14
2008
Dear Banks: A message from one of your new bosses
To the managers of the banks
Every time I have suggested things you might do differently, I have been told that this is impossible as you are under an obligation to pursue the interests of your shareholders.
Now that I am - unexpectedly - one of your shareholders, I expect you’d like to know what I would like you to do. Here are seven new instructions to be getting on with.
1. Short-term profits are not important: what is important is long-term value. I would like you to stop chasing short term arbitrage opportunities and overnight trading and focus on identifying and investing in the best-run, most productive and valuable enterprises. There will be no trading in derivatives or other purely financial products.
2. Cut executive pay immediately. From now on, nobody in the bank will get paid more than four times the salary of the lowest-paid employee. If you want to award yourself a pay rise, you’ll have to increase the salaries at the bottom.
3. All our branches and subsidiaries overseas will pay local taxes, in full. There will be no clever arrangements to transfer profits to tax havens to avoid tax.
4. No more junk mail trying to persuade people to take out new credit.
5. It is no longer our objective to inflate house prices. An increase in house prices is not an increase in net wealth: it is a transfer from those who do not own houses to those that do. We will try to dampen the housing market, not reinvigorate it.
6. Every bank that is “too big to fail” will be split up into smaller banks. We are going to reverse the cycle of mergers and takeovers that has created these monolithic institutions that have held us all to ransom.
7. There will be no lending for businesses or individuals involved in industries that are harmful to our society and planet. That means no lending to any of the following: the arms trade, advertising and marketing, tobacco, extracting or burning fossil fuels, or the motor industry. Instead, please invest more in clean technologies, technologies appropriate for developing countries, non-profit organisations and community groups.
I know that you have many new shareholders, and it will take time for you to get to know us all. My views won’t necessarily be shared by all your new bosses, but you can be pretty sure that lots of your new bosses think more along these lines than the old lot.
I was a bit hesitant about becoming a bank-owner, but now that it has happened, I think I’m going to enjoy it.
Work hard - but not too hard.
Yours,
Owen
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Why are you against lending for the motor industry but not aviation?
That’s a good question. I’m against aviation too.
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[...] a new banking shareholder Owen Barder lays it on the line with a few excellent instructions for the banks’ managers. All the instructions are perfectly sane, reasonable and humane. [...]
Hi Owen,
I came here from chickyog.
Lovely list, almost perfect, but I think it needs one minor amendment:
5. It is no longer our objective to inflate house prices. An increase in house prices is not an increase in net wealth: it is a transfer from those who do not own houses to those whose elderly and infirm relatives do. We will try to dampen the housing market, not reinvigorate it.
[...] wonderful open letter from a fellow stockholder to our new investment’s board of [...]
“That means no lending to any of the following: the arms trade, advertising and marketing, tobacco, extracting or burning fossil fuels, or the motor industry.”
Planning on walking back from Addis are you?
Might it not be sensible to wait until we’ve actually developed and deployed alternative technologies? No lending for fossil fuels, for example, would mean no letters of credit for oil shipments. At which point, or rather some 90 days later as the supplies run out, we all die.
A slight over reaction to bankers having buggered about, don’t you think?
As per your number 6 point, its worth reading this article for some counterpoints:
http://online.wsj.com/article/SB122360636585322023.html?mod=special_page_campaign2008_mostpop.
[...] Now that the government has in effect nationalised the banks, Owen Barder owns a bit of them. As a new boss, he’d like to tell the managers what to do. [...]
Oh and o/d charges to be reduced to say £1.50 and all the £30+ charges to be refunded along with a hand written note from the board of directors saying sorry and that they have acted like complete cunts an will try to do better in future.
O
A small point - you might try reforming the civil service before you hit the banks. If the top people at DFID could only earn 4 times the salary of the lowest grade salary, the top salary would be just shy of £70,000…
H
Helen
Thanks. To be fair, I have tried to reform DFID a little too.
It was, I think, Plato who first suggested a 4:1 rule. I’ve always found it a very compelling idea.
Owen
[...] his blog Owen Abroad Owen Barder has written this open letter to the banks Every time I have suggested things you might [...]