Bankers apology – the verdict

February 11, 2009 by admin
Filed under: Credit crunch, Public policy 

My friend and blog advisor Matt Cain has come up with a visual representation of apologies scorecard. We can use this again for the current bankers being grilled by the Select Committee.

The apology continuum

The apology continuum

A few comments on yesterday’s performance. I give Sir Fred Goodwin the highest marks: 4 out of 6 as he recognised the distress that has been ‘caused’ and he used the phrase ‘I fully accept my responsibility in the matter’ although he then qualifies it with ‘I imagine there are many others who think there but for the grace of God’. To which latter reply one is tempted to say that given Sir Fred is still a very rich man many people may think God has been unduly beneficent to the bankers. Sir Fred gets 1.5 out of 3 for apologising for the act, as he implies we would all have done the same as him in his shoes, but 2.5 out of 3 for recognising the consequences. Goodwin also engages most fully with the question of personal culpability although he is tendentious in implying those seeking to establish personal culpability want to ‘blame it all on me’.

Lord Stevenson gets a much more modest 2.5 out of 6. ‘We are profoundly, and I would say unreservedly, sorry at the turn of events’ seeks largely to evade any guilt of commission while ‘I am sorry about the effect that it has had on the communities we serve’ gets 1.5 for a rather mealy-mouthed apology for consequences.

Andy Hornby gets a mere 1 and that is for bringing himself to utter the ‘s’ word. He uses the ‘turn of events’ phrase (clearly one taught to the former HBOS team by their media advisors). Hornby explicitly rejects any personal culpability and even asks us to sympathise with him – ‘it has been an extremely stressful time’.

Sir Tom McKillop gets 2 out of 6. He apologises, says it was a bad mistake then says anyone would have done what he did.

As I said yesterday grovelling apologies may have a cathartic effect but they don’t necessarily offer insight.  The collective failure of the bankers yesterday is to provide a vivid and credible account of how personal vanity and greed interacted with systemtic problems. It is this we need to understand more than anything else; how do systems interact with individual psychological frailties to generate bad outcomes? I guess we will just have to wait for the autobiographies.

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Comments

9 Comments on Bankers apology – the verdict

  1. Joe Nutt on Wed, 11th Feb 2009 3:09 pm

    2. Not sure we need to wait for anyone’ s biography Matthew “to provide a vivid and credible account of how personal vanity and greed interacted with systematic problems.” I almost crashed the car with laughter yesterday listening to “The Long View “on Radio 4, which was about the founding of the Bank of England, when a Dutch guest described the government’s role in the current crisis as “fiscal incontinence.” Sounds good to me.

  2. Michael in UK on Thu, 12th Feb 2009 8:51 am

    3. “The collective failure of the bankers yesterday is to provide a vivid and credible account of how personal vanity and greed interacted with systematic problems.”

    I agree, and while it would be revealing to hear it from them, I think we can piece it together pretty well for ourselves. I was thinking about this (again) last night and came up with this very rough sketch (plenty of cultural theory deep in here in here too):

    1. Perception and expectation: Most of us hear and see to what they already expect to hear and see. They act on their predispositions. Information or communication which is not expected is not seen or heard, but ignored. Often, in business and government, it is actually resented (that bit is from Peter Drucker). As we see when “whistleblowers” are sacked or ostracised.

    2. Individuals who are used to personal success will rationalise out their failings and bad decisions (ie. find excuses on supposedly objective grounds). At some level this is about avoiding the effects of cognitive dissonance (http://www.matthewtaylorsblog.com/politics/welfare-reform-our-confused-attitudes/).

    3. Personal consistency. The political and business world overvalues consistency. Thus the media obsession with “u-turns” and the inevitable demands for resignation when they occur. For example, RBS bosses had to press on with the takeover of the Dutch bank, in order to stay consistent with their previous statements (“it’s a great deal”). Once a certain point was crossed, the culture is such that their personal credibility would have been damaged if they had said “hang on, we’ve changed our minds about this one”. Which would have led to sacking or pressure to resign. So from a personal perspective, whatever misgivings they may have had (I bet they did), it was still completely rational to press on and hope for the best.

    4. Herd effects: for all the talk about innovation, the banks (and hedge funds, and other financial firms) all started doing the same things. Massive debt (sorry, leverage!), complex contracts/derivatives, and obsession with mergers/takeovers etc. Another aspect of the herd mentality is hostility to anyone who challenges the majority view.

    5. City and business culture which massively favours the short term over the long term – the bonus system and “eat what you kill” rewards in context of takeovers are part of this.

    6. Systemic effects/complexity theory: very complex financial products and transactions (risk being repackaged and passed on and on etc), and unintended consequences in the form of complex feedback loops creating vicious circles which meant that usual remedies failed to work.

    The RSA could put on a great conference about all this – my ideal list would include Bob Cialdini, Larry Elliott or Will Hutton, and someone like Jake Chapman or Geoff Mulgan on the systemic aspects.

  3. fourcultures on Thu, 12th Feb 2009 10:57 am

    4. The anthropologist Mary Douglas, originator of Cultural Theory, had a problem. Her colleagues studying so-called ‘primitive’ cultures in far-flung parts of the British Empire thought the natives had irrational views about reality. Douglas, though, wasn’t so sure they were irrational. As her mentor E. Evans-Pritchard held, the worldviews of other cultures were perfectly rational and efficacious in the right context, and it was the biases of the observers that made it seem otherwise. Douglas eventually systematised her perspective and found it could usefully make sense of many features of British society. Flash forward to the present banking crisis and we can see a group of CEOs who were specifically chosen for their single-minded commitment to Individualist ways of organising: maximum competition, minimum regulation. In contect it made perfect sense. When it stopped working they were genuinely surprised, because these people were, almost by definition, unable to see things any other way.
    To the rest of us, of course, the surprise expressed seems rather distasteful. But then, most people find it hard to be so single-minded.
    What we need to learn is how to avoid such nasty surprises in future. At the moment it looks like we’re about to be led by maniacally single-minded Hierarchical Keynesians. Plus ca change…

  4. matthewtaylor on Thu, 12th Feb 2009 11:00 am

    5. Well said. Indeded I argued just about exactly this – although less elegantly and succintly – a few weeks ago.

  5. matthewtaylor on Thu, 12th Feb 2009 11:02 am

    6. Great stuff Michael. My colleague Matt Grist snuck into an event here yesterday featiring a talk by Nigel Thrift along exactly these lines. Nigel is speaking here in May, make sure you come along.

  6. The limits of free speech : Matthew Cain’s blog on Thu, 12th Feb 2009 12:39 pm

    7. [...] However, I really hate the way we glorify people who have done wrong, know they have done wrong, offered an apology and yet trade from their wrong-doings. This point was made well by septicisle suggesting: [...]

  7. Duncan Lawie FRSA on Fri, 13th Feb 2009 3:31 pm

    8. Maths question:

    how does 1.5 out of 3 plus 2.5 out of 3 add up to 4 out of 9? Maybe 4 out of 6?

    Cheers,
    Duncan.

  8. matthewtaylor on Fri, 13th Feb 2009 7:13 pm

    9. oops this is quite right – for some reason I was multiplying them. I will correct now! Thanks Duncan

  9. Are you fed up with the S word? « Enough said: George Wilkinson’s blog on Tue, 19th May 2009 2:26 pm

    10. [...] Matthew Taylor in February, where he anatomised apologies: Sorry bankers – a scorecard and Bankers apology – the verdict. Taylor was writing after the appearance of Sir Fred Goodwin and others before the Treasury Select [...]

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