... and before anyone says, "Ooh; here's another one supporting "his boss" so wouldn't you expect him to say that anyway!" ... here is the news! I am, and always have been independent of thought and action, which might have done me no favours on occasion, so just to be clear the thoughts that follow are mine - and anyway you don't know what I'm going to write yet!!
I was interested to see comments in the press this last week, and the reaction to them, by Douglas Flint the Chairman of HSBC - and the disclaimer for those that don't know me, I am a retired full time employee of that Bank and, having spent a reasonable amount of time away from the organisation, am currently a non-executive and independent director of one of its principal subsidiaries.
Douglas is a thoughtful man, and something has clearly got to him, given his comments on the impact that regulation was having on the ability of the Bank and its employees to go about their daily duties including lending money for business and still produce decent returns for shareholders, and pay substantial taxes to the Government. (Actually the very last bit was my addition). The general reaction from the media was predictable I suppose; stories written by people who have largely never had to actually run a business, and who have taken the view that bankers generally are criminals who need to be jailed for their crimes, and that regulation has been necessary to prevent bad behaviour.
Let me be equally clear in my explanation. I have no argument against the need for regulation - as long as it is appropriate. In earlier times people would build houses that were sub-standard, and they fell down. Regulation was necessary to prevent re-occurrences. In many other businesses, including the financial sector, similar problems occur. Medical practice and inappropriately researched drugs, accounting standards, journalistic behaviour, are always under review and need to change their practices.
The Financial Services industry is not immune. In the days when the local bank manager was a pillar of society, apparently, business was done on the basis of good sound principles without the need for too many rules, although I wouldn't mind betting even then there were a few who abused their position. And as they did, and morals changed - as they have done - those abuses were being brought in the open and so principles were swapped for rules. And once you have rules, human nature starts to consider how to use them to gain an advantage. This happens everywhere, not just in banking.
And when you start to have a situation when your shareholders are demanding higher and higher returns, and your regulators have not got their eye on the ball, and Governments are encouraging the industry to do more and more to promote financial centres - praising them even; remember Gordon Brown's words at a Mansion House Speech "What you, as the City of London, have achieved for financial services we, as a government, now aspire to achieve for the whole economy" .. and you start paying performance bonuses to front line staff ... and the list goes on, something is going to snap!!
It is not actually all that amusing.
It is all very well the media trying to say that the Banks need to be brought to heel, and should actually implement the regulatory changes even more quickly than they are. The problem though - and as I have said before in these columns - is that very often new regulations are introduced to try and paper over cracks in the wall. And what happens if you paper over a crack without cleaning out and repairing the wall itself? It cracks again - maybe somewhere else. In addition, and too often new regulations lead to unintended consequences.
I recall a meeting with Senator Paul Sarbanes some years ago when he produced the original two and half pages of his original draft rules - that became Sarbanes-Oxley. One of the clauses, he said, had now been expanded to cover 300 pages of rules. This was not what he had intended.
Look at the Basel rules for banks. They are introduced globally - apparently - but then not every country enforces them, or requires its banks to do so. I know from experience that HSBC - and it does not always get everything right - does its best to follow all rules and regulations, globally - on the basis that its standards must never be lower than the most stringent in operation. This is done all around the Group even if local standards do not require such strict adherence, and it is carried out by staff whose cultures do not necessarily fully understand why the Bank is being so strict. And no, I am not so naive as to believe that the bank in every single jurisdiction in which it operates gets it right - and as the recent slew of cases in America suggests, neither does anyone else.
I spoke a few years ago at a Regulators Conference in Asia. I believe it was the first time they had a banker making a presentation to them. They were happy to consider imposing regulations on their "charges" but they were doing so in an environment where they did not always think about the consequences of their actions because they never had a conversation with the people they were impacting. In fear perhaps of being persuaded to take a less tough line? I think not.
The concerns being expressed not just by Douglas Flint but others too are not a "plea for leniency". I see them as a legitimately aired concern on behalf of people who are under a huge amount of pressure. People on whom small businesses depend, but who are less likely to lend money for fear of falling foul of being branded as criminals for making a mistake.
You want criminals? Go look first at the terrorists around the world and get them sorted out. They are a far greater threat than the financial services community.