The banking industry's biggest problem isn't bonuses or market share

The only way to make the sector pursue long-term viability instead of short-term greed is to change the rules of the game

• 
• • Ha-Joon Chang
  • The Guardian, Wednesday 22 January 2014

‘The fact that the political class, including Miliband himself, cannot even imagine state-owned banks ditching the business model that caused this crisis is a testimony to the power of the financial industry lobby.’ Photograph: Stefan Rousseau/PA

Last Friday, in another of those agenda-setting speeches for which he has rightly become famous, Ed Miliband took on the biggest of what he describes as "the broken markets" in the UK economy – the financial market.

Taking his "cost of living crisis" theme to another level, the Labour leader emphasised that the issue is not just about oligopolistic firms fleecing their customers; it is also about the lack of jobs with decent wages that can support decent standards of living. The problem with the British banking industry, Miliband pointed out, is not just about the concentration of financial power in the personal account market, but also in the business loan market.

According to Miliband's analysis, the dominant banks are not lending enough to small and medium-sized enterprises because they form a cosy oligopoly (controlling 85% of small business lending) that does not want to take any risk; enterprise loans are inherently riskier than mortgage and personal loans. Given that small businesses create most jobs in the UK (as they do in all countries), lack of finance for them is limiting the creation of decent jobs. The solution, he argued, is to introduce more competition into the small business lending market by capping the share of individual banks.

This proposal has caused much controversy. However, one thing is certain: it is going to be slow-acting. It may be years before proper "challenger" banks emerge, given the time necessary for the review by the Competition and Markets Authority – which takes over the roles of the Competition Commission and Office of Fair Trading from April – and for the process of selling branches.

But there is a quicker and simpler solution to this problem. It is for the government to use its ownership of two of the big four banks, RBS and Lloyds, to direct more lending to small businesses. Thanks to the bailout following the 2008 financial crisis, RBS is 81% owned by the government. This means it can tell RBS what to do. It also owns 33% of Lloyds, and while this does not give it a total control over the bank, it is well above what is normally considered a "controlling stake" in an enterprise.

Now, if you can basically tell two of the four largest banks what to do – say, to increase lending to small businesses – why go through the rigmarole of calculating their market shares and forcing them (and the other two) to sell off some of their branches?

The usual refrain is that Westminster cannot make RBS and Lloyds do things differently because, in order to survive, these banks need to behave like other competitors: generating as much profit and paying their staff as much.

This argument may be right if the existing business model of British banks and other financial companies is fine. But it is not. It is a business model that has caused the biggest financial crisis in 70 years and created imbalances and inequalities that threaten the future viability of the British economy. The fact that the political class, including Miliband himself, cannot even imagine state-owned banks ditching such a model is a testimony to the power of the financial industry lobby.

From the day when RBS and Lloyds were bailed out, the Labour government was at pains to emphasise it would run them along the same lines as before nationalisation. The only thing for which Labour and, subsequently, the coalition government have used the government's dominant shareholding position has been to restrain bonuses. But this is really missing the point.

The problem with bonuses in the financial industry is not about their levels – if someone makes a huge contribution to the economy, he or she should be richly rewarded. The main problem is that these bonuses are given to people for doing the wrong things well – things that harm the economy in order to enrich the shareholders, the top managers of banks and other financial firms.

So the real question is how we make banks and other financial firms pursue the right goals, rather than how much people should be paid, whether in bonuses or salaries. And the only way to make them pursue different goals from those they pursue now is to change the rules of the game.

Unfortunately, few regulations have been introduced since the crisis that have materially changed the goals of financial companies. The result has been "business as usual".

All those complex and risky financial products that were at the centre of the 2008 financial crisis – such as mortgage-backed securities, collateralised debt obligations, credit default swaps and other financial derivatives – are back in vogue again.

The credit rating agencies, whose incompetence and cynicism in rating those financial products has become legendary after the crisis, are still operating in the same way.

Thanks to Help to Buy, the mortgage-lending market is nearly back to its old self. Now you can get loans that are 95% equal to the value of the house – not quite the 125% you could get before the crisis, but nearly there.

In the absence of measures to encourage longer-term shareholding – for instance, by granting more votes or tax advantages – short term-oriented shareholders are still reigning supreme, putting pressures on banks to generate short-term profits, whatever the consequences.

The main problem with the British financial industry is not the level of bonus, or even the concentration in the banking sector; it is that the industry is pursuing goals that are detrimental to the long-term economic viability of the country, in the process enriching only a tiny minority and sapping human and financial resources from the rest of the economy.

Unless those goals are changed through better regulation, the industry will remain harmful to the rest of the economy, whatever we do about bonuses and market concentration.

Our banks are not merely out of control. They're beyond control

Jailing reckless bankers is a dangerously incomplete solution. The market is bust. Institutions that are too big to fail are too big to exist

• 
• • Joris Luyendijk
  • The Guardian, Wednesday 19 June 2013 20.35 BST

'The banking system is highly dysfunctional, deeply entrenched, and enormously abusive, both to its own workers and the society it operates in.' Photograph: Adrian Dennis/AFP/Getty

Seeing the British establishment struggle with the financial sector is like watching an alcoholic who still resists the idea that something drastic needs to happen for him to turn his life around. Until 2008 there was denial over what finance had become. When a series of bank failures made this impossible, there was widespread anger, leading to the public humiliation of symbolic figures. But the scandals kept coming, and so we entered stage three – what therapists call "bargaining". A broad section of the political class now recognises the need for change but remains unable to see the necessity of a fundamental overhaul. Instead it offers fixes and patches, from tiny increases in leverage ratios tobonus clawbacks and "electrified ring fences".

Today's report by the parliamentary commission on banking standards (to which I gave evidence) is a perfect example of this tendency to fight the symptoms while keeping the dysfunctional system itself intact. The commission, set up after last year's Libor scandal, identifies all the structural problems and nails the fundamental flaw in finance today: "Too many bankers, especially at the most senior levels, have operated in an environment with insufficient personal responsibility." Indeed, as they like to say in the City, running a mega-bank these days is like "Catholicism without a hell", or "playing russian roulette with someone else's head".

In response, the commission proposes jailing reckless bankers. Restoring the link between risk, reward and responsibility is a crucial step towards a robust and stable financial sector. But the report's focus on individual responsibility is also dangerously incomplete because it implies that the sector is merely out of control. This plays into the narrative that things can be fixed by tweaking rules and realigning incentives; in other words, by bargaining.

In reality the financial sector is not out of control. It's beyond control. During the past two years I have interviewed almost 200 people working in finance in London: "front office" bankers with telephone-number bonuses as well as those in "risk and compliance" who are meant to stop them being reckless. I have also spoken to many internal and external accountants, lawyers and consultants.

The picture emerging from those interviews is of big banks not as coherent units run by top bankers who know what they are doing. Instead these banks seem, in the words of Manchester University anthropologist Karel Williams, "loose federations of money-making franchises". One risk analyst talked about her bank as "a nation engaged in perpetual civil war", while a trader said, "You have to understand, it's us against the bank."

I could give 50 similar quotes. Taken together, they leave but one conclusion: employees at the big banks themselves do not believe their top people know what's going on; the big banks have simply become too complex and too big to manage. If this is true, the solution is not so much to jail the top bankers when something goes wrong, it is to break up the banks into manageable parts. But the British establishment still seems incapable of accepting the notion that a bank that is too big to fail or manage is a also bank that is too big to exist.

The same seems to apply to the need to restore market forces in the financial sector: the second source of structural dysfunctionality. Imagine a restaurant had served up product as toxic as that which big banks, credit rating agencies and accountancy firms were churning out until 2008. You would expect that restaurant to have closed. You would also expect new restaurants to have opened up in the area. This is how a free market should work: competition drives out bad practices.

But where are the new credit-rating agencies, accountancy firms or big banks? Even worse, not only are there just four major accountancy firms, they are also financially dependent on the very banks they are supposed to audit critically. It's the same with thethree credit-rating agencies dominating the market.

And it gets worse. Imagine that a restaurant in your neighbourhood made the kind of money paid to top employees in banking, credit-rating and accountancy firms. You'd expect people rushing to open more restaurants, and with that increased competition you'd expect wages to come down. Again, this is how competition works. There are thousands and thousands of young graduates aching to get into investment banking, so no shortage of prospective chefs. So where are the new players in high finance?

The reality is that global high finance is de facto a set of interlocking cartels that divide the market among themselves and use their advantages to keep out competitors. Cartels can extract huge premiums over what would be normal profits in a functioning market, and part of those profits go to keeping the cartel intact: huge PR efforts, a permanent recruiting circus drawing in top academic talent; clever sponsoring of, say, an ambitious politician's cycling scheme; vast lobbying efforts behind the scenes; and highly lucrative second careers for ex-politicians. There is also plenty of money to offer talented regulators three or four times their salary.

Capitalists have an expression for this, and it's "market failure". Here is the source of so many of the perversities in modern finance, and the solution is not only to denounce those who can't resist its temptations, it's to take away those temptations. That probably means smaller banks, smaller and independent accountancy firms and credit-rating agencies, simpler financial products, and much higher capital requirements.

Before studying bankers I spent many years researching Islam and Muslims. I set out with images in my mind of angry bearded men burning American flags, but as the years went by I became more and more optimistic: beyond the frightening rhetoric and sensationalist television footage, ordinary Muslim people go about their day like all other human beings. The problem of radical Islam is smaller and more containable than Islamophobes believe.

With bankers I have experienced an opposite trajectory. I started with the reassuring images in my mind of well-dressed bankers and their lobbyists; surely at some basic level these people knew what they were doing? But after two years I feel myself becoming deeply pessimistic and genuinely terrified. This system is highly dysfunctional, deeply entrenched, and enormously abusive, both to its own workers and the society it operates in. The problem really is exactly as bad as the "banker bashers" believe.

Standard & Poor's feels Justice's lash, but can the law ever conquer greed?

The DOJ is making headlines with high-profile suits against Wall Street firms, but singling out a few won't fix systemic wrongdoing

• 
• • Heidi Moore
  • guardian.co.uk, Tuesday 5 February 2013 21.16 GMT

Standard & Poor's faces a Department of Justice lawsuit alleging the firm succumbed to conflicts of interest in their ratings for banks of mortgage-backed securities. Photograph: Stan Honda/AFP/Getty Images

 

In politics, public humiliation can often be a useful motivator. Take the Department of Justice, which was hauled over the coals in a recent PBS Frontline documentary on its lack of vigor in Wall Street prosecutions. The DOJ has been on a rampage lately.

The DOJ has been reportedly planning to file charges against the Royal Bank of Scotland, and last night, it filed an actual lawsuit against Standard & Poor's for misrating mortgage bonds before the financial crisis.

The Department of Justice is also getting creative and taking a novel tack. Standard & Poor's and other ratings firms have long maintained that their ratings, which were opinions, were protected under freedom of speech; in essence, you can't kill the messenger. This has proven a bulletproof defense for years.

The DOJ, in its lawsuit, counters that S&P acted as a double agent by allegedly violating its own standards. Ratings firms are paid by banks to rate products created by banks – an obvious conflict of interest in many cases. Standard & Poor's, like other firms, promised objectivity.

Thus the DOJ has alleged that S&P, while purporting to provide objectivity, was working on behalf of banks that needed good ratings for bad mortgage securities. To support this allegation, the DOJ quotes several emails that show S&P fretting over losing business to Moody's.

DOJ v Wall Street: from zero to hero

This rampage is great … directionally. The DOJ generally has to go crawling to Wall Street, tentatively striking deals that won't hurt financial reputations too badly and the bottom line hardly at all.

So, who doesn't love a major character finally overcoming its low self-esteem and owning its power?
In movie terms, this is the equivalent of the nerdy librarian who doffs her glasses and shakes out her hair, at which someone must yell, "Why, Miss Jones, you are magnificent!" It is Beyonce, pointedly filing her nails in the video for "Irreplaceable", squaring her shoulders and declaring, "You must not know about me. You got me twisted." It is Patrick Dempsey growing from spindly tween idol into a silvery heartthrob.


Considering that the DOJ is trying to regain its swagger, it seems churlish to object that it still may not be thinking big enough. And yet …

The DOJ's approach is great, in theory. It's good for a prosecutor's reputation to rake one firm over the coals and humiliate it publicly. But the truth is, the effect is limited. Other firms, rather than looking at the embarrassed firm and thinking, chastened, "there but for the grace of God go I," instead think, "God, glad I'm not like that poor sucker who got caught for doing what everyone does."
The DOJ is the greatest prosecutorial force in the country. It has subpoena power – excellent for commandeering embarrassing financial documents – and just enough resources and publicity power to really strike fear into Wall Street wrongdoers. The SEC is too underfunded; the CFTC has a shorter reach. The DOJ is, in short, the only entity in the country with any hope of accomplishing anything in the way of white-collar law enforcement.

Why 'making an example' doesn't work


There is some method to striking fear into the hearts of villains. For one thing, villains always believe they are exceptional. This is the case on Wall Street as well. Anyone who does anything dodgy involving money is usually pretty self-aware. He never deludes himself into thinking, "Oh, I am not doing anything wrong." He thinks, instead, "The authorities will never be smart enough to catch me."
This is why singling out RBS, or UBS, or S&P, will never have the fearsome deterrent effect that the DOJ really wants. In fact, by going after the firms piecemeal, the DOJ may actually be encouraging future wrongdoers rather than turning them away from crime.

You see, the DOJ is going after one or two firms for actions that were widespread across the industry. Fixing interest rates was the work of thousands of people. It's safe to say that S&P was not the only ratings firm that fretted that it would lose fees if it started downgrading bonds. In fact, S&P, according to the emails provided by the DOJ, frequently worried that it was not keeping up with Moody's.

This is a familiar pattern in Wall Street cases: Merrill Lynch, for instance, packaged all those bad mortgage securities partly because it was trying to outdo the profits of Goldman Sachs.

Wall Street's culture of rule-breaking

The dirty secret of Wall Street is that it delights in evading rules – not just for profit, but also for sport. To keep its skills sharp. The finance industry is full of clever people who love nothing more than finding loopholes to subvert authority, whether of government or of their own head of trading. The reason Wall Street leaders are always yelling about the necessity of teamwork is because acting mostly in one's individual self-interest – and the interest of one's bonus payment – is almost always the rule.

So, yes, this sudden burst of enthusiasm from the DOJ is a great development. There's no question that it's good, for most of the populace, to see one of America's great prosecutorial forces finally pull its act together on one of the defining scandals of our age: the greed – and sometimes fraud – that turned the housing crash into a financial crisis.

Yes, it's late – in fact, it pushes the traditional statute of limitations on such cases – but at least, some of the gears are finally moving. "Wisdom too often never comes, and so one ought not to reject it merely because it comes late," the supreme court Justice Felix Frankfurter once said, and he could have been talking about all these delayed actions.

It's also always fun to participate in the ritual of reading the hilariously self-incriminating internal emails that the DOJ captured. One of the best includes an S&P analyst sarcastically commenting that, after the crisis, the firm looked like something out of the 1980s hapless Wall Street comedy Trading Places:

"You should see how it is here. It's like a friggin trading floor. 'Downgrade, Mortimer, downgrade!'"

Bond ratings now less relevant

Wall Street, of course, didn't need to see these emails to see which way the wind was blowing with the ratings firms. Most banks and trading floors stopped depending on official bond ratings ages ago, even though all the ratings firms retain excellent records on corporate and municipal bonds (in fact, anything that is not mortgage-related).

BlackRock, one of the favorite bond managers of the federal government, has boasted for years that it does its own analysis on potential defaults rather than rely on ratings firms. (BlackRock's founder, Larry Fink, was not coincidentally one of the creators of the mortgage-backed security.) Official ratings are often only a technical requirement, but rarely do many banks or investors rely on them any more – the same way those banks don't rely on the Libor interest rate any more.

Which is why the DOJ should cast its net wider. Ultimately, the DOJ lawsuit against S&P may make a splash, but it probably won't be a deterrent. The only thing that will do that is banks and investors forcing ratings firms to behave differently.

That's easy in times of calm, like now, but much harder in bubble times, when greed rules.

Fitch downgrades Argentina and predicts default

Credit rating agency Fitch has downgraded Argentina, which is locked in a court battle in New York over its debt, and said the country would probably default.

Also read Ratings Agencies - The Power of Modern Day Astrologers

Also read How could Greece and Argentina – the new 'debt colonies' – be set free?

Fitch also said that Argentina's economy has slowed sharply this year Photo: AFP

11:55PM GMT 27 Nov 2012

72 Comments

Fitch cut its long-term rating for Argentina to "CC" from "B," a downgrade of five notches, and cut its short-term rating to "C" from "B". A rating of "C" is one step above default, AP reported.

US judge Thomas Griesa of Manhattan federal court last week ordered Argentina to set aside $1.3bn for certain investors in its bonds by December 15, even as Argentina pursues appeals.

Those investors don't want to go along with a debt restructuring that followed an Argentine default in 2002. If Argentina is forced to pay in full, other holders of debt totaling more than $11bn are expected to demand immediate payment as well.

Argentine politicians, even those opposed to President Cristina Fernandez, have nearly unanimously criticized the judge's ruling as threatening the success of the debt relief that enabled Argentina to grow again.

Ratings by agencies like Fitch are used by investors to evaluate the safety of a country's debt. Lower ratings can make it more expensive for countries to borrow money on the bond market, exacerbating their financial problems. 

Argentina is in a deepening recession and is grappling with social unrest. Besides the court case, Fitch cited a "tense and polarized political climate" and public dissatisfaction with high inflation, weak infrastructure and currency.

Fitch also said that Argentina's economy has slowed sharply this year.

Of the two other major rating agencies, Standard & Poor's has a rating of "B-" for Argentina, five steps above default, and Moody's rates it "B3 negative", also five steps above default.

Rating agency worker: 'I am genuinely frightened'

The global meltdown terrified the City. But many are more worried that no controls have been introduced since 2008

• This monologue is part of a series in which people in the financial sector speak about their working lives

'I was on holiday in the runup to the collapse of Lehman Brothers, when the crisis exploded. It was terrifying, absolutely terrifying.' Photograph: Linda Nylind for the Guardian

We are meeting in the heart of the City after the banking blog called on rating agency employees to talk about their experiences. The man I am meeting is British, in his early 40s, a fast talker and very friendly, the sort of person to apologise profusely when arriving four minutes late. He orders an orange juice.

The Joris Luyendijk banking blog

1. Anthropologist and journalist Joris Luyendijk ventures into the world of finance to find out how it works
2. This is an experiment Find out more
3. Are you an outsider? Meet the people who work in finance
4. Are you an insider?Find out how you can help
5. Follow updates hereThe Joris Luyendijk banking blog
6. ... or on Twitter@JLbankingblog

"Every time I read about a new financial product, I think: 'Uh-oh.' Every new product is described in those same warm, fuzzy phrases: how great they are and how safe. Well, that's how credit default swaps and asset-backed securities were explained when banks were introducing these.

"I still get so angry when I think about it. Taking a job at a rating agency seemed a perfect match: drawing a good salary while providing a service of genuine value for society. We need ratings to work out how safe a company or an investment bond is, what the risk of default might be. If you can't trust it, you shouldn't do business with it – it's that simple.

"The reality was very different. What's making me even angrier is that we don't seem to have learned from the crisis. It's back to business as usual. I am no longer with a rating agency, and when I ask former colleagues what lessons they've taken away from the 2008 debacle, they give me a blank stare and say: 'That wasn't us, that was Moody's and Standard & Poor's.' But we just lucked out: our methods were similar.

"Moody's and S&P are the two major credit rating agencies in the world. Between them, they control 80% of the market and they are large, rich and powerful. Then there's Fitch, desperately trying to get the training wheels off and grow. Finally, there are specialised smaller agencies, one of which I was working for.

I was there when the great collapse of 2008 happened, giving me a ringside view. My agency was incredibly lucky never to have expanded into areas we didn't understand. Our head office was very conservative. This saved us.

"I was on holiday in the runup to the collapse of Lehman Brothers, when the crisis exploded. I remember opening up the paper every day and going: 'Oh my god.' It was terrifying, absolutely terrifying. We came so close to a global meltdown. There I was on my BlackBerry following events. Confusion, embarrassment, incredulity … I went through the whole gamut of human emotions. At some point my wife threatened to throw my BlackBerry in the lake if I didn't stop reading on my phone. I couldn't stop.

Now here we are four years later, and the most incredible thing has happened – we've learned nothing from the whole thing. Everybody pretends it's all OK. Sometimes I feel finance has reacted to the crisis the way a motorist might respond to a near-accident. There is the adrenaline surge directly after the lucky escape, followed by the huge shock when you realise what could have happened. But then, as the journey continues and the scene recedes in the rearview mirror, you tell yourself: maybe it wasn't that bad. The memory of your panic fades, and you even begin to misremember what happened. Was it really that bad?

"If you had told people at the height of the crisis that four years later we'd have had no fundamental changes, nobody would have believed you. Such was the panic and fear. But there we are. We went from 'We nearly died from this' to 'We survived this'.

"Have you read Gillian Tett's Fool's Gold about the crisis? It was exactly like that. You had bankers who did not understand their own complex financial products but thought that they did, and then raters who took their word for it. And nothing has fundamentally changed.

"As most people understand by now, lots of sub-prime mortgages were bundled by banks into financial products and sold on to investors. These believed they bought a very safe thing because the products had been rated triple A, which meant that there was only a 1% or so chance of a default.

"When the crisis hit, it hit hard, reality kicked in and the rating agencies suddenly downgraded triple A products to junk status in a matter of days. I won't call it fraud; I will call it a 'desperate revision of history'.

"Overall, it was more incompetence than outright fraud. If the sub-prime mess had been a huge conspiracy, it would have been very, very difficult to keep that a secret all these years. Too many people were involved. As far as the rating agencies were concerned, it was incompetence brought on by short-termist, bottom-line thinking by senior management who just wanted to make money. That meant rating as much as possible, as often as possible.

"The big change in rating agencies started around 10 years ago. Before that time Moody's was seen as boring, quiet, nerdish. Analysts there were seen as researchers, studious types. Then new management came in and they threw this out of the window. They pushed a culture that was driven by a desire to just keep rating. And they hired people that reflected their thinking.

"Imagine you are a rating agency and you see this new product coming in. You realise: if we rate it, we can keep on rating products like it, as this is the beginning of a continuing stream. And a huge stream it was: thousands and thousands of products offered for rating – and each for a fee.

"But, at the same time, rating agencies senior management have become so focused on the bottom line. There's constant cost-cutting. Demanding more from fewer and fewer people. Obviously, the quality of a rating declines when there's less time to study a company and its business plan. In my time at the company, there'd be no paid overtime, no time off after you worked through the weekend, let alone a word of thanks.

"Ultimately the work suffers, more so when there are endless internal restructurings. Two heads of department in my agency had their department organised out of existence overnight. A little while later, one was resurrected when top management realised what it had done. Higher management often doesn't properly understand what's going on in its own organisation. They are constantly redrawing the map, to the point where it feels like the map has become more important than the journey.

"When asked about the crisis, rating agencies use the defence that the bankers who designed those complex financial products did not understand them themselves. So how can rating agencies be blamed for not understanding them either**?

"But you shouldn't just rely on the information given to you by the people whose product or company you are rating. Imagine a doctor who bases his diagnosis only on what patients themselves are telling him. If they are lying to him, the doctor is lost. If they are lying to themselves, ditto. Or imagine you went to rate the UK and all you do is ask George Osborne how things are with the country.

"With every new financial product, raters should be asking: have the products been tested properly? Are they modelled for all possible conditions, so boom as well as bust times? Do we even know what it does in every phase of the economic cycle? Do we know how the product is likely to evolve over time, how will it behave when it develops into a bubble? The thing is, you cannot ask these questions if you are permanently understaffed and under-experienced.

"Young analysts are much cheaper than experienced ones. And giving people a thorough training again costs money and takes a long time. If you're young, you will assume that what you've seen until now in your life is 'normal', when it might not be. More than that, young people lack not only experience in business but also in life*. When interviewing management, you need to be able to read people, to have developed alarm bells for when they might be lying to you – or worse, lying to themselves.

"This problem exists on both sides of the divide. Many of the most dangerous financial products are designed by the same kind of fresh-faced, straight-out-of-university boys and girls. They have never seen a market panic. They are too young to know the true face of the market; they don't see how products can be misused. What they do see, and tell their bosses, is how their product can make money.

"Finance is continuously evolving, so you have highly niche financial areas that fewer and fewer understand. This all but guarantees misunderstandings. Rating agencies have mostly generalists and very few niche specialists. Often you get someone specialised in product A to rate product B, even though they are 20% different. This is where misunderstandings are quite likely to arise, when a specialist mistakenly believes that his expertise is applicable to adjacent niches.

"I am genuinely frightened. What are the ratings agencies missing at the moment? What are the companies that they're rating developing? What's the next miracle financial product and how badly is it being misunderstood?

Also read

Ratings Agencies - The Power of Modern Day Astrologers 

The Crisis of European Democracy

by Amartya Sen

IF proof were needed of the maxim that the road to hell is paved with good intentions, the economic crisis in Europe provides it. The worthy but narrow intentions of the European Union’s policy makers have been inadequate for a sound European economy and have produced instead a world of misery, chaos and confusion. 

There are two reasons for this.

First, intentions can be respectable without being clearheaded, and the foundations of the current austerity policy, combined with the rigidities of Europe’s monetary union (in the absence of fiscal union), have hardly been a model of cogency and sagacity. Second, an intention that is fine on its own can conflict with a more urgent priority — in this case, the preservation of a democratic Europe that is concerned about societal well-being. These are values for which Europe has fought, over many decades.

Certainly, some European countries have long needed better economic accountability and more responsible economic management. However, timing is crucial; reform on a well-thought-out timetable must be distinguished from reform done in extreme haste. Greece, for all of its accountability problems, was not in an economic crisis before the global recession in 2008. (In fact, its economy grew by 4.6 percent in 2006 and 3 percent in 2007 before beginning its continuing shrinkage.)

The cause of reform, no matter how urgent, is not well served by the unilateral imposition of sudden and savage cuts in public services. Such indiscriminate cutting slashes demand — a counterproductive strategy, given huge unemployment and idle productive enterprises that have been decimated by the lack of market demand. In Greece, one of the countries left behind by productivity increases elsewhere, economic stimulation through monetary policy (currency devaluation) has been precluded by the existence of the European monetary union, while the fiscal package demanded by the Continent’s leaders is severely anti-growth. Economic output in the euro zone continued to decline in the fourth quarter of last year, and the outlook has been so grim that a recent report finding zero growth in the first quarter of this year was widely greeted as good news.

There is, in fact, plenty of historical evidence that the most effective way to cut deficits is to combine deficit reduction with rapid economic growth, which generates more revenue. The huge deficits after World War II largely disappeared with fast economic growth, and something similar happened during Bill Clinton’s presidency. The much praised reduction of the Swedish budget deficit from 1994 to 1998 occurred alongside fairly rapid growth. In contrast, European countries today are being asked to cut their deficits while remaining trapped in zero or negative economic growth.

There are surely lessons here from John Maynard Keynes, who understood that the state and the market are interdependent. But Keynes had little to say about social justice, including the political commitments with which Europe emerged after World War II. These led to the birth of the modern welfare state and national health services — not to support a market economy but to protect human well-being.

Though these social issues did not engage Keynes deeply, there is an old tradition in economics of combining efficient markets with the provision of public services that the market may not be able to deliver. As Adam Smith (often seen simplistically as the first guru of free-market economics) wrote in “The Wealth of Nations,” there are “two distinct objects” of an economy: “first, to provide a plentiful revenue or subsistence for the people, or, more properly, to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services.”

Perhaps the most troubling aspect of Europe’s current malaise is the replacement of democratic commitments by financial dictates — from leaders of the European Union and the European Central Bank, and indirectly from credit-rating agencies, whose judgments have been notoriously unsound. 

 

Participatory public discussion — the “government by discussion” expounded by democratic theorists like John Stuart Mill and Walter Bagehot — could have identified appropriate reforms over a reasonable span of time, without threatening the foundations of Europe’s system of social justice. In contrast, drastic cuts in public services with very little general discussion of their necessity, efficacy or balance have been revolting to a large section of the European population and have played into the hands of extremists on both ends of the political spectrum.

Europe cannot revive itself without addressing two areas of political legitimacy. First, Europe cannot hand itself over to the unilateral views — or good intentions — of experts without public reasoning and informed consent of its citizens. Given the transparent disdain for the public, it is no surprise that in election after election the public has shown its dissatisfaction by voting out incumbents.

Second, both democracy and the chance of creating good policy are undermined when ineffective and blatantly unjust policies are dictated by leaders. The obvious failure of the austerity mandates imposed so far has undermined not only public participation — a value in itself — but also the possibility of arriving at a sensible, and sensibly timed, solution.

This is a surely a far cry from the “united democratic Europe” that the pioneers of European unity sought.

Amartya Sen, a Nobel laureate and a professor of economics and philosophy at Harvard, is the author, most recently, of “The Idea of Justice.”

Argentina Re-Nationalises an Oil Company

Standard & Poor's puts Argentina on 'negative watch' over YPF nationalisation plan

Standard & Poor's has put a "negative watch" on Argentina's credit rating, citing "rising restrictions to international trade" and "steps to nationalise oil company YPF" as reasons for the move.

Women walk past a poster that reads "CFK - YPF. They're ours, they're Argentine" in Buenos Aires last week. Photo: Reuters

By Fiona Govan, in Madrid

11:03PM BST 23 Apr 2012

41 Comments

 

Despite affirming its "B" credit rating, S&P added that the South American country's recent actions "could exacerbate existing weaknesses in the economy", pointing to high inflation and increasingly rigid government expenditure.

The news came after Spain’s Repsol threatened legal action against any company that attempts to invest in YPF following its expropriation by Argentina last week, as the government expressed determination to “pay nothing at all” in compensation to the Spanish oil company.

The move would discourage external partners from providing the investment YPF needs to exploit vast shale oil deposits discovered within the Latin American country and is the latest attempt by Repsol to fight back against the illegal seizure of its subsidiary.

“We reserve the right to take legal action against any party investing in the YPF and its assets following the unlawful expropriation of the company,” Kristian Rix, a spokesman for Repsol in Madrid, told the Daily Telegraph on Monday.

The Spanish energy company believes billions of dollars are required to develop Argentina’s prospects including at least €25bn a year over the next decade to exploit the Vaca Muerta shale discovery made last year.

Julio De Vido, Argentina’s Planning Minister has already approached Brazil's state-run oil company Pertobras over investment in YPF and plans to contact other foreign oil companies including Exxon, Chevron and ConocoPhilips.

The development comes amid yet more rhetoric from Argentina as government sources insisted the offer of compensation would be “zero pesos”.

Shares in Repsol and Spanish builder Sacyr Vallehermoso, which owns a 10pc stake in the company, fell by 4.7pc and 10.7pc respectively on Monday after government sources quoted in Argentina’s daily newspaper La Nacion said the government was “determined to pay nothing at all to Repsol”.

Antonio Brufau, CEO of Repsol has argued that its YPF stake had a value of $10.5bn.
“They are looking into and finding out everything on the management of Repsol: irregularities, lack of investment, defective technical plans, financial and accounting issues. There is a debt of $9bn,” an unnamed official told the newspaper.

The government is assuming that any legal action processed through international tribunals could take five or six years, confided the source.

Meanwhile, details of the aggressive tactics employed by the government of Cristina Fernandez de Kirchner towards Spanish executives at YPF during the takeover emerged in a briefing issued by Spain’s foreign office to all its embassies fermenting hostilities between the two countries.

Mr de Vido and Axel Kicillof, the deputy economy minister, arrived at company headquarters with armed security guards who used “physical violence and threats” to force Spanish YPF employees from the building giving them five minutes to collect their personal belongings, the internal memo said.

Spanish YPF executives were then “hunted down” for “harsh interrogation” and they and their families sought refuge at the home of a senior executive awaiting repatriation to Spain.

In addition, eyebrows were raised over the state appointment of one of new managers of YPF. Exequiel Espinosa, the head of state oil company Enarsa, was once embroiled in a corruption scandal that threatened to derail Mrs Kirchner’s campaign for presidency in 2007.

Mr Espinosa was one of the Argentine officials on board a plane carrying Guido Antonini, a Venezuelan businessman who was caught landing in Buenos Aires with a suitcase of $800,000 allegedly destined for Mrs Kirchner’s campaign.

The matter forced the resignation of Claudio Uberti, an Argentine government official involved in trade and investment deals with Venezuela and cost Diego Uzcategui, president of Venezuela oil company PDVSA as both were on board the plane.

But Mr Espinosa, who was also one of the eight passengers on the private jet hired by Enarsa, survived the association unscathed.

“He’s a complete Kichnerista crony and now he’s in charge of exploration and production at YPF,” said a source connected to the Latin American energy industry.

Repsol may fight a move by the Eskenazi family to buy back shares in YPF citing a “force majeure” argument to declare the agreement void.

The company could argue that the agreement to buy back Eskenazi shares in the event that Repsol was to lose its majority stake was not applicable in the context of expropriation.

It also emerged on Monday that Argentine officials had searched a property used by Mr Braufau in Buenos Aires, seizing computers and documents apparently without an official court order.

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Argentina's oil grab is timely retort to rampaging capitalism

Cristina Fernández's actions, however clumsy, are part of a worldwide reaction to exploitation by business and the rich

• 
• • Will Hutton
  • The Observer, Sunday 22 April 2012

Cristina Fernández's move was populist and clumsy, but perfectly understandable. Photograph: Daniel Garcia/AFP/Getty Images

Suppose the British government knew that a key shareholder in Centrica, our last great British energy company and owner of British Gas, was to sell its stake to Gazprom, so making Russian state ownership inevitable. I hope that, in this scenario, the government would expand the provision of the Enterprise Act that allows Britain to block takeovers that are against the national interest to include gas and nuclear power. (The act is currently confined to defence, financial services and the media.) I'm pretty certain that Centrica chairman Sir Roger Carr, also president of the CBI, shares the same view. No country can be indifferent to the ownership of strategic assets and thus the use to which they might be put. Its first obligation is to the well-being of its citizens.

The Argentinian government was faced with just this dilemma last week. YPF is its national oil and gas company, which it sold to the Spanish oil company Repsol for $15bn in 1999 as part of its privatisation drive. It has not been a great deal for either party. Argentinian oil and gas production has slumped, exploration for new reserves has been run down and this oil-rich country is now an oil importer, with Repsol accused of looting the company and betraying its obligations.

Repsol's excuse is that Argentinian price controls are absurdly tough. It has wanted to sell its holding for some time and last July finally found a potential buyer: the Chinese state oil company Sinopec. On Monday, fearing that the deal was about to be done, the Argentinian government seized the lion's share of Repsol's stake to get majority control. Better that YPF is owned by the Argentinian government than the Chinese Communist party is their reasoning.

Many governments would have done the same. Ownership matters. Yet Argentina has been roundly condemned – the EU, Spain, Mexico and even Britain have all weighed in. The Economist thunders that President Cristina Fernández's antics must not go unpunished; nationalisation is a sin beyond redemption. The inference is that Repsol should have been allowed freely to dispose of its shares to whichever buyer and at the best price it could achieve. Argentina and its citizens have no right to intervene.

Ms Fernández was certainly high-handed and very arbitrary. She only seized enough shares from Repsol to secure 51% control and has yet to say what the state will pay in compensation; the other shareholders are hapless bystanders with their investment shredded. There is more than a whiff of shameless populism to her actions. But to portray Repsol as an injured innocent whose natural rights have been unfairly suborned is to traduce economic and political reality.

For too long, companies and the rich worldwide, egged on by American Republicans and British Tories, have shamelessly exploited the proposition that there is only one proper relationship between them and society: they do what they want on their own terms. And society must accept this because it is the sole route to "wealth generation". Capital exists above state and society.

Fernández's actions, however clumsy and unfair in their execution, are part of a growing worldwide reaction to the excesses that this proposition has brought. Repsol does not, and did not, have a God-given right to sell control in YPF to whomever it pleases while Argentina's interests can go hang. It exists in a symbiotic relationship with the society in which it trades. The right to trade and to own are privileges that come with reciprocal obligations as the Ownership Commission, which I chaired, argued earlier this year. They cannot exist in a vacuum because companies' actions have profound effects.

Moreover, companies, especially energy companies, need public agencies to help mitigate the risk of undertaking huge investments in a world where the future is unknowable. Across the globe, business and the rich insist on denying these elementary truths. Now they are reaping the whirlwind as a hostile reaction gathers pace worldwide. Capitalism's self-appointed custodians have become its worst enemies.

It is the driving force behind the Occupy Movement. It is why Jean Luc Melénchon, the hard left French presidential candidate, has had such a successful election campaign. It is why so many governments are co-ordinating their investigation into Amazon, the company paying negligible tax on its worldwide profits. It is why President Obama has adopted the Buffet tax on millionaires as a popular part of his re-election campaign. It is why George Osborne felt he had to balance his high-risk reduction in the top rate of income tax to 45%with a passionate declaration of war on the rich evading tax.

The reaction is long overdue and is producing some long-needed corrections. For example, in the last fortnight alone, Goldman Sachs' Lloyd Blankfein, Barclays' Bob Diamond and Citibank's Vikram Pandit have all faced angry shareholders, responding to the new mood, protesting about the extravagance of their bonuses compared to their institutions' paltry performance. They are being forced to accept less. Proportionality in top pay is beginning to be restored, if still a long way off.

But the mood needs to be channelled. Argentina may have done everyone a service by forcibly reminding global business that there are unpleasant consequences for neglecting economic and social responsibilities, but summary nationalisation without compensation is hardly a solid template for the future. It is a harbinger of Chinese-style arbitrary government; a move from crony capitalism to crony statism. It is time to reassert that while capitalism may be a proven route to prosperity, it only works in a complex interdependence with the state and society. There have to be rules at home and abroad to make a desirable world of open borders, free trade and free business work. Taxes have to be paid rather than evaded. Pay has to be proportional to contribution. Labour leader Ed Miliband was roundly and universally criticised as a leftist innocent just seven months ago when he differentiated between good and bad capitalism; now he looks extraordinarily prescient.

If more of his party – especially the shadow cabinet – would rally to his cause, there is a phenomenal political opportunity. The mood is changing. It needs to be channelled: the creation of a new and different compact with business, finance and the rich. It is what electorates across the world want to see. President Fernández, in her gauche way, has tapped into a global mood.

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Argentina's critics are wrong again about renationalising oil

In taking back oil and gas company YPF, Argentina's state is reversing past mistakes. Europe is in no position to be outraged

• 
• • Mark Weisbrot
  • guardian.co.uk, Wednesday 18 April 2012 11.42 BST 
  • 
    

Argentinia's president, Cristina Kirchner, announces that the oil company YPF is subject to expropriation. Photograph: Daniel Garcia/AFP/Getty Images

The Argentinian government's decision to renationalise the oil and gas company YPF has been greeted with howls of outrage, threats, forecasts of rage and ruin, and a rude bit of name-calling in the international press. We have heard all this before.

When the government defaulted on its debt at the end of 2001 and then devalued its currency a few weeks later, it was all doom-mongering in the media. The devaluation would cause inflation to spin out of control, the country would face balance of payments crises from not being able to borrow, the economy would spiral downward into deeper recession. Then, between 2002 and 2011, Argentina's real GDP grew by about 90%, the fastest in the hemisphere. Employment is now at record levels, and both poverty and extreme poverty have been reduced by two-thirds. Social spending, adjusted for inflation, has nearly tripled. All this is probably why Cristina Kirchner was re-elected last October in a landslide victory.

Of course this success story is rarely told, mostly because it involved reversing many of the failed neoliberal policies – that were backed by Washington and its International Monetary Fund – that brought the country to ruin in its worst recession of 1998-2002. Now the government is reversing another failed neoliberal policy of the 1990s: the privatisation of its oil and gas industry, which should never have happened in the first place.

There are sound reasons for this move, and the government will most likely be proved right once again. Repsol, the Spanish oil company that currently owns 57% of Argentina's YPF, hasn't produced enough to keep up with Argentina's rapidly growing economy. From 2004 to 2011, Argentina's oil production has actually declined by almost 20% and gas by 13%, with YPF accounting for much of this. And the company's proven reserves of oil and gas have also fallen substantially over the past few years.

The lagging production is not only a problem for meeting the needs of consumers and businesses, it is also a serious macroeconomic problem. The shortfall in oil and gas production has led to a rapid rise in imports. In 2011 these doubled from the previous year to $9.4bn, thus cancelling out a large part of Argentina's trade surplus. A favourable balance of trade has been very important to Argentina since its default in 2001. Because the government is mostly shut out of borrowing from international financial markets, it needs to be careful about having enough foreign exchange to avoid a balance of payments crisis. This is another reason that it can no longer afford to leave energy production and management to the private sector.

So why the outrage against Argentina's decision to take – through a forced purchase – a controlling interest in what for most of the enterprise's history was the national oil company? Mexico nationalised its oil in 1938, and, like a number of Opec countries, doesn't even allow foreign investment in oil. Most of the world's oil and gas producers, from Saudi Arabia to Norway, have state-owned companies. The privatisations of oil and gas in the 1990s were an aberration; neoliberalism gone wild. Even when Brazil privatised $100bn of state enterprises in the 1990s, the government kept majority control over energy corporation Petrobras.

As Latin America has achieved its "second independence" over the past decade-and-a-half, sovereign control over energy resources has been an important part of the region's economic comeback. Bolivia renationalised its hydrocarbons industry in 2006, and increased hydrocarbon revenue from less than 10% to more than 20% of GDP (the difference would be about two-thirds of current government revenue in the US). Ecuador under Rafael Correa greatly increased its control over oil and its share of private companies' production.

So Argentina is catching up with its neighbours and the world, and reversing past mistakes in this area. As for their detractors, they are in a weak position to be throwing stones. The ratings agencies threatening to downgrade Argentina – should anyone take them seriously after they gave AAA ratings to worthless mortgage-backed junk during the housing bubble, and then pretended that the US government could actually default? And as for the threats from the European Union and the rightwing government of Spain – what have they done right lately, with Europe caught in its second recession in three years, nearly halfway through a lost decade, and with 24% unemployment in Spain?

It is interesting that Argentina has had such remarkable economic success over the past nine years while receiving very little foreign direct investment, and being mostly shunned by international financial markets. According to most of the business press, these are the two most important constituencies that any government should make sure to please. But the Argentinian government has had other priorities. Maybe that's another reason why Argentina gets so much flak.

Who to blame for the Great Recession?

In 2000 it was the $164bn (£103bn) AOL takeover of Time Warner in America. In 2007 it was the-then Sir Fred Goodwin's £49bn acquisition of ABN Amro that signalled that the markets had peaked and were about to crumble.

Every financial crisis has its totemic moment; a decision that even at the time seems to defy logic and in retrospect is seen as an act of gross stupidity. Yet it takes more than one individual banker, no matter how powerful, to make a crisis and when the historians come to chronicle the Great Recession of 2008-09 the list of guilty men and women will include more than one former knight of the realm.
Here, then, is a (far from exhaustive) list of those who might be considered most culpable – who caused, exacerbated or failed to prevent the worst downturn in the global economy since the 1930s.

Alan Greenspan

Laughably given an honorary knighthood in 2002 for his "contribution to global economic stability", Greenspan's responsibility for the crash cannot be underestimated.

A fanatical believer in the self-righting qualities of financial markets, he was the bubble king who allowed the dotcom boom of the late 1990s to get out of hand and then, when plummeting share prices pushed the economy into recession, started the whole process off again, this time in the housing market.

As chairman of the Federal Reserve, he cut interest rates and left them at rock-bottom levels for two years.

Cheap borrowing costs encouraged Americans to load up on debt to buy homes, even when they had no savings, no income and no job prospects.

These so-called sub-prime borrowers were the cannon fodder for the biggest boom-bust in US history. The housing collapse brought the global economy to its knees.

Sir Mervyn King

Britain was mini-me to the US in the days of grand illusion before the crash, having its debt-fuelled party where growth was concentrated in the speculative sectors of housing and finance.

King became Bank of England governor in 2003, and while he has subsequently been one of the most pro-active central bankers with a refreshingly robust approach to the banks, the case against him is that he failed to "lean against the wind" during the economic upswing, leaving interest rates too low, and then waited too long when the economy was nosediving into its most severe postwar recession before cutting bank rate.

Under the government's tripartite system of regulation, the Old Lady was supposed to ensure developments in the City did not pose a systemic risk to the economy. It failed in that task.

Gordon Brown

We have abolished Tory boom and bust, Brown said repeatedly in his 10 years as chancellor of the exchequer. He hadn't.

His last big speech before becoming prime minister, made at the Mansion House in June 2007 just as the financial crisis was about to break, praised the bankers for their remarkable achievements and predicted "the beginning of a new golden age for the City of London". It wasn't.

Brown presided over the loss of a million manufacturing jobs and an ever-widening trade deficit while cosying up to the City. He used to quip that there were two types of chancellors: those who failed and those who got out in time. He got that one right.

Bill Clinton

One Democratic president, Franklin Roosevelt, put a cage round Wall Street after its excesses in the 20s led to the Wall Street crash and the Great Depression. Another Democrat, Bill Clinton, gave Wall Street the cage keys.

After a fierce lobbying campaign, Clinton agreed to repeal the Glass-Steagall Act, which ensured a complete separation between investment and retail banks. The move heralded the coming of superbanks, huge behemoths that took in retail deposits and used them to take highly-leveraged punts in the markets.

To make matters worse, Clinton beefed up Jimmy Carter's 1977 Community Reinvestment Act to force lenders to take a more relaxed approach to disadvantaged borrowers. Liberalised banks plus millions of new sub-prime customers equalled one big problem.

Eugene Fama

The economics profession failed to cover itself in glory in the run-up to 2007. Not only did economists fail to spot that financial institutions were loading themselves up with vast quantities of toxic sub-prime debt, most of them thought it was theoretically impossible for a crisis to happen.
In large part, responsibility for that lies with Fama, a Chicago University economics professor who in the 70s came up with the efficient markets hypothesis (EMH), which stated that financial markets price assets at their true worth based on all the publicly available information, encouraging the belief that the best thing to do was to pile in when prices were rising. Bubble-think, in other words.

Ronald Reagan and Margaret Thatcher

Just as many trends in modern popular music can be traced back to the Beatles, so politics was shaped by the activities of Reagan and Thatcher, the Lennon and McCartney of deregulation, market forces and trickle-down economics.

The changes pushed through in the US and the UK in the 80s removed constraints on bankers, made finance more important at the expense of manufacturing and reduced union power, making it harder for employees to secure as big a share of the national economic cake as they had in previous decades.
The flipside of rising corporate profits and higher rewards for the top 1% of earners was stagnating wages for ordinary Americans and Britons, and a higher propensity to get into debt.

Hank Paulson

The US treasury secretary in 2008, Paulson was the Sir Anthony Eden of the financial crisis. He had all the necessary credentials a Republican president would consider necessary for the job – chief executive of Goldman Sachs with an MBA from Harvard. He was considered the brightest and best of his generation. Like Eden over Suez, he was faced with a monumental challenge. And he blew it.
Paulson's big mistake was to put Freddie Mac and Fannie Mae into conservatorship, wiping out the stakes of those who had invested $20bn in the two government-backed mortgage lenders over the previous 12 months.

Unsurprisingly, there was no great rush among private investors to rescue Lehman Brothers when it ran into trouble the following week, and when the US treasury allowed the investment bank to go bust every financial institution in the world was seen as at risk.

Fred the Shred destroyed a bank; Paulson triggered the biggest economic downturn since the Great Depression.

Kathleen Corbet

No rogues' gallery of the crisis would be complete without a representative of the credit rating agencies. These were the bodies that took fees from the banks while giving the top AAA rating to collateralised debt obligations, the hugely complex financial instruments that bundled together the toxic sub-prime mortgages with the sound home loans.

Corbet was CEO of Standard & Poor's, the biggest of the rating agencies, and she left her post in a "long-planned" move in August 2007 just as the financial markets were shutting down.

The justification for the top-notch ratings was that the poor-quality loans would be lost in the mix, but when the crisis broke the reality was more like a food scare, in which supermarkets know there are a few dodgy ready-made meals on their shelves but must bin the lot as they are not sure which ones they are.

Phil Gramm

"Some people look at sub-prime lending and see evil," said this senator in a debate on Capitol Hill in 2001. "I look at sub-prime lending and I see the American dream in action."

Gramm, who thinks Wall Street a "holy place", was the main cheerleader in Congress for financial deregulation, putting pressure on the Clinton administration to ease restrictions – not that it needed much persuading.

The fact that he had been the biggest recipient of campaign fund donations from commercial banks and in the top five for donations from Wall Street from 1989 to 2002 was, of course, entirely coincidental.

The bankers

Was it Fred Goodwin at RBS or Adam Applegarth at Northern Rock – the first UK high street bank to suffer a full-scale run on its branches since the 1860s? Was it Dick Fuld, the man in charge at Lehman Brothers when it went belly-up? Jimmy Cayne, who spent the first month of the crisis playing bridge rather than running Bear Stearns?

Or Stan O'Neal, whose attempts to rid Merrill Lynch of its fuddy-duddy image saddled the bank with $8bn of bad debts?

How about Andy Hornby, the whizzkid running HBOS? Or perhaps the man chosen by Gordon Brown to be HBOS's white knight – Sir Victor Blank, chairman of Lloyds?

Choose any one from a very long list.