It’s always pleasing when real-life events and experiences confirm one’s prejudices, but it’s probably more salutary when they don’t.
As you may have noticed, I’ve been writing some fairly bad-tempered stuff about the credit crunch, reserving some of my fullest-flavoured ire for those greedy, self-deluding building society management teams who pushed through inappropriate and ill-considered demutualisations in discreditable and doomed attempts to line their own pockets and keep up with their peer group in the proprietary companies.
Except that they didn’t. Or at least, some of them didn’t, as I was reminded by a throwaway comment in one of the weekend’s papers. This briefly made the point that in the case of Bradford & Bingley, at least, the management team, led at the time by Christopher Rodrigues, didn’t want to demutualise at all and in fact argued that the society and its members would be better off if it maintained its mutual status. The society was then stalked by greedy carpetbaggers who supported the vote for demutualisation so that they, and the other members, could enjoy a windfall demutualisation bonus.
As it happened, for reasons I can’t begin to explain, the bonus in B&B’s case turned out to be a paltry £600 per member, which is a pretty pathetic amount to receive in return for a vote which rapidly led to the demise of the business.
But that’s another story. It’s true that in the end, under pressure from the carpetbaggers, Mr Rodrigues and his colleagues became gradually more enthusiastic about life in a proprietary company. But from my point of view, my version of history needs to take on board the fact that while some management teams deliberately achieved demutualisation, others had it thrust upon them: and in those cases it was customers, not managers, whose greed and short-termism first triggered their institutions’ destruction.
And much as I don’t particularly want to acknowledge it, this truth is part of a bigger truth, that stupid and greedy consumers are as much to blame for today’s banking crisis as stupid and greedy intermediaries or bankers. No-one likes taking responsibility for anything these days, and everyone will try to claim that every bad thing that happens is someone else’s fault. No doubt some of the poor and deluded people signing their names to false applications for mortgages in trailer parks all over America really didn’t have the faintest idea what they were doing and were effectively conned by crooked intermediaries, but a very large number knew perfectly well they were playing a part in a fraud and went ahead and signed anyway.
As I say, I don’t particularly like this version of events: it doesn’t play well with the consumerist in me. But when we think of those, from the first carpetbaggers to the trailer-park fraudsters, who’ve played a part in bringing the western financial system to the edge of catastrophe, we may decide we have some problems after all with the idea of the “victimless crime.”