Since Vince Cable MP spoke at BRLSI a few years ago he has given up his dancing shoes and taken up high office, and with it a habit of taking frequent pot-shots at bankers. It was brave, therefore, for someone from the British Bankers Association to stick their head above the parapet and come and talk to BRLSI’s Economics Group on Changes in Banking.
Lesley McCleod was the courageous lady in question, and very good she was too. Before joining the BBA as Director of Communications she was no stranger to the corridors of power, working under Angela Knight at the Treasury at the time of Kenneth Clark, then experiencing a bit of a change (to say the least) by going on to work for John Prescott. She evidently learnt a thing or two about plain speaking  from ‘Prezza’, because any fears that her talk would consist of PR platitudes were soon swept aside as she gave a frank account of her time in banking and a robust defence of the industry, even extending to those notorious bankers’ bonuses.
When Lesley started at the BBA she thought the main reputational issues would be current account charges, but this was not to be.  On a cruise on the Thames her mobile rang and a voice asked “What’s the matter with Northern Rock?”   It was an opportune moment to ask, as she was flanked on one side by the  Permanent Secretary to the Treasury and on the other by the Governor of the Bank of  England. One suspects there was some squirming in some very expensive shoes at the time!  The subsequent problems of securitisation of  the American mortgage market, syndicated debt and Lehman Bros has given everyone sleepless nights.
 
Pulling no punches,  Lesley said that the big problem with regulating the financial markets is that very few people understand the markets enough to regulate them. The Financial Services Authority, we were told, is staffed  by youngsters who the Traders can run rings round, and can’t retain its people. The Bank of England, meanwhile, doesn’t have people with the right skills. And, of course, banking is an international industry, and countries (or even European Unions) can’t act alone in trying to regulate it – one (rather major) problem with the Basel Agreement for the Regulation of Banks is that the Americans haven’t signed up.
Ms McLeod wasn’t afraid to deliver some home truths, either. The UK is reliant on its financial sector because of its lack of mining, manufacturing, & agriculture, and the financial sector is still not in the rudest of health – in fact of the eight banks in the world with ‘AAA’ credit ratings from Standard and Poors, four are Australian, which speaks volumes about the Northern Hemisphere. Recovery depends on keeping the best people,  and that, like it or not, means paying them bonuses. Vince Cable probably doesn’t like it, but perhaps we just have to lump it.
 
Bob Draper