For all the media frenzy around the Co-op Bank’s boss, the reasons it went under are far deeper, writes Joyce McMillan
THE Co-operative Bank chequebook that lies on my desk looks crumpled and old, this morning. Once, I used to feel a faint pang of pleasure, whenever I looked at it; the Co-op was not only a more ethical bank than most, but an efficient one, with a great online service and friendly staff.
Like most people, though, I’ve found myself using my chequebook less and less in recent years; and now, the Co-operative Bank I was once proud to use has gone bust like all the others. Today, the people’s bank is controlled by a group of transatlantic hedge-funds; and this week, we’ve learned that its chairman was allegedly not a decent man of the cloth immersed in the politics of mutuality, but a porn user with a crack cocaine habit, incapable of answering the simplest financial questions about the bank’s affairs. So now, the crumpled old chequebook suddenly seems like a relic of a world long gone; one where a range of banking cultures could co-exist, and consumers were allowed a genuine choice.
For the British Conservative Party and its Liberal Democrats allies, though, it seems that this humiliation of the Co-operative Bank and its ideals is not a matter for sorrow, but for a kind of demonic glee; indeed, if successful politics is about generating a narrative that succeeds in driving out and marginalising all alternative accounts of reality, then the performance of the British Right in gaining control of the story about the Co-op bank’s collapse deserves some kind of five-star review.
The Coalition government’s narrative-machine has already been performing well in recent months. Through its Lobbying Bill, it has managed to transform the debate around corporate influence-peddling at Westminster into an assault on the right of trade unions and other grassroots organisations to seek to influence party politics, in the run-up to a general election. And in the row over the Grangemouth refinery, it has managed to generate a public debate in which a small demonstration outside a senior manager’s house, which involved the waving of a large inflatable rat, is deemed more of an outrage to democracy than the power of one man to threaten the closure of a major strategic energy resource.
In the matter of the Co-operative Bank, though, the narrative-machine has excelled itself, in generating an explanation for the Co-op’s failure which involves – so it suggests – both the obvious absurdity of the faint elements of democracy in the bank’s governance, and the corruption of the Labour Party machine which failed to notice or to report the fact that the Co-op chairman was not only lacking in any serious financial expertise, but had serious personal problems, including a drug habit. None of these allegations is entirely false, of course. What is staggering, though, is the almost total success of the attempt to pass off these aspects of the Co-op story as a complete explanation for its failure; as if the bank were some kind of weird anomaly, a hangover from the dinosaur days of Labour politics which now needs to be tidied up, and run like any other normal bank.
Yet those of you out there not suffering from chronic political amnesia may perhaps remember that as recently as five years ago, several of those “normal” banks, including the Royal Bank of Scotland and Halifax Bank of Scotland, crashed in a far more spectacular fashion than the Co-op, bringing the entire global financial system to its knees, and requiring a taxpayer bailout of almost a trillion pounds – a sum, let’s remember, greater than the entire spending of the Scottish government over a period of 20 years.
Now clearly, the absence of any element of democracy in the governance of these banks did not prevent them from appointing senior board members who had difficulty in reading a balance sheet; one of the most striking aspects of the 2008 crash was the failure of almost everyone, from board members to senior financial journalists, to sound any warning at all. And it is also widely alleged that the near-hysterical mood on the trading floors of major financial institutions, in the last years of the boom, was fuelled by industrial quantities of illegal drugs, to be found strewn across the shiny surfaces of executive toilets throughout the City.
Yet despite the public anger directed at the time against bonus-hungry bankers, I cannot recall any one individual – even Fred Goodwin of the Royal Bank of Scotland – being subjected to the kind of minute investigation of his or her private life and addictive habits now being inflicted on the Rev Flowers; nor has any other individual bank been subjected to the kind of prolonged and destabilising government inquiry into its mismanagement that is now, at the behest of George Osborne, about to be visited on the Co-op.
From a Tory point of view, of course, the chance to put the boot into an organisation traditionally linked to the Labour Party is too good to miss. And from the point of view of the popular press, the story of the northern Methodist minister with a taste for rent-boys, drugs and the financial high-life is obviously irresistible.
For the rest of us, though – including those in the UK media who class themselves as serious political and financial analysts – the events of the past week pose some tough questions about why, and for how long, we are going to accept the blatant double standards reflected in the current feeding-frenzy around Paul Flowers and the Co-operative Bank. The truth is that in a striking parallel to the Royal Bank of Scotland, the Co-op went under as a result of a reckless and over-ambitious takeover decision, a piece of empire-building gone wrong. And if we remember anything at all about that recent history, we must therefore know that the account of the Co-op’s demise offered by the UK government is so partial as to amount to little more than a smokescreen; and that the mayhem wrought by the Rev Flowers remains small stuff compared with the disaster created half a decade ago by those chaps in the City who have more powerful connections, and whose lives and morals have somehow never yet appeared, blazoned in four-inch headlines across the pages of the popular press.