Politicians would like to think that Stephen Hester’s decision to give up his bonus marks the start of a mass renunciation of “excessive pay” by private sector bosses. It is certainly time the UK corporate and political world moved on and refocused on what is really important: i.e. how to restore growth. But far from starting a trend, the Royal Bank of Scotland CEO’s case is unique. Here are three reasons why: Read more
I have met Debbie Bosanek. I’ve also met her boss Warren Buffett. But as far as this week’s US political news is concerned, the more important figure is Ms Bosanek, the billionaire investor’s secretary. She’s important because she’s met Barack Obama, who gave her a high-profile spot in the audience for his State of the Union address this week, transforming her into a symbol of tax inequality in America.
Mr Buffett started this, of course. In a New York Times op-ed last August he attacked a system that allows him to pay a lower tax rate than any of the other people in his Omaha office. This has spawned the “Buffett rule”, the benchmark that Barack Obama is using to promise that the richest Americans will not pay tax at a lower rate than their secretaries.
Ms Bosanek is both an obvious and an odd choice to become – as an ABC interviewer put it this week – “the poster woman” for this campaign. Obvious, because she is the gatekeeper for Mr Buffett. Odd, because she is far from a typical secretary (in her polite but terse emails, she actually styles herself, in the modern way, as “Assistant to Warren Buffett”). Read more
For the world’s financial elite, now might be a good time to be on a Swiss mountainside, protected by a cordon of armed police, and able to take one’s mind off things by skiing and popping into a private bank.
Politicians continue to demonstrate a fierce desire to be seen to be doing something – anything! – about excessive executive pay and corporate tax avoidance. Nick Clegg, UK deputy prime minister, used a BBC radio interview on Thursday to step up the verbal assault on such practices. He said:
Look at this debate about irresponsible capitalism, what I call crony capitalism. It’s Liberal Democrats [Clegg's party] who’ve led the debate on clamping down on bankers’ bonuses and we must be just as tough this year in the bonus season that’s coming up as we were last year, if not more so.
It’s for him and his colleagues to prove that these threats can be turned into effective action, but in the meantime I’m struck by his terminology. What Mr Clegg calls “crony capitalism” is not what most of us call crony capitalism. I have always assumed the term applies quite specifically to unsavoury, over-cosy relationships between businesspeople and politicians. Read more
Despite the criticism that rating agencies have endured in the past three years – much of it justified – someone at Standard & Poor’s retains a sense of humour.
There are various words, many unprintable, that could be used to describe Hank Greenberg’s $25bn suit launched this week against the US government and the New York Federal Reserve over the rescue of American International Group in 2008. I’ll settle for ludicrous.
Michael Bloomberg, New York City’s mayor, made himself unpopular with his decision to raid Zuccotti Park in the early hours of Tuesday and evict 200 campers from the Occupy Wall Street protest, but he was right. So is the City of London Corporation in attempting to shift the tents from outside St Paul’s Cathedral.
You know a corporate scandal is serious when prime ministers and heads of state start to mention it. The fact that Japan’s premier Yoshihiko Noda took time in an FT interview on Monday to talk about the problems at Olympus is doubly significant, therefore. As our correspondents Michiyo Nakamoto and Mure Dickie point out, it’s “highly unusual for a Japanese prime minister to comment on events involving a private company”. Here’s what Mr Noda said:
What worries me is that it will be a problem if people take the events at this one Japanese company and generalise from that to say Japan is a country that [does not follow] the rules of capitalism. Japanese society is not that kind of society.
Even Europhile economists must have pricked up their ears at the offer of £250,000 to the person who comes up with the best plan for winding up the euro. Only the Nobel offers a more valuable bounty to the dismal scientists.
But whatever you think of the goal, is the Wolfson Economics Prize – offered by Lord Wolfson, the youthful, Eurosceptic, Conservative chief executive of Next, the UK retailer – the best way to achieve it? These days, bright business ideas often emerge through collaboration, rather than competition. Read more
It is a shock to hear Muhtar Kent, chief executive of that quintessentially American company Coca-Cola, suggest that the US is now less friendly to business than China.
But Mr Kent’s comments – “In the west, we’re forgetting what really worked 20 years ago” – echo what I heard two weeks ago at Harvard when I talked to Michael Porter, perhaps the world’s best-known expert on competitiveness. Read more
One common public perception of business – as I blogged earlier this week – is that the bigger it is, the worse it is. I was interested, therefore, to read in The Times on Friday that Britain’s top 50 businesses are to get a “hotline” to senior ministers. The paper writes (subscription required):
Bosses of companies, including BP and GlaxoSmithKline, will be able to telephone directly to the top of Whitehall departments in new individually tailored relationships with senior ministers who will act as their “buddies”.
When I worked in Milan in the mid-1990s, it was a standing joke that young Italians would not quit the family home: it was just too comfortable being cosseted by mamma and papà. Now this stereotype has solidified – young Italians feel unable to leave, even if they want to – and this could have serious implications for how the financial and economic crisis there plays out. Read more
Most companies aim to get bigger. But beyond a certain point, bigness becomes synonymous with badness. Think of Big Pharma, Big Auto, Big Oil.
Worse, if you are regularly described as one of the Big Four, Five or Six in any business sector, you are probably already in the sights of regulators and lawmakers.
This demonisation of corporate girth is nothing new. I can’t find a source for this image – which Marc Gunther uses to illustrate a blogpost about the growing power of US big business – but I’d say it dates from the first half of the last century, and there are plenty more where it comes from. Read more
Good morning and welcome to our rolling coverage of the long-awaited report from Sir John Vickers on UK banking reform.
You can find the text of the official report at the Vickers site.
Megan Murphy (MM), the FT’s investment banking correspondent, will guide us through the report.
12:00, MM: Sir John Vickers is calling a wrap on the press conference now, on the dot of midday.
A very interesting 90 minutes, with a strong defence of the commission’s work and what it is trying to achieve not only from Sir John, but most notably from the FT’s Martin Wolf and Bill Winters, the former co-head of investment banking at JPMorgan.
The banking industry may be taken aback by the tone of some of their commentary, as well as their conviction that ring-fencing is the best solution for removing the implicit taxpayer subsidy of universal groups, regardless of the direction taken by regulators/governments in other countries. That concludes the live blog for now, but we’ll be keeping an eye on developments and will post again later on anything new. Read more
At July’s parliamentary hearings into phone-hacking at the News of the World, Liberal Democrat MP Adrian Sanders wound up his line of questioning by asking James Murdoch if he was “familiar with the term ‘wilful blindness’”.
Mr Murdoch, now deputy chief operating officer at News Corp and head of its international business, asked Mr Sanders to elaborate, which he did:
It is a term that came up in the Enron scandal. Wilful blindness is a legal term. It states that if there is knowledge that you could have had and should have had, but chose not to have, you are still responsible.
Riots in Hackney, August 2011 (Getty Images)
Direct attacks on people, property and businesses are far more terrifying than market turmoil. But there is one striking parallel between the riots disfiguring British cities and the financial crisis that began exactly four years ago: both have shaken the foundations of public confidence in established institutions – the police in the case of the riots, the banks in the case of the credit crunch. Read more
The ill-tempered struggle in Washington over raising the federal debt limit is enough to make anyone gloomy about the future of the US. Clive Crook, my FT colleague, rightly contrasts the stasis among politicians with the “unrivalled energy and ambition” of US workers.
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat” (Sun Tzu)
News Corporation’s withdrawal of its bid for British Sky Broadcasting is the latest in a series of increasingly desperate tactical moves by Rupert Murdoch and his chieftains to limit the consequences of the UK phone-hacking scandal. Read more
Li Ka-shing’s interest in the British utilities company Northumbrian Water has set off a predictable ripple of nationalism.
Local politicians have started to air their fears that a takeover by Cheung Kong Infrastructure, controlled by the Hong Kong tycoon, would put local jobs at risk. But it would be odd and inconsistent if anybody in authority acted on those fears to impede the bid. Read more
Old companies may die, but old stock market indices ought to live for ever. Certainly, the longevity of the FT30 index, first published in 1935, suggests they can go on and on, even if their relevance ebbs and flows.
In fact, there could be no better moment to revive interest in the original benchmark of British stocks. Read more