In praise of Fred Goodwin
As I start this posting, I have no idea what I'm going to write about. But surely there must be something? The guy has been so pilloried that his real attributes must surely be better than his public image.
Goodwin has just agreed to give back a chunk of his pension, helping the government achieve its political objective, RBS get rid of a distraction, and Goodwin himself look at least a little better than before. But looking further back, surely there were people who thought he was good at his job in 2007? With so many executives hagiographed in the business press, he must have had his turn.
So what can we dig up?
Start with a Google search for "Fred Goodwin achieved". Amazingly, there is only one link: someone defending him on the grounds that the cost of his pension was only a small fraction of RBS's losses, and that by performance-related pay standards he does better than the Bank of England.
Similarly, "Fred Goodwin succeeded" returns nothing, and "admire Fred Goodwin" just one - which is someone admiring his not backing down over the pension - guess that one's out the window now. "Fred Goodwin is great" - nothing. "Fred Goodwin is good" - one hit, which reads "anything that could possibly adversely effect Sir Fred Goodwin is good from my perspective".
Perhaps he never did anything worthwhile at all? Let's try and figure out what he did do.
Wikipedia has a summary of his career. I remember seeing his name when he was chief executive of the Clydesdale Bank - which was my bank at the time - after its takeover by National Australia Group. I wasn't especially impressed which is why they aren't my bank any more.
After that he joined RBS and led its growth by acquisition into "the largest company in the world" (by assets, though like all banks it had liabilities almost as big). He was accused of "megalomania" but one could argue that he was just playing the game encouraged at least by the business media, if not the stockmarket (which has rarely rewarded size as well as it rewards growth, paradoxically indicating that it might be nearly rational after all).
Fortunately, Wikipedia provides us with some ammunition for our campaign to restore Fred's reputation. Forbes voted him Businessman of the Year in 2002. Between 2003 and 2006 he was at the top of the Scotland on Sunday "Power 100" list - and forgive me for cynicism about my country of birth, but that's not as impressive as it might sound. He was knighted in 2004 for services to banking.
But what's intriguing about that little list of external recognitions is its last entry. He was awarded a fellowship of London Business School as late as July 2008 - while he was admittedly still chief executive, but RBS had failed in a £12 billion rights issue in April and the writing was on the wall. Still, these things are probably in the works for a while. A search for "Fred Goodwin awarded" finds him also a fellow of the International Concrete Repair Institute, though if that's the same guy he has been living a very successful double life in chemicals for the last 30 years.
Outside of his professional life, he has chaired the Prince's Trust for about six years and was rumoured to be an option to replace Max Mosley at the head of Formula One governing body the FIA. Really, if the FIA chucks Max Mosley and the best option they can think of for restoring their own public image is Fred Goodwin...well, they deserve him.
But I digress. We are here to find the positive things that Fred has done...not his bad losses but his good wins, one might say.
Maybe it's not so bad that he built RBS into a vast, risk-taking behemoth. It did pay a lot of corporation tax over the years, and played its part in making London the financial centre of the world. Does this outweigh the net cost to the public of rescuing it? Actually, it might. But our old friend loss aversion means people focus much more on the losses than the gains.
One particular little note in that Wikipedia article is very interesting: while working for Touche Ross accountants, he headed up the liquidation of one of the last big failed banks, BCCI [update: according to a commenter, he was involved in the project but did not head it]. Do you remember the outrage about that, and the attempts to reclaim money from the people who had supposedly spirited it away under the noses of the regulators? So I guess he has some experience of how to play that game. In the end he managed to get half of the money back, which is a bit better than RBS has done with Fred's pension (for clarity let me emphasise that unlike BCCI, there is nothing fraudulent about Fred Goodwin's pension award!)
The Daily Telegraph has told us that "his grasp of finance is in the Alpha class" whatever that means. I think it's meant to be a good thing.
And to burnish Fred's reputation a little further, I have finally found some Google searches with positive results. "Fred Goodwin's achievements" returns two genuinely positive comments about his achievements and "Fred Goodwin created" gives an article suggesting he be congratulated for building what was, after all, one of the world's most successful companies for a time - as well as yet another not-that-Fred-Goodwin who works as a government psychiatrist.
Ultimately though, Fred leaves the Web uninterested and unmoved. Some of you may be familiar with the well-known mechanism for determining how good a programming language is: the sucks/rocks index. For example "Java sucks" finds 11,500 results while "Java rocks" finds 10,800 - a net suck of 700 or 6.5%. Perl does much worse on this measure (net suck of 107%) while Python does a lot better (a net rock of 184%).
Fred Goodwin, on the other hand, gives the following somewhat forlorn results:
- "Fred Goodwin rocks": no results
- "Fred Goodwin sucks": no results