The ‘did Sunak help Greensill at Cameron's request?' or not, saga seems to be keeping some parts of the news industry happy this morning. Fir what it's worth my reading of the messages Sunak sent is that he did offer some support. That would hardly be surprising. He let his senior staff meet Greensill many times over the issue. Sunak must have been aware of this.
The unfortunate part of this story is that it draws attention away from the bizarre business model of Greensill, which Cameron supported and which did not seem to create alarm bells in HM Treasury.
Greensill took the funding mechanism known as factoring onto another planet. What factoring does is advance money to a company on the basis of the value of the sales invoices it has issued but which have not been paid, using the fact that the customers are likely to pay as the security for the loans advanced. The model works, even if its a but cumbersome and so relatively expensive.
But what Greensill did was advance loans against invoices not yet issued to customers who had not even placed orders as yet, in at least some cases. In other words it advanced loans against business prospects and there was literally no security in that.
To provide a commonplace equivalent, that's like applying for a mortgage on the basis of having seen an advert for a job you think you might quite like and that you may apply for even though the chance of getting it is entirely unknown. And Greensill apparently thought that something as absurd as this was acceptable security for lending money.
The question that really needs to be asked is how Greensill ever got through any front door in Downing Street, ever, on the basis of such a business model? That's what I'd like to know.
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You need to do one of your video’s on this, I suggest however getting Richard Wilson to play Victor Meldrew and present it ‘I dont believe it…….’
It’s all about image, if you project the right image of wealth you are half way there then go and get a senior politician to jump on board you can go far for a short time. Getting a ex Prime Minister on board however, is like hitting the motherload, the kudos that creates is immense as well as the very useful access to current senior politicians. Ok this time it didn’t help Greensill, but the opportunity was there when it should never have been.
We need to do more to stop this revolving door between finance and ex senior politicians, particularly Prime Ministers( Blair went to work for JP Morgan) and all our recent Chancellors now work or have worked for the in the finance sector after having left their public roles. This cannot be sensible when we see the problems finance can cause us all.
When any bank or other credit institutions delivers such massive growth it is either reckless or fraudulent (or both).
We have become so obsessed by “innovation” that we are sucked in by an company like Greensill and their claims to be “different”……. but in banking there is nothing new under the sun.
Agreed
Hence also my disdain for crypto
Crypto is also environmentally unsustainable given the amount of energy it consumes. For no good reason. One could be forgiven for thinking it was akin to a Ponzi scheme.
I think it is
“We have become so obsessed by ‘innovation’ …”
I am not sure that ‘innovation’ is the real culprit here; but rather a cover for opportunism. Britain’s political culture, and its louche approach to business as a legitimate, exclusive ‘value-free’ zone of activity beyond the reach of responsibility or culpability, is I think closer to the mark; and that ain’t new in British public life: not by a ‘long chalk’.
You are right, innovation is not a bad thing (or, indeed, the culprit). But in our DESIRE for innovation we get get conned by the opportunists and chancers.
I should clarify that the distinction I would make from Mr Parry’s full sentence and his qualification is that it isn’t just in banking that this isn’t only a matter of ‘innovation’ or anything new; but the same conventions apply generally to business, economic activity and their relationship with political power.
Precisely my experience of many years working with the banking sector is clients.
Innovation in banking just means a new way of getting around regulators and extracting more wealth from clients
You pair of entirely justified cynics have my agreement
Found this FT article interesting on Greensill and it’s reverse-factoring – https://www.ft.com/content/1bbbe94c-9c3d-43d1-bcdd-8add6557c5a7
The article is not the full story…
Thinking about it, did Cameron do ‘Due Diligence’ before he joined, and what did or should it have told him?