The decision to strip the former RBS boss of his knighthood marks a new high in ‘banker bashing’ sparked by the financial crisis, and left business figures asking yesterday if it had gone too far.
But other critics said Fred Goodwin’s fate should serve as an example to encourage the banking industry to put its house in order.
Mr Goodwin, nicknamed “Fred the Shred” for his ruthless management style, became a pariah after the government bailed out Royal Bank of Scotland in 2008, at a cost so far of £45.5 billion on it.
With Britain on the brink of recession once again, attention has returned to the behaviour of bankers blamed for the financial storm, particularly at RBS, 82 per cent of which is still owned by the taxpayer.
Amid growing calls for Mr Goodwin to be punished further, the government announced late Tuesday that he would be stripped of the knighthood awarded him by Queen Elizabeth II for services to banking in 2004.
A statement from the government said Mr Goodwin “had brought the honours system into disrepute”, adding that “the scale and severity of the impact of his actions as CEO of RBS made this an exceptional case.”
The decision places Mr Goodwin in a select club that also includes Zimbabwean President Robert Mugabe, Soviet spy Anthony Blunt, and Romanian Communist dictator Nicolae Ceausescu, who lost his honour the day before he was executed.
Prime Minister David Cameron called the move – which removes Mr Goodwin’s ‘Sir’ title – the “right decision”. Opposition Labour leader Ed Miliband said it was “only the start of the change we need” in company boardrooms.
The annulment came at the end of a week when political pressure had also forced the current RBS chief, Stephen Hester, to waive his £963,000 annual bonus. The former head of the business lobby group CBI, Digby Jones, said: “There is a whiff of the lynch mob on the village green about this. Fred Goodwin has not been charged with, nor had anything examined in a court, nor found guilty of anything.” Simon Walker, director general of the Institute of Directors, also expressed concern about “anti-business hysteria” in the decision to remove the honour.
Labour’s finance minister at the time of the RBS takeover, Alistair Darling, questioned the singling out of Mr Goodwin for public humiliation.
“There is something tawdry about the government directing its fire at Fred Goodwin alone,” he wrote in The Times.
“If policy is not based on principle but is about individuals, the government will carry on being blown in the wind.”
Even Britain’s biggest trade union, Unite, was ambivalent. A spokesman said the decision was a “token gesture” that would be well received by all those who lost their jobs under Mr Goodwin, but would “do nothing to bring job security to the staff across the banking sector who continue to work under a culture of excess and greed at the top”.
Jackie Stewart, the former Formula 1 world champion and himself a ‘Sir’, said he thought his friend Mr Goodwin had been made a scapegoat.
“No single person or even any single bank created the biggest financial recession in modern times. To have this stripped I think is poor for the Constitution and very dangerous for the future,” Mr Stewart told BBC TV.
Britain’s newspapers, many of which have long been baying for Mr Goodwin’s blood, were similarly divided.
The mass-selling Daily Mail tabloid hoped “the humbling of Mr Goodwin will send a clear signal to bankers that they cannot go on as they have done, without bringing shame and opprobrium on themselves”.
But The Times, which ran a cartoon of the queen chopping off Mr Goodwin’s head with the ceremonial sword she uses to grant knighthoods, said the decision raised some uncomfortable questions about what Britain had become.
“It is the selection of an individual for public humiliation, and the changing of the rules just for him in order to make sure he is properly humiliated. Due process is replaced by the rule of the mob,” it said.