Peter MacMahon's Business Blog: Greed is not so good these days

Published on Friday 30 January 2009 13:44

GREED is good, we were once told by a fictional corporate raider. The Gordon Gekko creed of greed is one of the most famous of all film speeches, brilliantly played by Michael Douglas.

It is said to have been based on the words of famous - possibly infamous - US arbitrageur Ivan Boesky who reportedly once said this: "Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself"

That film was the late 80s and, it might have been hoped, that the attitude behind such arrogant boasts, whether they came from from fictional characters or from real people, might have been a thing of the past.

And certainly not seen in the current financial climate, where the former masters of the universe have fallen from grace.

Not a bit of it.

This week in America we have seen that many of these people have learned no lessons from the near collapse of capitalism which they - and their ilk - have precipitated.

In some banking quarters, humility there is none. The arrogance continues.

Take John Thain who became Merrill Lynch's chief executive in early 2008, and then commissioned famous design company revamp his office suite, spending approximately $1.22 million, according to documents published in the USA.

Additionally, documents showed that Thain signed off on the purchases personally, and that he used over $30,000 to pay the expenses the designer incurred in doing the work, according to American's CNBS network.

Incredible.

And there is more.

We have learned this week that senior executives at financial companies in New York collected an estimated $18.4bn (12.9bn) in bonuses in 2008.

Some of these are in companies that have been bailed out by the US administration, using money from taxpayers,the ordinary Joes who are losing their jobs or going through hard, hard financial times.

Little wonder that President Barack Obama has been moved to condemn such actions.

They were, he said, "the height of irresponsibility".

He added: "It is shameful, and part of what we are going to need is for the folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility.

"The American people understand that we have got a big hole we have got to dig ourselves out of but they don't like the idea that people are digging a bigger hole."

Hear, hear.

Now, from a UK perspective, there is - so far - no evidence of such lavish and insensitive behaviour by the British former masters of their universes.

Some banks continue to have fancy dinners and to throw the odd party for colleagues who have, by some miracle or their own endeavour, had some success.

But there are signs that the banks here are more sensitive to public opinion. New Royal Bank of Scotland chief executive Stephen Hester has, for example, said he will not use the RBS executive jet which his predecessor, Sir Fred Goodwin flew the world in.

Note that American bank Citigroup only cancelled an order for a new corporate jet after President Obama challenged them over their planned purchase.

However, we do not know in detail what the UK banks - in particular those in which the state has a significant stake - have behaved since they were rescued by the government.

It is to be hoped that RBS and Lloyds Banking Group are not run by people who believe in the Gekko creed.

It may not come naturally to them but bankers here, and in the USA, must adopt some humility and to be sensitive to the view of the public

They are in the public eye now as never before.

The philosophy they must adopt is a simple one: Greed is bad.