Who will tame the giant vampire squid?

6 Dec 2010 10:14 AM

Bank reform campaign gets animated, backed by influential pressure groups

Portraying investment banks as a giant vampire squid wrapped around the face of humanity, a new animation from The Great Transition campaign of nef (the new economics foundation) is launched today, Monday 6 December, aimed at increasing public pressure on government to take on the banks and not sweep the issue under the carpet.

The animation ask politicians if they have a plan to tame the banks, and if not, why not?

The one minute animation is backed by a wide range of influential pressure groups including: Compass, ResPublica, 38 Degrees, World Development Movement, Tax Research and the Post Bank campaign. The animation is part of the fast-growing counterweight to the power of the banks and is launched the day before the Eric Cantona-inspired run on the banks (bankrun2010), that has seen grassroots public campaigns spring-up in 15 nations.

Andrew Simms, Policy Director at nef said: “Who is afraid of the big, bonus-driven banks? The Coalition government it would seem. Why else, just two years after the biggest bail-out in history, are the unreformed banks still in trouble? Big investment banks were compared to giant vampire squids, wrapped around the face of humanity, feeding on anything that smells like money. Now massive spending cuts follow in their wake.  The government lack a plan to tame them, and seem to wish the problem would just go away. That’s why we’ve brought the vampire squid compellingly to life to jog their memory, and ensure that no one can forget the need for urgent reform. We have a plan to take back our banks for the benefit of the public and the wider economy, where is theirs?”

Tony Greenham, head of nef’s Finance and Business programme added: “The bankers claim they earn their bonuses through creating wealth, but the reality is that modern banking is more about extracting wealth from the real economy than doing anything socially useful. We can’t go on like this; it’s time to take back the banks for the public good and not allow our politicians to be bought off with a few grudging concessions from the banking elite.”

As public services pay the price for massive private-sector failure, there is little sign that government is prepared to stand up to the banks that played such a central role in the crisis:

  • Nearly £7 billion will be paid out in City bonuses this year.i
  • £7 billion is more than the first wave of public spending cuts, and the amount the UK has committed to propping up failing Irish banks as part of the Irish bail-out package.
  • Attempts to change bad bonus behaviour with a levy failed according to former Chancellor Alastair Darling, and there are already signs that the banks are preparing to return to business-as-usual on bonuses eschewing measures designed to diffuse public anger.
  • We’re told that there’s no alternative to huge public spending cuts in the wake of the crisis-driven recession. Yet, add together all the taxes in the UK that go unpaid, evaded or avoided and you come to a figure of £120 billion.ii A vigorous effort to collect even a share of that would completely change the debate. Yet the banks, and the accountants and lawyers that win lucrative business from them, are busy finding ever more ingenious ways to help their clients pay their fair share of tax.

Support for the animation:

David Babbs, Executive Director, 38 Degrees: "Whilst the rest of us suffer cuts to our services and brace for the post-Christmas VAT hike, the banks are back to business as usual. They are handing themselves big bonuses and refusing to face up to their role in causing this crash. 38 Degrees members know that big changes are needed. Politicians are way too timid on this issue - only people power can push them to do more."

Greg Fisher, Chief Economist of ResPublica: "Bravo to nef for having argued for re-shaping the financial system, including a community-based banking network, for many years.  They were discussing these things well before the financial crisis hit.  We need to change our banking system so it delivers what people value - services that are reasonably priced, banks that do not need bailing out, and which contribute to society and environmental sustainability.  The onus is on both politicians and "the giant vampire squid" to offer an alternative vision of a financial system that achieves these goals.”

Neal Lawson, Chair of democratic left pressure group, Compass: “Banks and financial capitalism are beyond control. Today it’s Ireland; tomorrow it will be wherever the most profit can be made. Students, the poor, the elderly all suffer. Banks have to be made to work for people and not just for extraordinary levels of pay and profit. It is time our politicians became animated about putting our needs first.”

Lindsay Mackie, Chair of the Post Bank coalition: “The banking industry is winning because politicians haven’t yet found the courage to stand up to it. That has to change if we are to head off another banking crisis. We need safe retail banking, real competition and above all we need to bring banks into the democratic fold. The Post Bank - publicly owned and serving the community - would be a simple, possible and desirable first step.

Richard Murphy, Director of Tax Research LLP: "Banks are the perfect example of corporations that seek to be beyond regulation - hiding profit, tax abuse and illicit flows in the tax havens they promote and support. Banks need to be re-rooted in the states that we now know support all that they do - which means they must be accountable locally for their activities globally."

Murray Worthy, policy officer at the World Development Movement: “Many people know the role that bankers played in the financial crisis but many may not be aware of their role in the 2007 food crisis and recent food price hikes. Investment banks such as Goldman Sachs were instrumental in creating a range of financial products which enabled rampant betting on complex food contracts causing massive food price increases. As Goldman Sachs pocketed around $1 billion from gambling on food prices last year, the poorest people in developing countries are pushed into further hunger, malnutrition and poverty.”

Kevin Smith, climate and finance campaigner, PLATFORM: "Banks have been allowed to siphon off unprecedented amounts of public funds with almost no accountability to the tax payer as to how that money is spent. While UK renewable energy continues to operate at a fraction of its potential capacity, publicly owned banks like RBS are facilitating finance for some of the most carbon-intensive projects and companies around the world."

i According to the Centre for Economics and Business Research.

ii According to tax expert Richard Murphy of Tax Research UK.

Related links

How do they get away with it?

Tame the Vampire Squid

nef's response to the Independent Commission on Banking

Rolling Stone: Matt Taibbi's Takedown of ‘Vampire Squid’ Goldman Sachs