Gina Davidson: Don't go banking on our forgiveness

Two years on from a financial meltdown, and as banks prepare to announce a return to huge profits, Gina Davidson asks if it's time for some redemption

Religion rarely enters the world of banking, but people are now asking whether is it time for us to forgive our debtors and allow a little redemption.

Is two years a long enough period for us to have some closure on the near collapse of global capitalism and the 37 billion government bail out of the Royal Bank of Scotland and Lloyds TSB? Should we let the high-flyers spread their wings once more?

One of Scotland's most senior financiers, Sir Angus Grossart, believes the public should to let go of their visceral anger and allow "hate-figures" such as Sir Fred Goodwin to re-integrate themselves into society.

Grossart, who has a personal stake in forgiveness as Goodwin is his close friend, even goes so far as to comparing the treatment of the former RBS chief executive to Kristellnacht.

While it might be a stretch to suggest that a few broken windows at the multi-millionaire's former home in the Grange can be compared to the infamous November night in 1938. Up 30,000 Jews were arrested and placed in concentration camps and 91 were murdered.

The chairman of Noble Grossart - a merchant bank - made the comparison in his call for an end to the "scapegoating" of Goodwin, right.

He points out that many others also made mistakes and never saw the collapse of the sub-prime mortgage market coming.

That's where his argument goes awry for most of the public. Goodwin and his ilk were paid handsomely to foresee such problems; to be bankers, not gamblers; to be reliable, not risky. Then there are those bankers who bet on the collapse of the American mortgage market. Not only did they see it coming, they made money out of the misery. Forgiveness, anyone?

It's not going to come from the public sector. Unison Scotland's John Stevenson says: "Maybe 30 years ago people at the top of these banks would have resigned in disgrace, now it's a kind of inconvenience.

"It continues to astonish that the public sector has delivered 30 per cent in efficiencies yet its workers are looking at a pay cut, while you can make massive losses at a bank and still get a bonus. It offends people's sense of fairness.

"There has been little in the way of contriteness from the banking industry. There's an arrogance that "they're too big to fail" and there's a fear among politicians to challenge the bankers. There needs to be much more regulation to ensure such a financial crisis doesn't happen again. It's in everyone's interests that the banks recover, not least for pension funds, to get our money back, but the issue we have is that it seems to be the public sector which will end up paying for failures of the bankers and politicians. It's hard to forgive that."

Bankers themselves seem to be craving forgiveness. While Cardinal James Francis Stafford, one of the highest-ranking Americans in the Vatican, has said that "bankers should assume moral responsibility and ask God for forgiveness", ministers in London's financial district have reported steadily swelling numbers of worshippers; anecdotal evidence, perhaps, that some bankers who contributed to the crisis of the past two years are seeking salvation.

According to the Rev Oliver Ross, dean of the City of London and vicar at St Olave's: "There is an increased desire among a lot of City workers to look at the ethics of what they do."

The Church of Scotland has set up its own Economics Commission, led by Professor Charles Munn, to explore the "fundamental ethical and moral questions underlying economic activity" after the financial crisis.

"This is a challenging time for many people, especially those who are, in their poverty, paying for the excesses of those who craved wealth," says a spokesman.

"In the Bible, the book of Timothy asks us to make investments which reflect our Christian faith but that also use God's wisdom. We would strongly urge Scottish financial institutions to follow these values to build a society that is not morally, or literally, bankrupt."

Queen Margaret University psychologist Dr Stuart Wilson says: "Most evidence suggests that forgiving has psychological benefits and there is even some suggestion that it can have a measurable physical effect, reducing blood pressure for example. The effect of forgiving an abstract societal construct such as "the banks" would be difficult to measure. Having said that, if times are tough, and stress is everywhere, a little bit of forgiveness can often go a long way."

Ad campaigns from the institutions themselves, such as RBS, Lloyds and HBOS, are doing their damndest to convince us that they are now regular high-street banks again and that their casino days are over.

NatWest and RBS also say they have helped more than 100,000 new business start-ups in the past year.

Can they - and even Northern Rock - expect a thawing of public opinion this week when they deliver their results, or will it just lead to more carping about bonuses and the lack of lending to small businesses?

Angela Knight, chief executive of the British Bankers Association says: "Ninety per cent of loan applications are being approved by banks, and while there is no magic solution... we can take a number of small steps."

So while Grossart's German analogy may not engender too much sympathy, that of comedian David Mitchell, is perhaps closer to the mark. According to him: "Top bankers are the new Germans. And the sooner we get to the point where we're making jokes about the outrages committed in their name, the better... We haven't got there yet."