Thursday, December 3, 2009


This seems to have become a week when, to paraphrase the words that William Shakespeare assigned to King Lear, chutzpah will come of chutzpah. The events in question are unfolding in the United Kingdom over a matter that has become all too familiar here in the United States, the payment of bonuses to those in the financial sector. This morning's BBC News story on the current state of play provides a useful summary of the chutzpah exchange. The first move came from the Royal Bank of Scotland (RBS), whose directors announced their intention to pay a total of £1.5 billion to members of its investment banking staff. This would be chutzpah enough when it remains unclear whether or not any country has truly emerged from the wreckage of economic crisis, but the RBS directors decided to add an extra dollop of chutzpah for good measure. They threatened to resign if the government blocks their decision. Those who see this as standing up to the excesses of big government need to know that the government is actually a major shareholder in RBS. Meaning, with only a little stretch of the imagination, that, in a framework of representative government, the British public is a substantive shareholder in RBS, with their interests represented by the Treasury and Chancellor Alistair Darling. If Darling (whose voice has been one of the more cautious when talk turns to recovery) is serving his representative responsibility (which seems to be the case), then it is a matter of having the chutzpah to stand up to RBS chutzpah.

The good news is that Darling is not alone. However, in terms of "quality of chutzpah," his language has been more diplomatic than that of others. The flavor of chutzpah is more apparent in banking analyst Ralph Silva's reaction to the exchange. Here is what he, speaking as a British citizen represented by Darling, had to say about the RBS directors:

Their job is very simple - to fulfil the requirements of the shareholders. If we tell them to paint everything blue, everything has to be blue.

They should not be going up against shareholders. I think we should fire them [before they resign].

This amounts to the chutzpah of a preemptive strike, otherwise known as whacking the mule with a two-by-four to get its attention. Then we have City Minister Lord Myners, whose language is not quite as extreme as Silva's but has barbs of its own in enjoining the RBS directors "to come back to the real world." My guess is that this will play to the gallery better than it will to the corridors of power, however. The one lesson we should have all learned by now is that a sense of reality does not necessarily have the best survival value in the financial sector! Nevertheless, it seems appropriate for this week's Chutzpah of the Week award to go to Darling, Silva, and Myners for having the chutzpah to retaliate against the chutzpah of the rich and mighty.

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