The NatWest Group into RBS, he alas was woefully inadequate to be a leading banker in charge of a large banking group, and he did not take the final few rungs up the ladder to move from 'dotting i's and crossing t's' to become a fully fledged canny Scottish Banker. He was far more at home burying himself in the minutiae of relatively trivial nit-picking such as office tidiness, colour of company cars, office design etc than the more vital banking fundamentals such as prudent lending policies, proper matched funding of its liabilities, and control of the investment banking, and other activities. RBS borrowed far too much, and lent the money very unwisely, and blundered headlong into the highly 'toxic' Collateralized Debt Obligation casino arena.
The author does, however, have a degree of sympathy for Fred Goodwin and asks 'why should he have all the blames, as a lightening rod for everybody else?'. There were plenty of opportunities to stop him, and yet hardly anyone at RBS really tried. Why? Money had quite a lot to do with it, with many staff claiming to be too scared of him to give him bad news or stand up to him, where in reality their reluctance to say anything related to the fact that they were trousering millions of pounds in salary, bonuses and share incentives.
This is an excellent, well written, informative and importantly a very readable book that manages admirably to give good perspective and balance to the circumstances leading up to the banks's insolvency and bailout by the British taxpayer. Yet again the weaknesses and gaping flaws in the Regulatory system and it's so-called 'responsible executives', are brought to the fore, with being named and shamed, high up on the list being the then Governor of the Bank of England, Mervyn King.
Presumably because of legal restrictions, scant mention is made of Mr Goodwin's affair with a high ranking RBS female executive, which occurred over the period when RBS was coming under severe pressure and needed firm, constant and concentrated management from it's CEO, and may well have been an unwarranted and catastrophic diversion at that time. The fact that a simple 'google' will readily name the woman involved and lead to a long video featuring her, illustrates the uselessness of the so-called super injunctions that the affluent resort to in the belief that their adulterous liaisons will be kept under wraps or should I say duvets!