The MT Diary: Howard Davies

Our new diarist, the ex-head of the FSA, hands in his badge and heads off for academe.

by
Last Updated: 31 Aug 2010
In my last two weeks as a financial regulator, our little world was dominated by the decline and fall of Dick Grasso at the New York Stock Exchange. Grasso had protected the exchange for more than a decade, preserving its extraordinary Spanish practices - specialists and open outcry on the trading floor - against all the odds.

No wonder his members were grateful. But the dollar signs attached to their gratitude clearly overstepped the mark, and he had to go. I suspect John Reed, the former Citibank chairman brought in to plug the gap, will bring more change to the market than its denizens expect, which will be no bad thing.

Grasso was always an entertaining host, but with two off-putting characteristics.

Revealingly, his office was decorated exclusively with photographs of himself - with the Pope, with Michael Jordan, Lorena Bobbitt or whoever.

And he kept the temperature at about 85 degrees, while never removing his jacket. This had the clever consequence of keeping calls on him very short. As sweat began to trickle down your chest, all you could think about was finding a quick means of escape.

But at the end of September for me it was goodbye, not just to Dick Grasso, but to the financial world in general, and to the shackles of public office.

For eight years, at the Bank of England and then the FSA, I have been in jobs where silence was golden, and careless talk cost lives - well, money at least. The FSA had institutional views, of course, on all manner of thrilling topics, like life assurance commission disclosure or fair value accounting. But the chairman had no personal opinions, whether on politics, the euro or the choice of spinners for England's winter tour.

Suddenly, all that has changed. At the end of September I jumped ship, landing at the London School of Economics. In academia, opinions are what we do. Ideas 'R' Us. Somewhere in the school there's probably a professor of spin. So I had better work up a few thoughts of my own. At the CBI, I seem to recall, I had an opinion on almost everything. But one gets out of practice.

A good starting point will be to remind myself that I'm still alive. One odd feature of leaving a job in the public eye is that the newspapers write obituaries. You're in the past tense.

As obituaries tend to be, the verdicts were generally indulgent. The Sunday Times and the Economist chose the moment to reflect on whether the City was a cleaner place as a result of my attention. Maybe, was the carefully considered answer. The Sunday Telegraph took a more personal tack, reflecting on my management style and open-plan office. The Daily Mail asked whether I could have done more for the unhappy shareholders of Equitable Life. The Independent broadly wondered whether the public's expectations of regulation are now unreasonable. Answer, broadly, yes.

The Financial Times, by contrast, got to the heart of the matter. Its obituary, small but perfectly formed, speculated on why I had not held a farewell party for staff (true) while inviting outsiders in for drinks (false). I guess 50% is a decent pass mark for the FT these days.

One of the puzzles that preoccupies those who feature in the British press is why so much that is written is factually wrong, particularly when the internet makes fact-checking much easier than it used to be. The Guardian editor Alan Rusbridger acknowledged the other day that 'the truth about most journalism - which editors know better than anyone - is that it is (in the memorable words of the Washington Post's David Broder) partial, hasty, incomplete, inevitably somewhat flawed and inaccurate'.

Unfortunately, although his diagnosis is right on the button, he did not offer a remedy. Until he finds one, newspapers will no doubt continue to rely on the acute form of cognitive dissonance from which most of us suffer. We know that what we read about ourselves is usually wrong, but we nonetheless implicitly believe whatever we read about others - especially if it's personal and critical.

I thought when I arrived in my ivory (well, concrete) tower that personal attacks would be a thing of the past, as I and my colleagues peacefully grazed on the lush grass of academe.

Not so. The first lecture I chaired was in honour of Richard Titmuss, a revered professor of social policy at the LSE who died 30 years ago.

One of his seminal papers discussed altruism and giving - asking why the number of blood donors tended to fall when payments to donors were introduced.

Julian LeGrand, who is off to advise the prime minister on the NHS (brave man), reviewed the life work of Titmuss, and we debated whether his ideas remained relevant today. 'They don't,' observed a fierce Scottish woman in the audience. Under Clement Attlee, she maintained, the government gave a moral lead, whereas today we have a prime minister 'in love with wealth', who 'travels to pop stars' homes on holiday accompanied by his wife's hairdresser'.

Ouch. Sadly, I've yet to meet a Cliff Richard fan at the LSE. Perhaps this will smoke one out.

Howard Davies left the chair of the FSA at the end of September to become director of the London School of Economics.

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