Myners to sort out City Fat Cats?

I found the appointment of Paul Myners to become Minister for the City and to serve as an advisor on the New Economic Council particularly interesting. Tom P says “great news I reckon – he knows what he’s talking about and isn’t afraid to be radical”

The Times calls the Chair of the Guardian Media Group, Land Securities, Chair of the Low Pay commission and ex-Chair of Marks and Spencer’s a “respected figure in the City”. While The Telegraph has called him “controversial” which I think is nearer to the mark.

Many on the left will be most upset that he was a director of a hedge fund that made money out of the collapse of Bradford & Bingley. He also gave £12,700 to Gordon Brown’s leadership campaign.

However, there is more to him for those who want meaningful change in our financial systems that may at first appear. He is not at all easy to pigeon hole.

I first came across Paul many years ago when he was a senior fund manager with Gartmore investments. I was a relatively new trade union rep on my pension fund investment committee. The fund had decided to sack Gartmore for poor short term performance. Paul came to a meeting and gave a typically impassioned presentation to our committee about why we should not dismiss Gartmore due to its recent performance and that things will improve in the long term. The Chair of our investment committee however, had already decided Gartmore had to go...... and I went along with things. I don’t think that the replacement fund manager did that much better and has since been replaced anyway, but such is life. It did seem strange to me at the time (and since) that long term investors (pension funds) paid so much attention to short term performance.

I’ve heard Paul speak at a number of events since and he has always shown an edge as a City outsider with an appetite for controversy. Of course he is probably best well known for the Myners report on investment principals.

While I loved his appearance on BBC Question time last year where he said “The arrogant, superior young toffs who lead the Conservative Party, neither of whom have done a serious day's work in their life... David Cameron was executive at Carlton Television which lost over a billion pounds while he was there. I take no lectures from that young man about business competence. ...Nor can we blame Gordon Brown for the sub-prime disaster in the United States of America or the recklessness of bankers.”

At the RSA early this year I heard Paul declare that he spoke “ as a trade unionist” and “someone who wouldn’t join the Labour Party because it is not sufficiently left wing for my taste” but who urged that stamp duty on shares ought to be increased to 5% in order to encourage long term ownership (not short term trading). I assume he is now a member of the Party.

He also advised the unions to concentrate their campaigning on the disparity in Executive pay “the self appointed managerial elite are raping the resources of companies”. So called “independent” external advisers on executive pay are called “Ratchet, Ratchet and Ratchet”. His distaste was clear.

Today we learnt that the former head of failed Bank Lehman Brothers, Richard Fuld, (see picture above right) “earned” $300 million in the last 8 years.

So once the present crisis is over (which eventually it will be) shall the new City Minister take steps to tackle the abuse of executive pay and short termism – and help prevent the next “Great crisis”? We’re wait and see, but I feel that if anyone can have a go .....