How 'Fred the Shred' sank Royal Bank of Scotland during the financial crisis of 2008
Making It Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy Iain Martin
THE great financial implosion of 2008 left a trail of social and economic devastation in its wake. But, by way of compensation, it also produced some fantastic literature. 'Too Big to Fail' and 'The Big Short' are just two examples of the plethora of "crash porn" that gave us a graphic minute-by-minute countdown to the breakdown of the global banking system.
Iain Martin's 'Making it Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy' is a more than worthy addition to the canon. In fact, it opens with a chapter that reads like it's been ripped straight from 'Barbarians at the Gate'.
It's the morning of Tuesday, October 7, 2008. RBS is teetering. Goodwin is scheduled at a meaningless conference. If he bails the meaning of his non-attendance will be quickly divined – RBS is in crisis. So he goes, and as each word leaves his lips a couple of additional pence slip from the RBS share price. The audience is half fixed on Goodwin, half fixed on their BlackBerrys, which coldly detail the slow, steady death of one of the nation's biggest corporations.
This chapter sets the tone, if not the rhythm, for what's to follow. One of the gods of British finance standing mute witness to his own funeral, and symbolising the way in which those who thought they were masters of events were in fact being mastered by them.
From the dramatic opening, Martin pulls back to tell the extended story of how RBS and Goodwin came to their collision with history. On one level this represents a modern morality tale, with RBS the noble institution undermined by the nefarious interloper Goodwin. But this part of the book makes me wonder.
Perhaps Goodwin's predecessors were indeed all "men who were financial innovators and patriots". But they were also bankers, not Samaritans, and I suspect the rose-tinted view Martin paints of the early RBS years is partly due to the fact that there weren't many journalists like him snooping around in 1850. The other slight problem is Goodwin himself. Martin does an excellent job of profiling his subject. But at a time when the word banker has become rhyming slang, he comes across as a disappointingly mid-market villain.
There's a great tale about Goodwin's father holding down someone he accused of bullying his son, as Goodwin Jnr gives him a good pasting. And there are the usual examples of corporate excess. But we've all long since come to regard such excesses as pretty much par for the course.
I desperately wanted to read how Goodwin sent recalcitrant underlings into some secret RBS shark tank in the basement of 280 Bishopsgate. But in fact, Martin reveals Fred the Shred wasn't even much of a shredder. He left all the actual firing up to the human resources manager.
Where the book does especially succeed is in setting out a gripping narrative of Goodwin and RBS's decline and fall. That's partly because Martin is a natural storyteller, and partly because he has enough good contacts to keep the anecdotes flowing. My personal favourite was when Alistair Darling broke off his lunch at the British Embassy in Washington to take a call from Yvette Cooper informing him that she had been forced to lock Gordon Brown's adviser Shriti Vadera out of a particularly fraught meeting on the spiralling crisis.
But what really makes 'Making it Happen' work is the slow inevitability of what's about to occur. There's something strangely intoxicating about watching these titans of finance coming to the gradual realisation that their castles have been built on sand.
If you were to start reading about the Titanic assuming she docks safely in New York, it would come across as a rather dull story of a pleasure cruise. As it is, the knowledge that Goodwin and co are heading directly for the mother of all icebergs keeps you turning the pages in morbid anticipation.
In the account of the final meeting before the announcement of the Treasury's £50bn bailout package, one observer recalls, "Fred was the least emotional of the bankers ... he obviously realised the game was up." Martin has done an excellent job of chronicling why.