This morning we have the third instalment from the Treasury Select Committee following its inquiry into the banking crisis, Banking Crisis: reforming corporate governance and pay in the City. There is a huge, inescapable, irony about MPs publishing a report on remuneration in the City at a time when many of them have been exposed as grasping fiddlers themselves. It has meant that so far the report has been given very low key coverage, except for its condemnation of City minister Lord Myners for his "naivete" over his handling of Sir Fred Goodwin's pension arrangements when he left RBS.
Having read the sections of the report dealing with Myners' role in approving the terms of Goodwin's departure, I still believe that it is harsh to heap some much of the blame for the outrageous deal onto a minister. We all need to cast our minds back to the nervous, panicky days of last October when the world's banking system looked to be hurtling out of control into total collapse. The stakes were high and ministers were meeting virtually round the clock to work out what could be done to head off the then impending disaster. Should they have been looking harder at the package that RBS remuneration committee cooked up? I didn't think so before and I am still not convinced now. Myners had bigger fish to fry that weekend.
Much of the rest of what this report says is sound common sense as it returns to the theme of having massive rewards that are out of line with the risks and which seem to have no downside. The trouble is that this is just not going to be taken very seriously in the current climate where the media focus is all on MPs expenses and where the hole they have dug for themselves seems to be getting deeper every day. It is a crisis out of control.
However, when the dust has settled, some of what the Treasury Select Committee is recommending may suddenly be viewed as having s fresh moral authority. That might be hard to contemplate in the current climate: just how could MPs find any moral authority to lecture anyone else on excessive remuneration? A fair question.
There is alot in the report's 45 recommendations that is about transparency and that is where MPs might be able to achieve some progress in their desire to reform remuneration in the City. MPs are suffering mainly because transparency has been forced on them. Now it is here it will never go away but, they may ask themselves, why should we be the only people exposed to such harsh scrutiny? Gradually, they may be able to turn the tables on other sections of society whose remuneration policies have also caused public disquiet.
As to the Treasury Select Committee's series of reports on the banking crisis, we appear to be due at least two more: one on regulation which could be the most controversial and one on the international dimension. There is also the possibility of a couple of more focussed reports on topics such as the role of hedge funds and the future of the mortgage market, although they might be wrapped up in the next two reports.
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