The press here in the UK is reporting that bank corporate governance actors are provoking a backlash and criticism from MPs and academics alike following complaints from one bank chairman relating to outsized conduct related fines levied upon banks. Indeed, the fines are staggering. In effect, such fines and banker bashing was generating a societal cost by forcing banks to sell businesses and downsizing, thus curtailing much needed capital for a weak economy. A lot is at stake here... the FT on March 6th also reports that Barclay's chairman John McFarlane feels strongly that the impact of excessive fines to society is great severely dampening profits and delimiting lending. Elsewhere, the article reports on comments of academics like Roger McCormick who question if the fines are really that extravagant compared to perceived (high) levels of banker's compensation.
I would add to that the cost of bailouts upon the UK tax payer are also a relevant metric in all of this debate. However, in the final analysis, my heart and mind falls in behind the governance actors like McFarlane. At some point, we need banks to be actively taking part in supporting a revived and growing economy, especially in Europe which is so dependent upon banking unlike the more broadly diversified US markets. Fine or even jail wrongdoers as you may, but let's also get on with the business of lending and arranging capital for a needy European economy, I say.
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