Tuesday, 31 January 2012

Mr Goodwin

So Fred Goodwin has "brought the honours system into disrepute". How, exactly? He didn't award himself the knighthood that has today been withdrawn. He merely accepted it. He may well have brought himself into disrepute, by his graceless behaviour as much as by his reckless management of the Royal Bank of Scotland. He certainly brought the banking industry into disrepute, as of course did many others of its leading lights, some of whom still have their knighthoods and other gongs. He is responsible for his behaviour. He is not responsible for the honours system. The only people who may truly be said to have brought the system into disrepute as a result of Goodwin's business dealings are those who recommended and confirmed the award in the first place.

But then it would be hard to argue that the honours system was in particularly good repute even before the former knight ran his bank into ruin.

The Cabinet Office statement makes much of the "scale and severity of the impact" of Goodwin's actions at RBS, above all the £45.5 billion of taxpayers' money that had to be ploughed into the bank. But this was only the flip-side of Goodwin's apparent success in the years of his pomp, when RBS went from being a small regional bank, albeit one with a distinguished history, to being for a time the largest in Britain and one of the largest in the world. Goodwin was a gambler who, like many gamblers on a winning streak, didn't know when to quit and lost everything.

Except, of course, he personally didn't lose all that much; the taxpayer did. That may have been his final, and successful, gamble. The same, though, might be said of the last government which awarded him a knighthood for what looked at the time like unarguable and remarkable "services to banking". Gordon Brown gambled on an unending finance-driven boom, the country lost, and there was no-one to bail-out the bailers-out. So while the Goodwin knighthood in retrospect looks like a mistake, it was part and parcel of the last government's love affair with banking (a delusion largely shared by the Conservative opposition at the time, of course). So again, not Goodwin's fault. He didn't bring the honours system into disrepute. He was merely the most egregious example of its failures, its genuine disreputability.

I'm not arguing that Goodwin deserves to keep his knighthood (or indeed his pension, though no-one is threatening that). But unlike previously dispossessed knights, he is not a criminal or a traitor; he is merely an embarrassment. He just didn't turn out to have been quite so excellent a banker as he was thought to be at the time he was being given the award.

Perhaps we should extend the principle. Make all honours conditional on continued good performance. Shouldn't Sir Ian McKellan have lost his knighthood for his hammy performances in the X-Men films? Or here's an idea: instead of waiting for England to win the World Cup before honouring the manager, why not give him a knighthood in advance and threaten to take it away if we don't win? It would make a nice incentive.

In the middle ages, saints who failed to grant miracles were sometimes ritually humiliated. Their relics were taken out of their shrine, scattered on the floor of the church, and cursed. It was believed that by such means the saint might be encouraged to do better in the future. Or perhaps it just made the community feel better. Goodwin, of course, played the principal part in the collapse of RBS; he was no mere plaster saint. But while the fall of RBS was spectacular, and expensive, it was a symptom of the failure of the financial system as a whole. If not Fred, it would have been someone else.

It is Fred Goodwin's misfortune to have become the symbolic focus of public disgust at bankers, their bonuses and pensions, the damage their financial wizardry did the the world economy, the giant bills and seemingly sempiternal austerity with which they lumbered the rest of us. His personal demeanour contributed to this as much as the size of the RBS catastrophe. Had he surrendered his pension and prostrated himself before the nation as a humble penitent, he might today be leading some banking clean-up commission. He might be well on the way to becoming Lord Goodwin.

Plenty of other leading bankers who managed to keep their heads down during the travails of 2008 have kept their knighthoods and their jobs. They must be grateful to Fred Goodwin tonight for taking the flak on their behalf. In acting, unwillingly no doubt, as a lightning rod for public anger, he has performed his fellow bankers a great service. Worthy of a knighthood, almost.