That Sir Fred Goodwin’s £693,000 pension – which would cost £30,000,000 to buy – has become a symbol of all that was wrong banking system is no real surprise. It is a ridiculously large award for failure.
But ministers demands that he should give some up only present the government as impotent, as Goodwin makes clear he’s hanging on the loot. Unfortunately, if the law is on Goodwin’s side, he really doesn’t have anything to lose by riding out the storm.
Rather than invite Goodwin to cock a snook at the rest of us, government should instead be developing long-term solutions to the problem of reckless incentive schemes in key private sector businesses.
This crisis has shown that large important private sector organisations are capable of developing incredibly irresponsible incentive schemes that only benefit a few select individuals. The shareholders, who actually owned the banks, were somehow persuaded to sign off schemes that were not in their own, let alone the wider, interest.
The banks developed incentive schemes that offered incredible rewards to those who took incredible risks, whether those risks paid off or not. The shareholders were too many and too diverse to provide effective oversight, which means a new and possibly complex form of regulation will be required in the future; that’s what ministers should be concentrating on.