Wednesday, 20 November 2013

Coke and co-operatives

"Rather than the typical make up of company executives and non-executives directors, the Co-Op's board included a plasterer, a nurse and a horticulturist..." This line is from the Financial Times, but I've heard a lot of variations on it over the past few days. The FT's article doesn't explicitly say why having a plasterer on the board of the Co-Operative Group might be a problem, but I'm going to stick my neck out a bit and suggest that the implication is that the people the FT's referring to above have no business being on the board and that their presence there directly led both to the Co-Op Bank's financial trouble and also the hiring of the Reverend Paul Flowers. I'm going to stick my neck out a bit more and say that there's a further implication that Reverend Flower's presence on the board during the bank's financial issues and the reports of him buying illegal drugs tell you all you need to know about the man and the bank - that one explains the other; that the bank's failure to make enough money is worthy of moral condemnation, but that it is made even more worthy of condemnation by Reverend Flower's alleged brush with drugs. In short, the FT is saying that the Co-Op was always going to come off the rails if it let a bunch of comedy northerners and a drug abusing methodist minster run the show.

What the FT - and everyone else who casually trots out this line and conflates Reverend Flower's personal crisis with the Co-Op Bank's financial crisis - has forgotten is that four years ago, a whole shitload of banks with a whole shitload of guys on their boards with hundreds of years of banking experience between them managed to fuck themslves and very nearly everything else up. The fucking up of things that they accomplished was, if you remember, astonishingly comprehensive, and I thought we'd all kind of agreed that part of the problem was too much expertise on the part of the banks. Essentially shitty loans were parcelled up so as to look like good investments, by very clever people who'd forgotten all of their social and moral obligations and remembered only the obligation to make money. In 2008, I had a not particularly good seat in a very peripheral arena in which a tiny part of the financial crisis was played out. Even from where I was sitting, it was possible to see wealthy, financially literate blokes in good suits with nice cars being incredibly stupid with theirs and other people's money.  Some of them are still arguing over the repsonsibility they should bear for the decisions they took. So until someone can show me in a calm and carefully explained way how the plasterer, the nurse and the horticulturalist have done any worse than these guys, I would rather the Co-Op didn't change a thing about the way it does business.

The Co-Op's actual board of directors are here. The Group's interim financial results are here.

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