For those of you who did get through the “Who do you believe” piece, and are curious to know how it all panned out at the end, I have two pieces of news for you. First, the story gets murkier and murkier. Second, the butler did NOT do it.
You will recall that we had left the story poised at the brink – will he or won’t he? Let me decode: will Sir Fred the Shred Goodwin apologise to shareholders, stakeholders, employees, taxpayers and the pizza delivery man for screwing up the bank and colluding to screw up the nation’s economy? Or won’t he?
As it turns out, he apparently did murmur some words, which was construed by lip-readers to be tantamount to an apology, if we stretch the meaning of the word ‘apology’. Attaboy, our Fred! Unfortunately, John McFall, Treasury select committee chairman in the UK, refused to accept the apology as being anything meaningful.
Read these:
1. The Sunday Times, on February 15, 2009, carried a story in its online edition, starting “Nobody is too rich or powerful to escape the caustic Glaswegian wit of the chairman of the Treasury select committee…”
“On Tuesday it was the turn of Sir Fred Goodwin and Sir Tom McKillop, formerly chief executive and chairman of the Royal Bank of Scotland respectively, and Andy Hornby and Lord Stevenson, who held the same positions at Halifax Bank of Scotland. McFall’s first question was: were they sorry for the destruction of once-venerable institutions now partly owned by the government and costing taxpayers millions? All four apologised but even after a three-hour grilling, McFall wasn’t convinced.
“There was no sense of real contrition,” he says. “They didn’t seem to think they were personally culpable. It’s not part of their culture. They have a sense of entitlement. Getting bonuses is in their DNA and risk taking is at their core — until the extent of their cavalier risk taking is uncovered and the whole thing implodes.” …
“The next day, addressing the current chief executives of the banks, McFall asked them why they thought they were hated. “I don’t know what they thought of that but John Varley, of Barclays, did admit that trust in the industry had been lost. I think it will take years to recover. This is a difficult time to rebuild confidence.”
2. BBC News - 14 February 2009 (http://news.bbc.co.uk/2/hi/uk_news/scotland/7889665.stm)
Headline: Banking bosses head for a McFall
If "sorry" is the word of the moment, then a certain McFall is the man of the moment.
“The chairman of the Treasury select committee has taken centre stage at Westminster, managing to extract apology after apology from the four men held responsible, by some, for the entire UK banking crisis…
“The man of the moment knows how to grab the attention. “Is sorry the hardest part?" was his opening gambit to the deposed chairmen and chief executives of the Royal Bank of Scotland and Halifax Bank of Scotland.
“Unconvinced by their apologies, he questioned their contrition. “What exactly are you apologising for? We've been told you've been coached extensively and meticulously by PR people and lots of money has been spent, so are you expressing sympathy because your PR advisers advised you to do so?"
"No," said the bankers, but Mr McFall's disdain was plain to see - and the public relations damage was done. “
Things get worse from here. Some people wistfully regretted that the great democratizer, the guillotine, is now firmly ensconced in the pages of history.
3. BBC News - 9 February 2009 (http://news.bbc.co.uk/2/hi/programmes/bbc_parliament/7879616.stm)
Headline: Bank ex-bosses to face committee grilling
Four former bank chiefs who led their institutions to the verge of collapse are set to testify before the treasury committee.
Reports have emerged recently that RBS may nonetheless distribute a total of £1bn in bonuses to staff.
The revelation has prompted outcry among politicians, press and public alike.
Lib Dem (Liberal Democratic Party) Treasury spokesman Vince Cable, writing in the Daily Mail, said that the "financial aristocracy" were "lucky the British have no guillotines in stock".
Similarly, the Independent's Simon Carr argues that "revenge is the answer".
Even worse, people have demanded that the bank bosses should return their past bonuses – surely the most unkindest cut of all.
4. “The Sunday Times, on February 15, 2009, carried a story in its online edition, headlined “Bank chiefs urged to repay bonuses”,
“Treasury select committee chairman John McFall says it is morally right for bosses who brought banks close to collapse to pay back rewards…Senior executives of HBOS and Royal Bank of Scotland, whose irresponsible speculating brought the British banking system to its knees, are to be urged to hand back the multi-million pound bonuses they awarded themselves.
“A report by the Treasury select committee will conclude that, while MPs cannot legally confiscate the six-figure rewards the bankers received over the past two years, it is morally right for them to return the cash.
“The report, due out in April, is expected to be scathing about Sir Tom McKillop, the former RBS chairman, Sir Fred Goodwin, the former RBS chief executive, and Andy Hornby and Lord Stevenson, the former chief executive and chairman of HBOS, for failing to show enough contrition when they gave evidence last week.”
The sponsorship deals that RBS signed up has come in for a great deal of abuse. Sachin Tendulkar has even been asked to return the money he got from modelling for the RBS ad which started me off on this journey!
5. Brand Republic - 16-Feb-09, 09:05
(http://www.brandrepublic.com/News/881116/RBS-attacked-spending-200m-celebrity-sponsorship/)
Headline: RBS attacked for spending £200m on celebrity sponsorship
“The Royal Bank of Scotland, bailed out with billions of pounds of taxpayers' money, is under fire for blowing £200m on sponsorship deals with top sports stars including Zara Phillips, Andy Murray and Jack Nicklaus.
“Mann has called for the sports stars to volunteer to opt out of their lucrative contracts. He said: "I think it would go down very well with the British public if some of them were to cancel their contracts. Some of them would become real heroes if they did."…
6. Yahoo India News - Sun, Feb 15 09:32 PM
(http://in.news.yahoo.com/43/20090215/928/tsp-reckless-rbs-signed-sachin-others-fo.html)
Headline: 'Reckless' RBS signed Sachin, others for 200 mn pounds
“A spendthrift Royal Bank of Scotland (RBS) spent 200 million pounds on sponsorship deals with Sachin Tendulkar and other top sportsmen just weeks before being bailed out by the British government, a newspaper reported Sunday…
“The news comes after the bank announced that it had made a loss of 28 billion pounds last year.
“Treasury select committee member MP John Mann told the paper: 'They have been reckless yet again. This doesn't seem to be a bank that could do anything in moderation. It now needs to realise the golden days are over.'
Now, why am I going on and on about this seriously unwholesome sordid saga, which has obviously caused a lot of disgust and contempt for the top execs of RBS, and almost killed the brand?
Because I believe that the spin community and the brand owners need to take a bunch of lessons out of this.
A brand’s reputation is far more important and certainly more fragile than its image. The reputation is built on how it conducts business and deals with people, not just consumers and customers, but the community at large. The reputation of a bank is built over decades and the foundation of the reputation is two words – trust and respect. The first you provide to your constituents, and demonstrably so; the second you earn.
Advertising and PR won’t save a brand when both have been lost.
The TV spot which started me off on this long story teaches us that sometimes, the best thing that spin doctors can do for their clients is to tell them to lie low and say nuffink. There’s a whole world of practical wisdom in Brer Rabbit.
Saturday, March 21, 2009
Sunday, March 1, 2009
Who do you believe?
That unredeemed ornery rascal of a rock’n’roller, Bo Diddley, wrote a song which has been covered by millions of would-be rockers:
I walk 47 miles of barbed wire,
I use a cobra-snake for a necktie,
I got a brand new house on the roadside,
Made from rattlesnake hide,
I got a brand new chimney made on top,
Made out of a human skull,
Now come on take a walk with me, Arlene,
And tell me, who do you love?
Now, I have walked a few thousand miles up and down ad agency and client corridors, and once I did think of using cobra-snake-lookalike for a necktie but agency dress codes prevented me from doing so (maybe I was just plain chicken!). And now that I am out of the agency-client game, I know who I do trust, and who I would believe.
These thoughts were provoked by an ad I saw some weeks ago, in which Sachin Tendulkar was being measured for a suit, and the voice-over and supers went something like this: "
The client sign-off showed Royal bank of
RBS, RBS…that set me thinking and then rushing to my comp. I remembered having read a whole lot of bad news, real bad news about RBS from about mid 2008 till earlier this week. A little digging around and here’s some of them, the latest one first:
1. From The Guardian, Wednesday - 28 January 2009 headlined “Pay packet envy: the greed that drove the City's bonus culture; The men who made millions while the banking system crumbled” (http://www.guardian.co.uk/business/2009/jan/28/executive-salaries-banking)
It was Valentine's Day and for Sir Fred Goodwin there was a very special present. The youthful banking executive was one of elite group of Royal Bank of
The payments created a furore but Sir George Mathewson, the plain talking RBS executive who had led the eight month campaign, could not understand what the fuss was about. "They wouldn't give you bragging power in a
The bonuses helped drive RBS along its road to ruin. The bank's executives got the deal-making bug and embarked on an orgy of acquisitions, gobbling up more than 24 companies in the next eight years - culminating in the £50bn record-breaking takeover of ABN Amro just as the credit crunch started to bite.
Nine years on, the bonuses help illustrate what happens when pay deals reward risk taking and highlight the gulf in pay between boardroom bosses and those who work in the City, earning even bigger bonuses through private pay deals that do not have to be published.
"Without question my research points to the fact large companies seem to have been paid for getting bigger not better. We saw that with RBS," said Peter Hahn, a fellow in finance at
2. From The Guardian - Monday 26 January 2009 – headlined “Police asked to investigate RBS for mis-selling” (http://www.guardian.co.uk/business/2009/jan/26/police-investigate-rbs)
Police are under pressure to launch an investigation into the Royal Bank of
The Lothian and Borders force confirmed yesterday it was conducting inquiries into whether the bank fraudulently sought investment from shareholders, many of them
3. From The Guardian - Monday 26 January 2009 – “Twenty-five people at the heart of the meltdown ...” (http://www.guardian.co.uk/business/2009/jan/26/road-ruin-recession-individuals-economy)
Fairly prominent in this list is Sir Fred Goodwin, former RBS boss. Here’s what the article has to say about him:
Once one of Gordon Brown's favourite businessmen, now the prime minister says he is "angry" with the man dubbed "Fred the Shred" for his strategy at Royal Bank of Scotland, which has left the bank staring at a £28bn loss and 70% owned by the government. The losses will reflect vast lending to businesses that cannot repay and write-downs on acquisitions masterminded by Goodwin stretching back years.
4. From guardian.co.uk - January 19, 2009 – headline “Government takes 68% stake in Royal Bank of
Loss-making Royal Bank of Scotland pledged to step up lending to big corporates and lend a further £6bn to a wide range of customers as part of an agreement with the government to increase its stake in the troubled Edinburgh-based bank to 68%.
As shares in RBS lost two thirds of their value to close at just 11.9p today, the government altered the terms of the October bail out to allow preference shares - which do not carry voting rights - to convert into ordinary shares almost immediately.
5. December 30, 2008 – headlined “Thirty years on - the truth at last” (http://business.timesonline.co.uk/tol/business/columnists/article5415971.ece)
December 31, 2038: Royal Bank of
…The documents confirm speculation at the time that the Bank of England, the FSA and Mr Darling were “exceptionally worried” about the ability of RBS to roll over its short-term funding in money markets by early October.
One handwritten note from an unnamed Bank of England official to the Chancellor, dated Thursday, October 2, 2008, reads: “RBS is having enormous difficulty raising short-term funds... danger of confidence draining away completely... there is a real question over whether it will be able to open its doors for business next week.”
6. From November 29, 2008 – “Sir Fred Goodwin takes the hit as shareholders spurn £15billion rights issue by bank (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5254438.ece)
Sir Fred Goodwin, the outgoing chief executive of Royal Bank of
As expected, the Government was left with almost all the new shares, giving it a stake of 58 per cent in the enlarged bank, after existing shareholders shunned the emergency capital-raising. Only 0.24 per cent of the new shares were taken up, some of them by RBS directors who had promised to take up their rights in full before it became apparent that the deal was a flop.
7. From guardian.co.uk – November 6, 2008 – headline “Downgrades hit Barclays and Royal Bank of
More downgrades for the banks today.
Panmure Gordon analyst Sandy Chen has repeated his sells on Barclays - down 8.5p to 187.4p - and Royal Bank of
"There has been a slew of news [on credit default swaps] recently – little of it positive. We see [Barclays and RBS] as most exposed to further losses as credit events gain momentum…”
8. From November 5, 2008 – headline “Royal Bank of
Stephen Hester, Royal Bank of
9. From October 15, 2008 – headline “Shredding credibility at Royal Bank of
Under normal circumstances, if a company expands recklessly, faces collapse and needs an emergency rescue, the very least you can do, on showing the executives responsible the door, is to clean out those non-executives who failed in their job of restraining such over-enthusiasm.
Yet I am told there is no intention to dispose of the 14 - count them - 14 non-executives at Royal Bank of
10. From Timesonline.co.uk - October 13, 2008 – headlined “Royal Bank of
The Chancellor will move to take control of the Royal Bank of Scotland today by injecting £20 billion of taxpayers’ money….Sir Fred Goodwin is expected to step down today as chief executive of the Royal Bank of Scotland (RBS). Andy Hornby, the chief executive of HBOS, also faces an uncertain future.
RBS will offer its shareholders the right to buy £15 billion of new shares, the vast majority of which are expected to be left with the Government, giving it a 60 per cent stake.
And my favourite, the killer piece of them all:
11. From The Guardian - 24 January, 2009 – headlined “Sir Fred, just say sorry” (http://www.guardian.co.uk/business/2009/jan/24/fred-goodwin-rbs)
Goodwin's descent from hero to zero is as shocking as his bank's finances. This week it was announced that the Royal Bank of Scotland (RBS) had suffered a £28bn loss - the biggest loss a company has recorded in
He had been Gordon Brown's favourite banker, until the prime minister turned on him this week, saying that RBS had been "irresponsible" under Goodwin's control (and it has to be said on Brown's watch). Over the past year, Goodwin received salary and bonuses amounting to £4.2m.
In 2002, he was named Forbes Businessman of the Year - the ultimate business accolade. Back then he was known as Fred the Shred for the incisive way he had shredded staff numbers to boost profits. Today Goodwin, who formally leaves his post on 31 January, is known as the "disgraced Fred the Red". Goodwin can take some comfort in an annual £579,000 pension.
Phew! If that’s not a litany of woes and wrongdoing, I don’t know what is. Caveat: the venom, the sarcasm, and the caustic language are there in the originals – I haven’t added anything; didn’t have to.
The RBS people in
RBS sure did change the way the game is played, and are now in the process of paying for it. They did make it happen – seriously. They did get things done, for their shareholders, their customers, and the poor sods of taxpayers out there in the
Is this the kind of bank you wish to make things happen for you?
Question 2: Why did RBS India release this ad? Surely their PR and ad agencies would have told them not to do it – if I’ve read the news articles, all that the ad will raise with me is a nasty snigger. I guess people would believe editorial more than advertising – so why do this?
The ruins of the reputation of RBS are surely made out of human skull.
Oh, in case you wondered, Sir Fred didn’t apologise. Read this:
Telegraph.co.uk - 20 Nov 2008 (http://www.telegraph.co.uk/finance/newsbysector/epic/rbs/3490576/RBS-issues-sweeping-apology-to-shareholders.html)
Headline: RBS issues sweeping apology to shareholders
Sir Tom McKillop, chairman of Royal Bank of Scotland, has issued a sweeping apology for the dramatic implosion of the banking giant.
Sir Tom told a shareholders meeting in
RBS has been attacked by employees and shareholders who have said the bank's management has not apologised for its near-collapse in October, which put tens of thousands of jobs at risk. RBS has already announced 3,000 redundancies.
Sir Tom attempted to answer that criticism, telling shareholders gathered at the Church of Scotland general assembly hall on the Mound in
RBS was told by the Government to raise an extra £20bn of capital to bolster its balance sheet. When the bank unveiled the fund raising on October 13 it said Sir Tom would step down as chairman of RBS in April, while Sir Fred Goodwin, chief executive, leaves today. Sir Fred has said he is "sad" about the dire state of the bank but so far has declined to apologise to shareholders and employees.
For he’s a jolly good fellow…
Wednesday, December 3, 2008
Zero Tolerance
Mr Prime Minister
I hope you, your party bosses and your colleagues are watching the news channels right now (1845 hours, India time) - and I hope you are learning right lessons for the future.
You are seeing the people of Mumbai, Delhi, Kolkata, Hyderabad, Bangalore, Jaipur, Ahmedabad, and other cities sending you one clear message - "zero tolerance from now on".
Zero tolerance for terrorism.
Zero tolerance for apathetic administrators and politicians.
Zero tolerance for corruption, which has led our beloved country to a state of complete alienation from your tribe, the politicians.
Zero tolerance for lack of accountability.
Zero tolerance for inaction.
Zero tolerance for passing the buck.
Zero tolerance for political interference in our security, police and defence forces.
Zero tolerance, Mr Prime Minister, zero tolerance from now on.
Now, it's your turn to tell us what you are going to do to ensure that our demands for zero tolerance are met.
Happy viewing!
I hope you, your party bosses and your colleagues are watching the news channels right now (1845 hours, India time) - and I hope you are learning right lessons for the future.
You are seeing the people of Mumbai, Delhi, Kolkata, Hyderabad, Bangalore, Jaipur, Ahmedabad, and other cities sending you one clear message - "zero tolerance from now on".
Zero tolerance for terrorism.
Zero tolerance for apathetic administrators and politicians.
Zero tolerance for corruption, which has led our beloved country to a state of complete alienation from your tribe, the politicians.
Zero tolerance for lack of accountability.
Zero tolerance for inaction.
Zero tolerance for passing the buck.
Zero tolerance for political interference in our security, police and defence forces.
Zero tolerance, Mr Prime Minister, zero tolerance from now on.
Now, it's your turn to tell us what you are going to do to ensure that our demands for zero tolerance are met.
Happy viewing!
Tuesday, December 2, 2008
The real terrorists
In a few hours, it would be a week since the horrible attacks took place in Mumbai. We citizens, wherever we reside, are outraged and baying for blood.
Our Government, the media, everybody is pointed fingers largely at Pakistan, and many of the bodies of governance are busy pointed fingers at each other. There is a lot of debate and discussion about what gives rise to terrorism, the root causes, etc etc. All valid debates and points of view.
Since 1993, Mumbai and other parts of our country has suffered from bomb blasts, random destruction, from terrorists. But who helped them?
Our institutions have been systematically eroded and virtually destroyed. Our judiciary is open to bribery and corruption; our law and order machinery most certainly so; our laws can be manipulated depending on who you are or who you know; corruption is rife in all states in our country. Our media is sensational, insensitive, irresponsible, unprofessional and downright unethical.
Who makes all this possible?
Walt Kelly in one of his Pogo comics, made this statement: "We Have Met the Enemy and He Is Us."
We pay bribes - small bribes, large bribes, but bribes none the less; we work with the underworld (ask any hotelier in Mumbai, ask anybody in the Mumbai films and TV business); we reward TV channels with the highest viewership ratings - it doesn't matter how idiotic the content; we do 'huzoor maa baap' to politicians; we invite them to our social functions; we brag about who we know and how we can get things done; we don't cast our votes because 'who's going to stand in queue in the hot sun?'; we despise the cops, so none of our children want to be cops; we pay lip service to the armed forces, but I wonder how many of us would be delighted if our offspring told us that they wanted to join the Army; we reward a bridegroom who's in the government services by paying the highest dowry; this list is endless.
So, for once, let's, for once, be honest with ourselves and say
I’m starting with the Man in the Mirror
I’m asking him to change his ways
And no message could have been any clearer
If you want to make the world a better place
take a look at yourself, and make that change.
Only then will we have earned the right to say "Jai Hind" and mean it.
Our Government, the media, everybody is pointed fingers largely at Pakistan, and many of the bodies of governance are busy pointed fingers at each other. There is a lot of debate and discussion about what gives rise to terrorism, the root causes, etc etc. All valid debates and points of view.
Since 1993, Mumbai and other parts of our country has suffered from bomb blasts, random destruction, from terrorists. But who helped them?
Our institutions have been systematically eroded and virtually destroyed. Our judiciary is open to bribery and corruption; our law and order machinery most certainly so; our laws can be manipulated depending on who you are or who you know; corruption is rife in all states in our country. Our media is sensational, insensitive, irresponsible, unprofessional and downright unethical.
Who makes all this possible?
Walt Kelly in one of his Pogo comics, made this statement: "We Have Met the Enemy and He Is Us."
We pay bribes - small bribes, large bribes, but bribes none the less; we work with the underworld (ask any hotelier in Mumbai, ask anybody in the Mumbai films and TV business); we reward TV channels with the highest viewership ratings - it doesn't matter how idiotic the content; we do 'huzoor maa baap' to politicians; we invite them to our social functions; we brag about who we know and how we can get things done; we don't cast our votes because 'who's going to stand in queue in the hot sun?'; we despise the cops, so none of our children want to be cops; we pay lip service to the armed forces, but I wonder how many of us would be delighted if our offspring told us that they wanted to join the Army; we reward a bridegroom who's in the government services by paying the highest dowry; this list is endless.
So, for once, let's, for once, be honest with ourselves and say
I’m starting with the Man in the Mirror
I’m asking him to change his ways
And no message could have been any clearer
If you want to make the world a better place
take a look at yourself, and make that change.
Only then will we have earned the right to say "Jai Hind" and mean it.
Sunday, November 30, 2008
Beyond rage: action
Finally, I am in a condition to put my thoughts together in a coherent manner. The murder and destruction at the Taj, the Trident and the Nariman House - the pictures, the videos, the stories, the soundbites - they have shocked all of us in Mumbai, India, and the civilized world.
Now, the blame game, the rolling of heads, the scoring of brownie points have started. From the POV of political parties, this is a great time to do this - elections are just a few months away.
But what of us? What do the citizens India, who happen to live in Mumbai, get out of this? Another round of unkept promises? Another round of mumbled words and meaningless gestures passed off as action?
We won't be fooled again. Not any more. In the Mahabharata, Vidur tells us that one of the six things a man should avoid is "a king who fails to protect". We are now livid and we want to get rid of the kings and queens who failed us.
What do I want to see thrown out from our country and our system?
What do I want to see happening now?
Now, the blame game, the rolling of heads, the scoring of brownie points have started. From the POV of political parties, this is a great time to do this - elections are just a few months away.
But what of us? What do the citizens India, who happen to live in Mumbai, get out of this? Another round of unkept promises? Another round of mumbled words and meaningless gestures passed off as action?
We won't be fooled again. Not any more. In the Mahabharata, Vidur tells us that one of the six things a man should avoid is "a king who fails to protect". We are now livid and we want to get rid of the kings and queens who failed us.
What do I want to see thrown out from our country and our system?
- cynical corrupt politicians
- inept politicians and bureaucrats who have corrupted our systems, by making 'politically convenient' appointments at top levels in our security and police forces
- ineffective politicians who hold positions as rewards for services rendered to their power mentors in their parties
- criminal politicians with track records, and underworld connections - banned for life
- a government that has demoralised our defence forces - the whole row about pay for our soldiers is an incredible and outrageous farce. Our soldiers are a million times more dedicated to our nation, and a million times more valuable, than our politicians
- accountability which is now to the party bosses and not to the electorate
What do I want to see happening now?
- Public and published accountability of all politicians - what have they accomplished against their promises? Public review to be held every six months, and each candidate will be given one grace period of another six months, if he's failed against his promises. If their is shortfall of performance after this grace period, we the public will physically and through media agitate for his removal.
- Meritocracy, and only meritocracy, in senior security (that include police) appointments.
- Removal of all security appointments from political influence. To start with, ensure that the federal investigation agency is itself free from political interference
- Removal of political interference in the day to day functioning of all security and police forces
- Publicly punish all politicos with criminal records and connections with the underworld. They cannot be allowed to participate in political life ever again.
- Strengthen our laws and our security forces equipment and training - it's pathetic that Mumbai policemen died after being shot through the head, while he was wearing a helmet. Surely, somebody took a bribe to accept low quality helmets which is supposed to save lives!
Sunday, November 23, 2008
The time to reap what you sow
On Nov 22, 2008, the New York Times this article on Citigroup: http://www.nytimes.com/2008/11/23/business/23citi.html?pagewanted=1&_r=1&ref=business
As usual , NYT does an excellent job of description, analysis, and collecting together various strands to make up this long article. As an ex-customer of Citibank, and one who has had long associations with Citi staffers in India and a few other countries, I can only add some specific comments and observations to the NYT story.
My customer experiences as well as those dealing with the Citi staffers have given me two clear impressions about Citibank (maybe it's true of Citigroup as well):
The culture of risk also runs contrary to my expectations - I always believed that banks have to run on two principles: prudency and conservatism. After all, a bank runs its business on money taken from depositors, who expect their money to be safe in most cases.
The NYT story I have mentioned above tracks the sorry tale of Citigroup from 2007, or thereabouts. NYT also carried a story four years ago, on Whether or not Mr. Prince succeeds will speak volumes about how effectively a chief executive can change the culture of a company as large as Citigroup, as well as offer a test of whether the bank can still dominate markets and rake in profits without crossing regulatory and legal boundaries."
Obviously Mr Prince failed in that job. Maybe he was destined to fail - unless he could replace a whole generation of managers overnight, he couldn't have changed the culture. Maybe he didn't want to succeed - he was being advised by Robert Rubin, and here's NYT from the Nov 2008 story:
“Chuck Prince going down to the corporate investment bank in late 2002 was the start of that process,” a former Citigroup executive said of the bank’s big C.D.O. push. “Chuck was totally new to the job. He didn’t know a C.D.O. from a grocery list, so he looked for someone for advice and support. That person was Rubin. And Rubin had always been an advocate of being more aggressive in the capital markets arena. He would say, ‘You have to take more risk if you want to earn more.’ ”
Rubin was the Treasury Secretary during the Clinton administration, when he "helped loosen Depression-era banking regulations that made the creation of Citigroup possible by allowing banks to expand far beyond their traditional role as lenders and permitting them to profit from a variety of financial activities. During the same period he helped beat back tighter oversight of exotic financial products, a development he had previously said he was helpless to prevent." Looks like Rubin is one of the architects of the mess that US banking is in now.
Now, I read that he is (was?) an advisor to Barack Obama during the period of transition. If he continues to advise the new President of the USA, God save America, and more importantly God save the World! Nothing short of divine intervention may suffice.
As usual , NYT does an excellent job of description, analysis, and collecting together various strands to make up this long article. As an ex-customer of Citibank, and one who has had long associations with Citi staffers in India and a few other countries, I can only add some specific comments and observations to the NYT story.
My customer experiences as well as those dealing with the Citi staffers have given me two clear impressions about Citibank (maybe it's true of Citigroup as well):
- a culture of risk
- a culture of short-changing the customer to the point of being dishonest
The culture of risk also runs contrary to my expectations - I always believed that banks have to run on two principles: prudency and conservatism. After all, a bank runs its business on money taken from depositors, who expect their money to be safe in most cases.
The NYT story I have mentioned above tracks the sorry tale of Citigroup from 2007, or thereabouts. NYT also carried a story four years ago, on Whether or not Mr. Prince succeeds will speak volumes about how effectively a chief executive can change the culture of a company as large as Citigroup, as well as offer a test of whether the bank can still dominate markets and rake in profits without crossing regulatory and legal boundaries."
Obviously Mr Prince failed in that job. Maybe he was destined to fail - unless he could replace a whole generation of managers overnight, he couldn't have changed the culture. Maybe he didn't want to succeed - he was being advised by Robert Rubin, and here's NYT from the Nov 2008 story:
“Chuck Prince going down to the corporate investment bank in late 2002 was the start of that process,” a former Citigroup executive said of the bank’s big C.D.O. push. “Chuck was totally new to the job. He didn’t know a C.D.O. from a grocery list, so he looked for someone for advice and support. That person was Rubin. And Rubin had always been an advocate of being more aggressive in the capital markets arena. He would say, ‘You have to take more risk if you want to earn more.’ ”
Rubin was the Treasury Secretary during the Clinton administration, when he "helped loosen Depression-era banking regulations that made the creation of Citigroup possible by allowing banks to expand far beyond their traditional role as lenders and permitting them to profit from a variety of financial activities. During the same period he helped beat back tighter oversight of exotic financial products, a development he had previously said he was helpless to prevent." Looks like Rubin is one of the architects of the mess that US banking is in now.
Now, I read that he is (was?) an advisor to Barack Obama during the period of transition. If he continues to advise the new President of the USA, God save America, and more importantly God save the World! Nothing short of divine intervention may suffice.
Wednesday, November 5, 2008
The Promise
I never thought it would happen in my lifetime. I wanted it to happen, but at the back of my mind, I believed that Bush and his Republican bunch of thieves would steal the electoral college away from Obama, like he had done to Gore eight years ago.
But I am glad I was wrong. I am glad I over-estimated the powers of the greedy military-industrial complex commanded by the Republicans. I am glad that Americans finally stood up and voted to get a new man into the White House - Barack Hussein Obama II.
He couldn't become the Prez of the US, right? He's black, with a Kenyan father, and his name is all wrong. It's not British Isles - like Kennedy or Clinton or Bush. It's not a German or a Dutch sounding name, like Eisenhower or Roosevelt. It's not North European at all. And worse, it's got Hussein as the middle name!
Anyways, when it came to the chase, these didn't matter. What mattered was what Obama stands for, and his ability to inspire the grassroots to come out and be counted.
He's got his job cut out for him. The US has become the most disliked, and indeed possibly the most hated nation on earth, for some years now. That doesn't stop people from migrating there - it still is a nation of opportunities, and doesn't discriminate against you when you are making money for yourself and others. But, outside of the US, most of the world tends to bridle a bit about the US. Many, including me, believe that there is only one rogue state in the world, and that's the US; it's still the most powerful nation on earth, and we can't ignore it, even if we wish to. That image is not a nice one to begin with - and Obama has to change that.
Having lost political credibility in the world, it is now losing economic credibility thanks to the meltdown of Wall Street, and the ham-handed efforts of Paulson and the Bush administration to save their rich cronies, and let the taxpayer go to hell. Again, not nice for a new Prez.
The promise is that Obama will tackle these with the basic values of humanity, which belong everywhere to everyone. Decency, honesty, prosperity WITHOUT greed, respect for others which breeds others' respect for you, and working together for a better world.
Sounds idealistic? Utopian perhaps? Maybe, but that's what Obama has done to me. Like a old diehard romantic idealist, I believe there is space in the world for ideals, and that you can live your life by your ideals, and that you can inspire others to share in those ideals.
And Obama has the next four years, at least, to show that ideals can make a big difference to the world. Tough, but I believe that he can do it. At least, now there's somebody in power in the US whom I like and can support.
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