The Occupy Wall Street movement repeatedly called for the bankers responsible for the worst economic meltdown since the Great Depression to be brought to justice. While that has not happened yet, the British government may be about to take a step in that direction.
Pressure in the U.K. is mounting on the government to strip the knighthood of Fred Goodwin, the former CEO of the Royal Bank of Scotland (NYSE:RBS). This would be a rare but not unprecedented step. Robert Mugabe, who has ruled Zimbabwe with an iron fist for decades, lost his honor a few years ago. A committee of civil servants will make the final call on whether Goodwin, blamed for RBS’ collapse, will retain his knighthood.
Goodwin, known as “Fred the Shred” for his devotion to cost-cutting, was knighted in 2004 for his “services to banking.” At the time, he was hailed as a genius for transforming the sleepy Scottish financial-services firm into the world’s fifth-largest bank through acquisitions, including the Netherlands’ ABN AMRO and Citizens Bank in the U.S. Forbes named the chartered accountant its Global Businessman of the Year in 2003.
“Few realize that this 275-year-old Scottish bank, a nonentity on the world stage just a few years ago, is now bigger [by market capitalization] than such household names as JPMorgan Chase (NYSE:JPM), UBS (NYSE:UBS) and Deutsche Bank (NYSE:DB),” the magazine gushed in announcing its accolade.
The good times didn’t last. In 2008, RBS got the biggest bailout of any bank in the world, costing U.K. taxpayers 45 billion pounds. The government still owns 83% of RBS. A recent government report noted that Goodwin’s “robust and assertive” management style was flagged as a concern as early as 2003, when the Forbes article appeared. Interestingly, his affair with a co-worker, which he tried to hide, was not seen as a serious issue, the report says.
Goodwin resigned in October 2008 after the bailout. He became one the most vilified people in the U.K. once it was reported that he got an annual pension of 770.000 pounds. Some media reports are even speculated that RBS may need another bailout. And Goodwin’s story has echoed in the U.S.
Angelo Mozillo may not have a knighthood to lose, but like Goodwin, the former Countrywide CEO has been tried and found guilty in the court of public opinion for his role in the real estate meltdown. Mozillo escaped criminal charges, though “he agreed to pay a $22.5 million fine and to repay $45 million in what the government said were ill-gotten gains to former Countrywide shareholders,” according to a February 2011 story in the Los Angeles Times.
Last August, former Lehman Brothers CEO Richard Fuld, who failed to prevent the venerable Wall Street bank’s 2008 collapse, and other former executives settled an investor lawsuit for $90 million using a $90 million insurance settlement. His 1% lifestyle, which includes an estate in Greenwich, Conn., and properties in New York City, Idaho and Florida did not change one iota.
People hoping to see Wall Street hotshots doing the perp walk on TV as they head to court to answer for the sorry state of the economy will be disappointed. The desire for justice and even vengeance is understandable, but the best Americans can hope for is civil fines that might pinch the pockets of the masters of the universe ever so slightly. Our neighbors in the U.K. have the opportunity to at least hand Goodwin a public humiliation that money can’t forestall. It’s not much, but Americans won’t even get that smidgen of satisfaction.