Err, this doesn\’t make sense:
\”Of course,\” he drawled, \”you\’ll offer your properties as collateral.\” \”No,\” I replied. \”We\’re not giving personal guarantees. We have a good business plan and we\’re offering a small stake. You\’ll have to take the risk with us, if you want the reward.\” The spider press-ups froze. I might as well have told him that I\’d torched his mock-Tudor semi in Purley and sold his mousy wife to Somali pirates. The idea that his bank should take an entrepreneurial risk had cast him in a Bateman cartoon, his mouth open and his cheeks flushing. He could hardly contemplate the horror of it.
OK, UK retail banks don\’t take equity stakes in business plans in return for loans. That\’s not what they do. They\’ll lend against security (like housing) or in an established business against the security (perhaps a debenture or something) of the business itself.
Nothing new there at all.
The question \”Whom does my wealth enrich?\” is not one that keeps Barclays awake at night, evidently. Its answer is simple: us. I can see Bob Diamond, president of Barclays, passing one of those \”Make Poverty History\” posters in his limo and smiling to himself, murmuring: \”Job done.\”
But to use that to go on and moan about the rewards paid to that part of a bank which does take equity stakes in return for investment….well, that\’s simply silly as well as being confused.
The suburban bank manager ain\’t getting that sort of pay…..because he\’s not in that sort of entrepreneurial world. The people who are in that world do get that sort of pay: the VC companies, the investment part of banks.
There may still be thingswrong with the pay structure in those areas but Pitcher here has got very confused, at the best, about how banking works.
But they don’t get the rewards either. They get x% on their loan money and that’s it. Full stop.
If they want the chance of the 10x multiple, they have to risk losing the cash.
But yes, it’s fantastically unlikely that a retail account manager is going to take an equity stake.
On the more substantive note, can we stop with the “Greed is Good” already?
Greed is meaningless unless there are people out there willing to trade with you to satisfy whatever cravings you have.
Repeat after me: Greed is irrelevant.
But greed (or self interest) provides the motivation for people to produce things to trade with others, no?
What about this bit:
“Frankly, it’s bad enough being lectured by the heir to a baronetcy and a wallpaper fortune about the wickedness of rich bankers. But Osborne also makes insufficient distinction between bonuses paid on the back of taxpayer support and decent entrepreneurial activity.”
So wallpaper manufacturers are wicked and greedy and not at all indulging in decent entrepreneurial activity?
Eh? Osborne isn’t a worthy, good, enterprenurial wallpaper manufacturer – his ancestors who made the fortune were. He’s a lucky sod who’s come no closer to a real job in his life than any of the Labour frontbench…