Excuses

I don't have much sympathy for Fred Goodwin. He ran a Bank into the ground and gave the taxpayers a £325bn liability for around 20 years. That takes some doing. But I don't blame him for this pension fiasco.

You don't expect a guy of that kind of gambling instinct to take such risks without making sure he did not personally be set up for the future. He was in charge of all the necessary things to make that happen, surrounded by the right kind of compliant Board and, best of all, he had a desperate Government being advised by the kind of people Goodwin was - Bankers.

Is Goodwin To Blame For His Pension?

Goodwin thinks himself unlucky - massive financial turbulence caused his Company's downfall in his mind. That was not specifically true. RBS could have survived a recession and in conjunction it could have survived a large decline in the housing market - these things could not have impacted his business no more than the usual attrition.

What killed his business was RBS' sole reliance on one single point of potential catastrophic failure - lack of credit.

His whole business model was leveraged on the availability of cheap and easily accessible money to balance his books. His argument is that everyone else did the same which, to a great extent, is true.

That does not mean Fred Goodwin was right, it just made all bank executives idiots.

But Fred Goodwin was a pragmatist also. When the whole thing blew up in his face, he had a rock solid contract which defined around 15 months of pay off plus a pension top up. That is, if certain conditions were met. Should Fred Goodwin have been summarily dismissed for his incompetence, then we may not have got into this situation. However, he was offered the face-saving option of 'early retirement' and that's were the problems lie.

Due Diligence

At the time, last October, Alistair Darling had hailed Fred Goodwin for 'doing the right thing' in waiving his right to the 15 month pay off which of course saved the Government's face in front of taxpayers - Darling and Brown were seen as steely men who confronted Bank largesse and solved the problems. At the time, Brown was being widely regarded as a 'Superman' and his reputation had risen, Phoenix-like, from the ashes of economic disaster.

But Goodwin had indeed waived his pay-off rights but in return had made sure his pension pot top-up of £8m and the right to draw a £653,000 per annum pension immediately was kept in place. It was there for all to see. Now Darling and the City Minister, Lord Myners, are trying to say they knew nothing of this.

To my mind, this is standard contract stuff, just like Peter Mandelson getting 3 years of his EC Commissioner's salary as a pay off despite being employed as Business Secretary - which we pay for.

In his letter to the Treasury, Fred Goodwin makes clear he agreed to a 'series of gestures' in order to keep this little nugget. And frankly, Goodwin was never stupid and he certainly was not contrite. For all the disaster that had beset his Company, he believed he was just a victim of the market. In his mind, he had taken a lowly, provincial Scottish Bank and grown it to become one of the top 5 banks in the world - in his world, he was a hero.

Incompetence and Negligence

The whole series of bank bails outs have a parallel with the Bank failed business model because they were designed, in haste, to support the model. The theory was, by making available a fractional amount of the 'toxic debt' then banks would have enough access to capital to shore up the books and survive, even thrive. It was a disastrous misread of a highly complicated situation. Nothing as simple as just throwing big numbers at it was going to get this solved and, in my opinion, many banks needed to be weeded out rather than supported to get this put right.

If nothing else, there was a whole mindset in the City to unpick, and that's where sneaky bits of embarrassment started to arise.

It started as banks carried on paying bonuses, using taxpayers money to carry on as if nothing had happened, arguing, 'You have to pay bonuses to get good people' which does not go down well when the taxpayer is forking out around £1.3 trillion in liabilities, loans and guarantees. They seemed small to the City as if they were being contrite, but the whole ethos had not changed.

The Government, in its blind panic and swirling in a pool of bad advice, just blundered on as if everyone knew what was on their minds. Of course, they did not want Goodwin to have his massive pay off entitlement - it was bad PR - so agreeing a simple pension right was a good alternative.

The devil is the detail - Goodwin was not going to survive on the Minimum Wage, although to him, £653,000 a year is peanuts.

The fact of the matter is this. Darling, Myners and Brown are guilty of completely misreading the situation. While throwing our money around as if there was an unlimited supply, they did not attempt at any time to curtail the City with strings attached to it, certainly none thought through. So, once again, the taxpayer sits aghast that such negligence and incompetence as could be seen to have caused all this massive financial loss and disaster in the financial system could be repeated by the Government in the bail outs.

I have said it before, it is time we withheld our tax money and make this Government account for every penny before they go throwing it around. They have put us all into a position of having to sustain long term debt and every penny they add to it by incompetence, is another we will all have to find many times over in the future. I say, enough is enough.