I'm not entirely sure that Gordon Brown and his faithful Sancho Alistair have ridden up on white horses and saved us, but they have taken bold, decisive action, and for this moment at least our chances look better than they have in a week.
Part of the Government's plan of course is the effective nationalisation of most of the big banks, and it is part of that that I want to dwell on. Specifically, I'd like to talk about the Tragedie of Frederick Goodwin.
Now Sir Fred 'the Shred' Goodwin is not a figure that attracts much sympathy today. He is the erstwhile Chief Executive of RBS, and is the first and the most high profile banking exec to take the pearl handled revolver into a quiet room and be a good chap. Nonetheless, there is something of the genuinely tragic in the story, tragic in the Shakespearean sense. Here is a man who achieved great, astonishing things and was brought low by the very impulses that drove him to succeed. A flawed, brilliant man, undone by an unescapable twist in his personality. Sounds like tragedy to me.
Goodwin is a Paisley grammar school boy, which puts him in immediate contrast to a Scottish banking environment dominated by the clubbable, networked scions of Edinburgh's public schools. He is in other words an outsider, who rose to his position through a mixture of ambition, luck and a fierce first class intellect. This is a man who was a partner at Touche Ross at 28 - an achievement that takes others a career to achieve, if they achieve it at all. At 32 he ran a department of a thousand souls unpicking the bones of the BCCI fraud, an achievement that made his name. Make no mistake, he may be a cantankerous bastard, who never suffers fools, but he is a genuinely brilliant man.
Up and up he went, chief exec of RBS in his late thirties. Half a dozen years later it was the second biggest bank in the world, and by some measures the thirteenth biggest company on the face of the earth. Goodwin did this in a number of ways. He demanded results and got them. His mastery of the detail (all those years as a forensic accountant) kept the rest of the bank at a pitch of excellence: 'What would Fred think of this?" "Hmmm. Wouldn't buy it.' 'Agree. Do it again.' And he bought NatWest.
Nat West was three times RBS's size. It was also subject to a take over bid by RBS's great rival the Bank of Scotland. In a mixture of courage, astonishing self belief and sheer cold eyed aggression Fred snatched NatWest from BoS (which consoled itself in the arms of Halifax, which also ended badly). Meanwhile, the integration of NatWest and RBS was run so well Harvard Business School wrote a case study about called 'Masters of Integration.'
RBS just grew and grew. It broke its own profit records every year. Further acquisitions followed, in the US, in China, in the UK. In the spring of last year Fred Goodwin had built a machine that seemed capable of anything. No matter what was thrown at it, analysts reports, city sneering, deals on three continents, it just grew stronger and badder and bigger. It was with this machine under his hand that he turned to what was to be his finest, valedictory moment.
The story was beguilingly similarly to the Natwest takeover. Barclays, which was seen as somehow a softer, weaker bank than RBS, was negotiating what seemed to be a cosy merger with the huge, multinational Dutch conglomerate ABN Amro. ABN Amro was a different beast to NatWest through. No stuffy, sloppy, fat English aristo here. No, ABN operated in 54 countries. It had a hundred thousand people. It was worth over 40 billion pounds. No one had ever attempted a hostile take over of such a beast before. The only thing vaguely comparable was the AOL / TimeWarner deal, and that was based on inflated dotcom bubble valuations and it was friendly. AOL wasn't a monster of complexity a world across and three hundred years deep. ABN was.
Fred went for ABN like he'd gone for NatWest. This time he involved other banks in his posse, Fortis of the low countries and Santandar of Spain. They outbid Barclays (again its the self belief, vision, sheer agression) and stuck to it. They stuck to it when ABN sold its US arm, La Salle, which was half the reason RBS wanted it, to Bank of America. They stuck to it through the summer when the credit crunch darkened the horizon and common sense said to lower the bid. No though. He wouldn't back down. Not in the teeth of the most ferocious criticism; never back down.
RBS and its sidekicks horribly overbid for ABN to win the deal. They paid £45 billion in cash money, which was 17 times the book value of the bank. In other words, thats 17 times value of ABNs assets if the bank was to be liquidated. In the good times this would have ben amazingly overpriced, but perhaps just, just, justifiable given the benefits of the ABN deal to RBS and Goodwin's track record of integration, but in the bad times it was madness. And when the deal was signed the bad times were very clearly round the corner. No one expected them to be this bad though.
RBS won ABN and with it set the seeds of its own destruction and that of Goodwin as well. Times grew tighter. RBS had to run the biggest rights issue in European history, asking shareholders for £12 billion to repair the ravaged balance sheet. Goodwin got it, but after paying cash for ABN and repeatedly denying that RBS planned a rights issue, the writing was on the wall. A tiny shift had taken place, in which his brilliant mind and subtle strategic sense had been somehow overwhelmed by the will to win, by the desire to beat Barclays flat, by his own crushing ego. Confidence had become arrogance, aggression hostility, self belief had tipped into overwhelming ego.
From then on in it was chronicle of a death foretold. The financial crisis has laid bare the faults of the ABN deal in dreadful detail, and its architect has been overthrown. Destiny had become hubris, and after hubris, Nemesis.
"He's worth no more
They say he parted well, and paid his score
And so God be with him! Here comes newer comfort."
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