John Varley at Barclays says the banking industry owes an apology

John Varley was interviewed on BBC Radio4’s Today Programme. Perhaps the surprising thing about the post on the BBC website is it is headlined “No Recovery Soon in Bank Credit”… “well duh!” as my 14 year old would say. The gap in understanding between public and press understanding of what the “bank bailout” meant remains as large.
John Varley came on the radio with the following messages
1) The banking world should apologise or its mistakes
2) Barclays was still making new advances to small business and that it was “growing its market share of new mortgage lending” (a clever political answer given that the market is so near zero that Barclays could currently grow its relatively small market share by the smallest of additional commitments)
3) The UK banks could not start to expand lending to normal levels until “asset prices recovered” which he felt would take at least 2 years.

Varley is right on the first point. The banks only have themselves to blame.

I must admit I am prone to blame the regulator – but the regulator is not there to stop the banks making mistakes it is there to protect the public. The public can complain about the failings of the regulators – and boy have they failed – but bankers can’t blame the regulatory regime for their own inability to kick their addiction to approving marginal lending decisions in the past 5 years let alone their ability to kid themselves that they “understood the risks” of some of the more esoteric interbank products.

Frustration with the banks is not new, especially in a recession.

I am old enough to have been in banking in the recession in the early 1990s – then one branch of Barclays bounced a cheque on a local builder (of Irish origin) who took revenge by coming in over the Easter Bank holiday and repainting shamrock green all of the outside bits of the branch that were blue. It was a lovely job, carefully done – looked beautiful. He then invoiced the bank for his services. When asked by the judge why he had painted the branch green he replied “Why? ’tis my favourite colour!”

The follow on to that story it that despite being awarded damages against the foolish, but plucky, builder… Barclays are still his bankers. Perhaps the foolish ones were the bank – the damages they sought only added to his overdraft – though I believe the publicity (and public sympathy) he received from his story appearing in the press meant he was probably the winner in the end.