Three previously much-lauded leaders from the banking group HBOS are severely criticized in a parliamentary report in the UK. There are powerful lessons to be learned. Insights from a new social class indicator are also worth noting.
This week a popularization from an academic study suggested a new model of social class in the UK. One category is being considered to be at “the top” of the seven classes, and receives the meretricious label of the elite group. Equally clear is the group occupying the least desirable social niche, the newly identified Precariat.
The abuse of labels
One of the lead researchers, Professor Mike Savage of the London School of Economics is quoted as saying
“It is striking that we have been able to discern a distinctive elite, whose sheer economic advantage sets it apart from other classes… At the opposite extreme, we have discerned the existence of a sizable group [the Precariat] – 15 per cent of the population – which is marked by the lack of any significant amount of economic, cultural, or social capital.”
Is it a simple linear scale?
My reading of the popular reporting of the study is that the seven categories are being placed along a “top to bottom” spectrum as if a simple linear scale exists through which individuals may or may not be socially mobile. But that is a different and more technical story.
My main point is that the bankers at HBOS serve to illustrate the new social concept labelled the elite ‘class’. Weber used such classifications as idealized descriptions of his sociological concepts. Here they are value laden. The elites are “top” people, because we attribute positive connotations to those with loads of money. They are seen as the worthy wealthy. Our Chancellor, George Osborne, is among those vocal in identifying the undeserving and feckless at the “bottom” of the social pile.
The HBOS Three
To return to HBOS, the three members of the elite class named and shamed in the report are Former HBOS chief executive Sir James Crosby, brilliant Harvard graduate Andy Hornby recruited by Crosby, and who replaced him as CEO in 2006, and Lord Stephenson, chairman of Halifax [the H of HBOS]
Let’s cut off their honours
The commission report recommended social sanctions on the three leaders, withdrawal of honours, and prohibition from posts involving financial dealings.
The Guardian unsurprisingly was indignant:
“Primary responsibility for these failures should lie with the former chairman of HBOS, Lord Stevenson, and its former chief executives, Sir James Crosby and Andy Hornby,” concludes the report. It is astonishing that, almost half a decade after the implosion of HBOS, a parliamentary commission with a roving brief has provided the first official account of what went wrong.
Royal Bank of Scotland will always hold top spot in British banking’s hall of shame by virtue of its sheer size and the ludicrous top-of-the-market purchase of ABN Amro, but HBOS stands alone “as a home grown failure in traditional banking”, as the report puts it. The commissioners have killed stone dead the notion that HBOS was, in some vague sense, an innocent victim of the hurricane in financial markets around the time of the collapse of Lehman Brothers in 2008.