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.