Tuesday, September 18, 2007

Northern Rock: Drawings - and some conclusions - from the front line

The Front Line
(Northern Rock, 115 Houndsditch, City of London 17.09.07. 12.30pm)
11" x 16", pen and ink and coloured pencil in sketchbook
copyright Katherine Tyrrell - all rights reserved (see note at end)

Queuing outside two branches of Northern Rock has been the "logistical difficulty" which prevented a blog post on Saturday and then my posting very, very late on the last two days. I'm one of the "depositers" (as we are now called!) hit by the problems at Northern Rock which I gather have been reported around the world. I've spent hours in queues on both Saturday and Monday - but I took my sketchbook with me!

In Travels with a Sketchbook in...... my post there tells you rather more about what it was really like at the front line - from the perspective of being inside a queue with a sketchbook! Yesterday I was up at 3.50am and outside 115 Houndsditch by 4.30am - and was first in the queue. Which made a bit of a change from Saturday when I got to Bromley at 9.00am and still had at least 100 people in front of me in the queue when the branch at Bromley closed at 2.00pm Saturday afternoon (see second sketch).

Normally I don't comment about things on this blog beyond matters to do with art, but the last three days had been a very educational experience. So, in my blog post today, I'm going to discuss the practical things you can do when you see an event like this (or anything else significant in your life) being poorly communicated and misreported.

The queue that got nowhere
(Northern Rock, Bromley 15.09.07 1.00pm)
11" x 16", pen and ink and coloured pencil in sketchbook
copyright Katherine Tyrrell - all rights reserved (see note at end)

Yesterday, I highlighted the call for a Blogger's Code of Conduct. Proposals include the notion that site owners and bloggers should:
  1. Take responsibility not just for your own words, but for the comments you allow on your blog.
  2. Label your tolerance level for abusive comments. (etc)
On Sunday I started to research what was going on and was appalled to find (on the internet at least) that:
  • the problem was being dressed up as a business issue and economic problem only and was really only being discussed in economic terms.
  • the Governor of the Bank of England was labelling all people with money in the bank as "investors"
  • there was little awareness that:
    • most of the people in the queues were pensioners
    • most of them were there to withdraw their pensions funds and life savings
  • really quite nasty abuse was being heaped on the people on the queues who were being called all sorts of names - on BBC blog comments, BBC 'Have Your Say' message boards and in the comments on major leader pieces of certain broadsheets. "Thickos" and "lemmings" were two of the more polite terms used.
I took the view that, based on my experience of queuing unsuccessfully on Saturday and the lack of journalists seen talking to the queue, that most of these views were being expressed by people who had no little or no idea about the profile of depositers and had not visited the queues. I was also most concerned that the media were making the situation worse and not better by:
  • failing to do some basic news gathering
  • failing to take adequate responsibility for the nature of comments on their websites (as per the Bloggers Code)
Having been in a queue on Saturday I knew that about 90-95% of the people there were pensioners with an estimated average age somewhere between 70-75. On the basis of the sample of 20-30 people near to where I was standing it appeared to me that most had their pensions funds or life savings deposited and that such funds were well in excess of the level of funds guaranteed by the government in the event of bank failure.

It was also my view when I viewed the Internet on Sunday that pensioners were effectively being 'abused' by the media apparently failing to take adequate responsibility for the nature of comments on their websites. What I was most concerned about was that the level of abuse being dished out would mean that older people might not want to comment for fear of being abused themselves at a more personal level. I decided to say something.

Drawing from the Northern Rock
11" x 8.5", pen and sepia ink and coloured pencil in sketchbook
copyright Katherine Tyrrell - all rights reserved (see note at end)

So - having spotted the Bloggers Code of Conduct earlier in the week, I decided to start asserting it. I made detailed complaints to both The Press Association and the BBC. I commented on a number of prominent blogs and leader pieces which I knew would be being followed by the 'powers that be'.

As soon as I started to make complaints about the way pensioners were being abused, I seemed to get a response from others who also started to express support for the pensioner perspective and comment on the abuse.

By the end of yesterday, I noted that:
  • people like me were now being referred to as "depositers" by the government (as opposed to being referred to as "investors" by the Governor of the Bank of England last week).
  • The BBC coverage of the queues was less focused on the amount of money being withdrawn and instead focusd on the pensioners in the queues. I didn't watch it all when I got back (too tired!) but there did seem to be a bit of a new competition amongst some of the channels to find the oldest person in a Northern Rock queue! The channel I watched found a 93 year old chap who was there to take out his life savings.
  • the Chancellor had, at last, announced that 100% of the deposits were safe.
  • the government's compensations scheme for banks which go bust has come under very heavy criticism. The FSA Chief Executive is looking to find ways of improving the savers' guarantee scheme for larger deposits.
The move came after three days of long queues at branches up and down the country as customers withdrew more than £2bn of their money - about 8% of Northern Rock's total deposits.
Now I have no idea whether or not what I said had any impact or whether my voice was just one of very many who all made the same points. I very much suspect it was the latter. However, if expressing my personal experience made others think twice about what they and others have said then I am pleased. I am also now very firmly of the view that it is essential that all website owners and bloggers take responsibility for comments posted on their sites on the Internet. I also think that if you can find the right place to comment, the Internet can potentially be a very powerful place to speak out. However I also sincerely hope I'll never ever have a Sunday again like last Sunday - or the last three days for that matter!

Finally - as I've had a fairly traumatic three days, I think I need to take a break so that I can catch up on lost sleep and do the research to revise my stategy for my savings and pension funds. I'll be posting again by the weekend and will also moderate comments on this post or any other as they come in.

Normal blogging service - and the art - will resume at the latest next Sunday!

Note: Please note all rights are reserved in respect of all images and text on this blog and my other blog. Please contact me if you want to copy either sketches or my comments.



lyn said...

Dispite the circumstances the drawings are lovely! Hope you have a peacful week. I heard nothing of the bank problem, our local news has been focused on the fires that are burning in Southern California. Hope this all worked out well for you.
Lyn Feudner

Rose Welty said...

Oh Katherine, what a mess. This is a great post on taking action and the difference an individual can make. (And the blogging code of conduct is great, thanks for highlighting it.) Your sketches are lovely. You did these standing up? for hours? Amazing! I read your post this morning and then stopped off at the art store after the morning school run. They had a nice pocket-sized Canson sketchbook on clearance, you inspired me, I bought it in hopes of always having it with me. I wish you good rest over the next few days.

Katherine said...

Thanks for the comments

I did the Bromley one standing up - across a double paged spead - but I did move forward in the queue and lean it on a chest-high 'thing' (Telephone box?) situated on the pavement. We all got very amicable about moving around in the queue as it made excruciatingly slow progress with lots of comings and goings as we hunted down hot drinks and things to eat and trips to the loo!

Which reminds me that I must say a very big thank you to the Starbucks opposite the Houndsditch branch! I went back there yesterday after finally getting my cheque paid into a National Investment Account and drew this while sitting on a stool and looking out the window to the branch across the road. Not an ideal drawing place but I didn't want to miss the opportunity to record what was a very momentous event.

I'm greatly intrigued now as to whether anybody else recorded the event in this way.

Good luck with the sketching Rose - I'll be fascinated to see what you start sketching.

Jeanette said...

What a troublesome time for you Katherine. I'm sure its taken its toll in patience and worry. I'm glad you took a stand and made your voice heard.

Your sketches, as always, are a treat to see and capture the moment beautifully.

Julie Oakley said...

You poor thing Katherine. Standing for all that time! However it's rather good to see the great reportage sketching. Please give yourself plenty of time to recover fully.

Dave said...

You're the first person I've known that has actually had money in the NR. Must have been horrible for you, but you seem to have turned it into a positive experience. Good for you.

Bank runs are intellectually interesting, because it is probably rational for individual depositors to withdraw their money (you don't loose anything by doing it, so even the very small risk of loss that is probably all that actually exists isn't worth taking). But collectively we are all worse off if there is a dramatic loss of confidence in the banking system.

But that shows that the solution isn't to denigrate people who are acting rationally. The only solution is to show depositors that their risk really is zero, as has now been done. The UK's deposit insurance system is probably too clever. It is a form of co-insurance, which is meant to reduce the so-called "moral hazard" problem that economists argue is inherent in a full insurance system. This means that depositors have no incentive to evaluate the solvency of a bank if they do not bear any share of the risk of the bank going broke. In reality, though, most depositors have no way of evaluating the solvency of a bank, and generally assume that they are all safe, perhaps as a result of regulation. When a run on a bank results, the shortcomings of the co-insurance system are revealed.

Katherine said...

Julie - J and I came to the conclusion that since I seemed to have managed to take double my normal morning dose of pills by accident that may have had something to do with it!

I do know that when I left the queue and got home all the aches and pains that I would normally have arrived en masse and it was back to normal with avengeance. You've seen what I'm like when I stand up from sitting - well it was like that but about three times worse than usual.

I went to bed because it was easier rolling out of bed than getting up from a chair!

Katherine said...

Jeanette - if you saw some of the things that were being said and you knew that the people they were talking about were people in their seventies and eighties you wouldn't - as I didn't - find it difficult to say something.

Katherine said...

Dave - you got it in one. My partner said the money was absolutely safe - and then an hour later said that on the other hand if I was panicing and wanted to queue he was much more concerned - because it meant that all depositers would be doing pretty much the same. At which point we concluded that in order to avoid the stress of not doing anything, we needed to get in the car and get me in the queue!

You should get this one written up for your classes!

All I can say is the same thing I used to say to my lecturers at college in my economics classes - which is that, in real life, people act on the basis of imperfect information and not rationally on the basis of perfect information. It has been and will continue to be my view that economists should take lessons in sociology!

I used to try and introduce the phenomonelogy I studied at Cambridge to the economics staff - but they used to have a lot of difficulty comprehending something which meant looking at things 'subjectively' from the point of view of an individual with imperfect knowledge as opposed to 'objectively' and rationally in a third person perspective. They were wedded to their impartial objective perspective - the sort of view which makes people 'investors' in an economic cycle as opposed to people in their 50s, 60s, 70s and 80s with deposits related to pension lump sums and life time savings - and who won't get another chance to regenerate them.

I think the thing that annoyed me most was the way the Governor of the Bank of England seemed to expect every 'investor' (ie pensioner) to be as familiar with the money market as every analyst in the city. One did wonder whether he had ever had the experience of having elderly parents.

The other important factor is trust in a source of information and confidence in its accuracy. At a rational level, people with deposits do not get sent the information as shareholders do. After that you are dependent on the wisdom and views of 'expert' comment in the media - by people who may or may not be experts but who certainly owe us no duty of care and can give no guarantees.

What I found truly shocking was how many ordinary people didn't know about the limits of the FSA's Compensation Scheme - or that, for one individual, it applied across all funds in all accounts in all companies in one group.

Which also presumably means that we now need to be experts in mergers and acquisitions as well if we are to avoid placing funds beyond the limits of the scheme inadvertently.

Interestingly - and more worryingly - the staff in the banks also don't know which organisations are covered by their FSA licence (which is what actually matters). I came across two on Monday who simply didn't know - and I would have placed money in excess of the limit in error in a third if they hadn't asked me a question "Was I aware that...?"

So even if I had asked the question prior to last weekend I may not have got the correct answer.

I can tell you it's a very frightening experience to find yourself in. I now well understand why 'under the bed' feels like a very safe place for your money.

Dave said...

The Bank of England had been under pressure from the FSA to do something for several weeks, but refused on the grounds of the "moral hazard" problem.

"Under the bed" might seem like a good risk, although if you announce on TV that that's what you're going to do, like one person I saw, I imagine the risk goes up quite a lot!

Katherine said...

Jury seems to be out on whether the Governor of the Bank of England will keep his job

David - I know I saw and watched that chap and did wonder about the wisdom of his statement!

Katherine said...

Jury seems to be out on whether the Governor of the Bank of England will keep his job

David - I know I saw and watched that chap and did wonder about the wisdom of his statement!

I need orange said...

Good on ya for speaking up.

I always feel -- If *I* don't speak up (in that sort of situation), why should I imagine anyone else will.

If not me, then who?

Good for you. Surely you had an effect. Especially as your response was so focused and pertinent.

-- Vicki in Michigan

Tania said...

You are to be congratulated on taking the stance that you did. Surely such a well-reasoned response couldn't have gone unnoticed. And I love those sketches - I bet there's nothing else like them. I wish you a speedy recovery.

R said...

Well, I ran across the link to your blog in an excellent post on blogging at www.emptyeasel.com, you were an example of how a blog can draw visitors. But I was really surprised by your post being as relevant to my own blogging interest. My newest blog is about Personal Finance and being able to read about a bank run in England was serendipitous to say the least. Two things crossed my mind as I read. First, taking money our of a bank can put a person in a very vulnerable place where scam artists seem always to be waiting. Second, I wonder what follow up protection is being made to those who got caught in this cock up?

A Reason to Paint said...

I must admit I have never heard of Northern Rock, but I sure do love the way you have illustrated your post with these sketches.

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