Bernard Ginns: Who’s more important, a Rothschild or a Prime Minister?

It’s a rarity in that it is one of the few decent works of fiction to have appeared about the credit crunch and the people responsible for it.

Acres of non-fiction have been published and by and large these various books, articles and essays have added to our understanding of what went wrong and how.

But in fiction you can get closer to the truth, even if you are dealing with made-up people and places.

Mr Cartwright’s book deals with the collapse of a blueblood, family-owned private bank in the City of London called Tubal & Co. It had been run on prudent banking principles for more than three centuries, until the new generation took over and set up a hedge fund, specialising in subprime mortgages.

The masters of the fund foolishly believed that risk could be removed from investing by following a clever formula. The consequences were disastrous, as we have seen.

The story concerns the efforts of chairman Julian Trevelyan-Tubal to rescue the bank, keep its troubles firmly away from the regulators and negotiate a sale to a billionaire American businessman.

It is a comedy of sorts and highly amusing in places, but some passages contain real anger and power. As Julian sourly quotes JM Keynes in the beginning, “you might just as well read a sheep’s entrails as the Romans did as make predictions about the markets”.

The lead character is clearly well-read: he also quotes Charles Dickens in describing the bankers of his time as “sleek, slobbery, bow-paunched, overfed, apoplectic, snorting cattle”.

As his world falls down around his shoulders, Julian has a bitter realisation about the City and the kind of country that is capable of spawning such a collection of institutions.

“I don’t want any of this for my children. This rotten, crumbling industry resting on greed and half-truths; this pretence that Tubal’s itself is somehow special, that the people who work in banking are particularly talented, that the Government is principled, that the old country still possesses ancient wisdom and deeply embedded human standards.”

Many in the real world have become blinded by this kind of anger. Indeed, it is easy to do so and forget the essential and socially useful role performed by banks and bankers.

Julian’s father, Harry, a product of the old school who believed in sticking steadfastly to relationship-based banking, held the view that bankers are “the glue that holds society together”.

In Harry’s opinion, “they are part of a higher elite, who really understand how the world works. Their understanding of money has given them something incomprehensible to politicians and ordinary people.

“Without their capital, directed to where it is needed, the whole system would collapse. Who is more important, a Rothschild or a Prime Minister?”

That’s a good question. Mervyn King, the Governor of the Bank of England, probably fears it is the former, judging by comments in a newspaper interview earlier this month.

He warned that imbalances in the banking system were growing again and could lead to a repeat of the 2008 financial crisis. And he warned that the knowledge that the state would always underwrite banks has led to a culture of excess in risk and bonuses.

“The concept of being too important to fail should have no place in a market economy,” said Mr King. Asked if the financial crisis could return, he said: “Yes. The problem is still there. The search for yield goes on. Imbalances are beginning to grow again.”

Back to the book, published this month by Bloomsbury. For its epigraph, it uses another quote by JM Keynes, from his 1936 work, General Theory of Employment, Interest and Money.

“When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done.”

That should make you shudder. The Independent Banking Commission, set up to look at splitting up the retail and investment banking arms of the country’s top banks, is to deliver an interim report next month ahead of a final report in September.

I keenly await what it has to say – and whether our politicians have the guts to act on it. I expect that the bankers will win out again.

As a footnote, Mr Cartwright reveals that he took advice from bankers on banking in his research for the book, but he decided against naming any of them. People tend to speak more faithfully off the record. Other People’s Money has the ring of truth to it.