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The Great Election Debate

So we had the third and final leadership debate last night before the UK goes to the polls to vote for a hung Parliament (the most likely result). The debate is between the David Cameron for the Conservatives (leading the polls), Gordon Brown for Labour (rather gaff-prone this week) and Nick Clegg for the Liberal-Democrats (until last month, ‘who?’).

Leaders debate

Now I’m not going to talk a lot about politics in this blog – it’s not my place – but there was a big spat about banks last night. From the Wall Street Journal’s live blog of the event:

The banks: Cameron up first, and trots out his rehearsed pitch fairly cleanly – promises changes to regulation, backs Obama etc. Banks should serve the people, not the other way round.

Clegg says no bonuses to directors of banks and a ban on all cash bonuses above £2500 (that sound you can hear in the distance is bankers heading at high speed for Heathrow airport). Again, goes too hysterical; needs to go back to his style of the first debate.

Brown then explains the history of the financial crisis in thirty seconds (oddly leaves out pre-crisis fixation with cheap money policy and narrow inflation targeting on both sides of the Atlantic)

Brown says the Tories are pro-banker, always were.Cameron tries to turn it around. He wants a bank levy. But does he want lower taxes for all businesses? "You're damn right I do."Somewhat confusing… increased taxes for banks, but lower taxes for all businesses. Err… banks are businesses.

Just to be clear on what’s going on here: Gordon Brown has been a strong supporter of the City, Fred Goodwin and the banking markets throughout his leadership.

I’ve mentioned this before but, just to re-emphasise the point, here’s an excerpt from Gordon Brown’s Mansion House speech of June 2006:

London has enjoyed one of its most successful years ever, for which I congratulate all of you here on your leadership skills and entrepreneurship.

Financial services are now 7 per cent of our economy. Financial and business services as much as 10 per cent. A larger share of our economy than they are in any other major economy, contributing £19 billion of net exports to our balance of payments, a success all the more remarkable because while New York and Tokyo rely for business on their large domestic base, London's international ranking is founded on a large and expanding global market.

London is now the home and natural location for 20 per cent of all cross border lending: 30 per cent of world foreign exchange turnover, 40 per cent of over-the-counter derivatives trades, 70 per cent of the global secondary bond market.

Gordon Brown was in love with the City and the City was in love with him. In fact, for UK banking, a Labour majority would be no bad thing as ‘better the devil you know’ and all that.

Meanwhile, Cameron’s claims that they are not the banker’s party falls flat when you look at who funds their Party. This week’s Private Eye:

“Goldman bankers are Tory funders as well as government advisers. Simon Robertson, a major Goldman banker until 2005, has given the Tories £325,000 since 2004. Richard Sharp, a leading Goldman director until 2006, gave Kensington & Chelsea Tories thousands while working at the bank, and has given Conservative Central Office £220,000 since 2006. Christopher French, head of ‘wealth management’ at Goldman Sachs, gave the Conservatives £50,000 in 2008. Hugh Sloane and George Robinson have given them £317,000 and £150,000 respectively. Their hedge fund, Sloane Robinson, ran one of its funds in partnership with Goldman Sachs which ‘also provides the partnership with financing lines and short selling facilities’.”

And this is the Party that called Gordon Brown to task last week for working with Goldman Sachs, and is now “lashing out at the people he was very happy to work with over the last 13 years as both Chancellor and Prime Minister.”

Meanwhile, the sunny side of the street where Vince Cable, Shadow Chancellor for the Liberal Democrats, walks has also been sullied. From the Times:

“In 2006, addressing the spring lunch of the Association of Foreign Banks in London, he praised the City’s achievements and warned of the dangers of ‘the current clamour for regulation of financial products’. He favoured ‘a lighter touch’ for City regulation.”

All in all, it makes it easy for me to know who I’m voting for this year…

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About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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