Speech to The Worshipful Company of International Bankers Dinner

Master, Members of the Court and Company and distinguished guests, I count it a great honour to be invited to your Installation Dinner.

It's quite something to be in the presence of a Company with a Royal Charter. Not only that, but you have added "Worshipful" to your title.

You're beginning to sound more and more like a branch of the Church of England!

One of the roles of Archbishops, indeed of any priest, is to be a pastor to those who find themselves in testing times.

I am not sure who decided so many months ago to invite me and address you here tonight, but with such foresight I think they should be recruited as a market analyst without further ado.

You will well know the story of the surgeon, the vet and the economist who were arguing that theirs was the world's oldest profession.

"Just look at the first chapter of Genesis," said the Surgeon.

"God created male and female in his image, there is no doubt that anyone who could put the human body together like that must be surgeon !"

"Not so fast," said the Vet. "Before he got round to making humans, God made the animals, everything that flies in the air and swims in the sea. So it stands to reason that God was a Vet."

"Nonsense" said the economist. "before he made man or the animals, God made the world out of chaos."

"So what ?" asked the surgeon and the vet.

"Well, Who do you think made the Chaos ?" replied the economist.

In a speech to the British Bankers Association this year, the Governor of the Bank of England noted that the relationship between banks and the Bank of England was 'a prickly one'.

This was because banks are legitimately concerned primarily with their commercial interest whilst the Bank of England is concerned with the interests of the UK economy as a whole. These two sets of interests are not always the same. Mervyn King went on to point out that whereas a company which misjudged risks or their business model should generally be allowed to fail to encourage prudence in others, the failure of a bank could impact far beyond the importance of that bank alone – so called systemic risk. This is why central banks have often acted as "lender of last resort". This can in turn encourage banks to take greater risks enabling them to earn higher profits.

The Governor also posed a question which goes to the heart of where our markets find themselves today:

"Are these repeated crises the inevitable result of human nature at work in financial markets, with greed and fear alternating as sentiment swings from irrational optimism to irrational pessimism? Or is it the failure over many years to find the right incentive structure for banking markets? Or is it a mixture of both?"

Well I do not come to you tonight with answers to those pressing questions, however It seems to me that the current solutions being proposed by the administration in the United States are remarkable, not least for a proposed level of intervention that now seems to do away with the concept of "systemic risk" and replaces it with a new market notion of "systemic underwriting".

This is something previously unknown in the so called land of the free and the land of the free market.

Adam Smith believed that when we act in our own self-interest, an 'invisible hand' would control our excesses and direct us - even against our will – towards the common good.

Today we are more cautious, more cynical and more realistic. It seems if we morality in our markets we have to legislate for it. Indeed as we meet here tonight, the Prime Minister and the Chancellor are meeting with members of the US treasury to propose exactly how such regulation might work.

The problem they, along with other Governments, will face at this time is how to regulate that which its libertarian advocates argue works best when it regulates itself.

Market freedom has become an absolute, a kind of fundamentalist religion in itself. You know the joke about how many economists it takes to change a light bulb.

The answer is: "None. The market will sort it out."

So much for the self-regulation of the market. But no-one knows better than you that things are changing daily, and some kind of security needs to be achieved. Any putative regulation must be based not simply on factors which might seek to limit the re-occurrence of events over the past week, but which take into account a more basic understanding of our actions.

The story is told of the Zoo keeper who one day was passing the monkey house. He looked in and saw a monkey sitting on the branch of a tree with the Bible in one hand and Darwin's Origin of Species in the other. "What are you doing", asked the Zoo Keeper ?

The monkey replied, "I'm trying to discover whether I'm my brother's keeper or my keeper's brother!" One of the lessons of the current turmoil is the recognition of our interdependence upon each other. It is a lesson that is often at odds with the mindset behind those practices such as short selling, but it is a lesson that bears repeating in times of crisis.

Am I my brothers keeper ? Yes I am. The impact of what happens with a subprime mortgage in America has an impact upon my brother employed in Newcastle Upon Tyne working for Northern Rock. Am I brother's keeper ? Yes I am when short selling leads to mergers with redundancies for thousands of my brothers and sisters. Am I my brothers keeper ? Yes I am, because "systemic risk" only makes sense when it is translated into the thousands of individual stories of hardship that flow from the collapse of a bank.

This interconnectedness is more than the playing out of Globalisation upon financial systems. It is fundamentally a recognition of the law of consequence. Our actions have consequences far beyond that of their immediate parameters.

Let me tell you about Richard, a Yorkshire farmer I know, who specialises in potato farming. He also grows wheat.

We may have not enjoyed the wet summer, but it has proved disastrous for Richard and many other farmers, many of whom have lost about a third of their earnings. The harvest is late, there is a huge cost in drying out the crops, and sowing for next season is late.

In this current situation I hope that the government responds to the call from the Rural Advocate to bring forward payment of subsidies.

If they can find $700 billion to support the market, will the Government - and bankers – help bail out our farmers? Farmers are facing ruin not because of bad investment, or speculation. Can we help secure the vital food security they provide?

I am hugely impressed by the aims of this Worshipful Company. You are the largest of the Livery Companies and genuinely international and in your aims are a force for good.

• Your commitment to this fellowship means that you put the community before personal gain. That's wonderful!

• You raise substantial funds for charity, with a particular interest in the welfare of young people. That touches my heart. I may be touching your wallet one day, for I'm just about to float a Trust Fund for children and young people.

• Your links with schools take practical effect when your businesses offer placement schemes for sixth-formers.

• You seek to promote professionalism with high ethical standards.

I know you are having to shoot the financial rapids. Markets are in turmoil. Bear Stearns and Northern Rock are etched indelibly in your memory. And now we have the stories of Lehmann brothers and Merrill Lynch, AIG and HBOS.

To a bystander like me, those who made £190million deliberately underselling the shares of HBOS, in spite of its very strong capital base, and drove it into the bosom of Lloyds TSB Bank, are clearly bank robbers and asset strippers!

We find ourselves in a market system which seems to have taken its rules of trade from Alice in Wonderland, where the share value of a bank is no longer dependent on the strength of its performance but rather on the willingness of the Government to bail it out, or rather on whether the Government has announced its intentions so to do.

Our country has built its financial strength historically on the manufacturing of goods, where money was the medium of exchange. In the last week we have has seen its systems come close to ruin because now money is no longer being the medium of exchange for goods, but rather is the very item which is being traded.

Meanwhile talk of bonuses being paid out to the few whilst the many suffer, cocks a snook at any talk of "fairness" or "equity".

Is it any wonder that in his book, The Good Society, J. K. Galbraith, wrote: "No one likes to believe that his or her personal economic wellbeing is in conflict with the greater public need. To invent a plausible ideology in defence of self-interest is thus a natural course."

These are testing times. I know, you have shareholders to consider and that many of you have had to make tough staffing decisions. Some of you must have had sleepless nights and your home life would have suffered. These are tremendously testing times.

I don't want to impose any more burdens on you. Only to say that the immense power you wield – even if it doesn't feel like that – is given you by God for the benefit of the whole of humanity.

Tomorrow morning I will attend a meeting to launch a campaign of education for all as part of the global effort to achieve the Millennium Development Goals, including the eradication of global poverty by 2015.

Of course for such a target to be achieved there needs to be stable financial systems. Without a solid global economic base to work from, the eradication of world poverty would be an even greater task. But as one columnist recently noted, "the President of the United States recently announced a $700 billion bailout plans for banks and financial institutions.

One of the ironies about this financial crisis is that it makes action on poverty look utterly achievable. It would cost $5 billion to save six million children's lives. World leaders could find 140 times that amount for the banking system in a week. How can they now tell us that action for the poorest on the planet is too expensive?"

The world's poor are waiting. And there is something that you can do to help. In fact it's something everyone can do to help. What is it? - It's 'Topping Up for the world's poor", giving a little with every transaction to a scheme called Deposit the Difference.

What does that mean?

Well, imagine that every time you bought something, you could arrange to top up your bills by a few pennies to the nearest pound above, and deposit the difference into a fund for educating the poor children of the world. Then imagine that each month you could arrange that any spare pence above the last pound of your total salaries be taken off and you could deposit the difference in the same fund.

Next, imagine that your example was taken up by everyone in the country – and that together we could help ensure that all those extra pennies could be channelled into areas of need – especially into Education and Health for the word's poor.

I'm grateful to the Global Exchange for Social Investment, that this is an idea which is already being developed.

For me, its appeal is that it would generate a large scale effect from a realistically small scale effort. It's a financial act in which everyone can play a part. Tonight we could resolve to do it!

On a lighter note – and I'll finish with this – here is the story of the banker on his way home, who was accosted for money by a beggar outside the doors of Canary Wharf.

The banker refused, saying, "If I gave you money, you'd only spend it on a round of golf".

"Golf!" said the beggar. I haven't played golf for 25 years. Can't afford it."

"Well, then, you'd spend it on gambling."

"Never. Gambling is a waste."

"Drink then. Anything I gave you would be spent on alcohol".

"No, I don't drink; I need it for food."

"In that case", said the banker, "come home with me and I'll get my wife to cook you a superb dinner."

The beggar was shocked and shamefaced. "Look at my torn clothes; I haven't had a bath for weeks; I probably smell. Your wife wouldn't like that."

"I know," said the banker, but I want her to see what happens to a man when he gives up golf, gambling and drink".

May God bless you all as you become the change you want to see in the world.