Iain Martin has done a book about the Royal Bank of Scotland, entitled Making it Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy after their corporate slogan from the boom era. I’m gradually reading the books that fell out of the banksplosion, and I would rate this one not as good as Anglo Republic: Inside the bank that broke Ireland on Anglo Irish Bank, which I reviewed here.
The main criticism I have is that it is shamelessly partisan for Gang B versus Gang A, and the facts of the story don’t fit into a story about Gang B and Gang A, but rather about the wider meta-gang, the business, media, bureaucratic, and political elite. Trying to force it, Martin has to torture some of his facts and incorporate chunks of nonsense he was given by people who have no place in a serious book. To his credit, he’s aware of this, but the concessions he makes tend to highlight the problem.
Making It Happen is weakened by being a partisan book, but it is stronger for being a Scottish book. Martin argues strongly for the Scottishness of RBS and of its key executives, the role of Scottish politics and the Scottish elite in its rise and fall, and the role of the bank in Scottish life. Christopher Clark insists that the Balkan crisis of 1914 happened in the Balkans for Balkan reasons; Martin that the Royal Bank of Scotland’s Scottish managers crashed the bank in Scotland for Scottish reasons.
Scottish officials and politicians around the Scottish Development Agency, the Scottish Office, and the devolved government set a policy goal of building up a Scottish financial services centre as a post-industrial source of growth and a way of recycling oil money, and one of them, Sir George Mathewson, moved from the SDA to the Royal Bank to take charge himself as CEO. He in turn appointed most of the other key personalities, whom he recruited from the Scottish elite that had tapped him. The caricature example is that Johnny Cameron, the head of RBS investment banking, was the brother of the Cameron of Lochiel. Mathewson was an engineer, a product of Scotland’s technology culture, originally promoted by its Labour Party political machine but later close to the SNP; Cameron, a scion of its premodern aristocracy.
This is useful. But although Martin identifies the build-up of the financial services sector as a political choice in Scotland, he bizarrely doesn’t for the UK as a whole. Apparently, change in the UK economy’s structure in the 1980s was caused by “financialisation”, which came from a clear sky, and nobody is responsible. Financialisation, in Scotland, was the work of individuals with faces and names; in the UK, a diffuse miasmatic phenomenon without author.
This is where the partisanship kicks in. There was a government minister responsible for the economic development of Scotland in the 1980s – Lord Younger, who was also chairman of the Royal Bank, and who appointed Mathewson as CEO. Yet he gets an incredibly easy ride, even when he is flagrantly sacking off his responsibilities at RBS in favour of politics. Supposedly, he said on his deathbed that the bank was taking too many risks, but the only witnesses to this touching scene are people with every reason to defend the reputation of Scottish Conservatism. Younger is described as “Scotland’s man in Margaret Thatcher’s government”; I know for a fact that there are plenty of Scots who thought he was a heartless proconsul imposed on them to destroy their way of life. Extreme, you might say, but suffice it to say that his record is far from uncontroversial. The problem is simple: he’s a mate.
In fact, the partisanship comes out mostly in the judgment of individuals. We get Younger as saint; we also get Sir Steve Robson as saint. Robson is the Treasury civil servant who designed railway privatisation and championed PFI, before switching to a sinecure job promoting more PFI with a thing called “Partnerships UK” funded by the PFI industry. He was also a director of RBS – which did quite a bit of PFI business – right up to the finish. This makes him quite possibly the one man who has cost British taxpayers more money than anybody else bar Gavrilo Princip. But he is wheeled out as a sage, again and again. Apparently he had doubts about RBS’s strategy – so much so that he nearly said something!
The Bank of England governor Sir Mervyn King, and the Bank as institution, are touted heavily. But we now know that King was hugely uninterested in bank regulation and actively hostile to the career prospects of Bank officials who specialised in it (one, two, three, four).
Staff found presenting financial stability issues in front of the new governor frightening because of his apparent disdain for their work. One current official remembers a talk on the Spanish banking system. “How is that relevant?” Sir Mervyn asked. Staff learned the only answer was to find a reason why such matters should concern the monthly decision on interest rates. Former colleagues say that Sir Mervyn found it difficult intellectually to grapple with the influence the BoE had when things were not written down with formal targets and powers, so he preferred to assume markets were likely to be efficient and crises would not occur.
“The process within the Bank was one of second-guessing what your superiors and specifically Mervyn King would like you to think about a certain subject before offering your opinion on it. Agreeing with the Governor was the route to advancement. Some people did not like it and left. It’s all a bit pointless if you are just going to reflect back what somebody already thinks. There were a lot of people at the Bank being paid vast amounts of money to hold a mirror up to Mervyn.”
And of course the Bank was so worried it nearly said something.
The partisan element here is that the Tory case against Gordon Brown is basically that he set up the so-called tripartite regulatory system, with responsibility divided among the FSA, the Bank, and the Treasury. It is held that this was a mistake and the Bank would have done a better job. This only makes sense if the Bank was in fact clamouring to do something about the banks. Memory has to give way, for pride cannot, and so we get King as saint. After all, he played a major role in pushing the coalition in the spring of 2010.
Martin is unintentionally eloquent on how thin the Tory case to have predicted anything going wrong is. The only evidence he can find that anyone in Gang A, or was it B, thought there was a problem is an intervention in the Commons from Peter Lilley in about 1998, worrying that the regulators might “take their eye off the ball” while the FSA staffed up. It was hardly still staffing up in 2007.
There’s more; Martin quotes Gordon Brown’s remark about no more boom and bust on every other page, but he doesn’t manage to mention that Sir Mervyn thought we were living through the NICE Decade of non-inflationary continuous expansion – i.e. precisely the same thing but in econospeak – even once in the whole book. He finds it necessary to tell us that an RBS exec once did a consulting assignment at the Rosyth naval dockyard in the mid-80s, “near Brown’s constitutency”. The point is to imply that Brown agreed to the Queen Elizabeth-class ships because the yard was in his constituency, a charge the Tories kept making even though the yard isn’t. Martin is smart enough not to say that it is, but still can’t keep himself from going on about it. Like so many Tories, he seems to have been startled by Gordon Brown as a baby.
He has a personal down on Shriti Vadera, a Tory tic which originates in her being right about rail privatisation. He calls an Australian RBS banker an “Italian immigrant” because, as far as I can make out, his name ends with an o. But why care? He quotes Internet troll Fraser Nelson’s batshit innumerate notion that the UK’s debt to GDP ratio is 400%, very likely because Nelson is his boss at the Spectator.
There is a conclusions section in which he addresses some of this stuff. He recognises that the crisis was global, and therefore that Gordon Brown had remarkably little influence over Washington Mutual’s or IKB Deutsche Industriekreditbank’s lending standards. He accepts that the UK made a political choice for financialisation in the 80s and that somebody somewhere might be responsible, although the sainted name still cannot be pronounced. So, suddenly the government in charge at the time was sort of responsible. We’re not going to agree about economics in a million years, so I’ll just note that he (or possibly Fraser Nelson) has weird hard-money ideas.
This could have been a good book. It could even have been a great one and it probably ought to have been, had it only had the clarity and the sheer will to trash Gang A, Gang B, Gang C, and anyone else in the alphabet that Anglo Republic had in spades. The problem can be located precisely, in the list of acknowledgments. It’s long..and My God!…it’s full of dicks!
We have the wretched Fraser Nelson. We have Scottish Tory Bruce Anderson, who I will always remember for his amazing ability to get at least one racial slur into each of his Indy columns. We get Tory ambassador to the 21st century, Tim Montgomerie. We get Con Coughlin, MI6’s man in the Telegraph and the bloke who got CURVEBALL’s rubbish about 45 minute WMDs into the world’s press. It’s a horrible line-up of hacks, bullshitters, and propagandists, and the smell off them gets all over the book.