takeover. None of the former building societies remain in independent ownership. Retail banks were also allowed to expand mortgage lending.21 This deregulation had a profound effect on the banking sector. The banks and former mutuals became focused on short-term profitability. This is hardly surprising given the short-term perspectives of the institutional investors owning the banks. The average duration of equity holdings has fallen from around 5 years in the mid1960s to around 2 years in the 1980s. At the turn of the century, it had reached just over a year. By 2007, it had fallen to around 7.5 months22. Many institutional investors churn their portfolio every quarter and their success is measured by returns rather than any involvement in bank governance. Inevitably, this affects the behaviour of executives and directors. The tenure of directors has been shrinking. Even before the recession, the average FTSE 350 chief executives had tenure of only about 4.6 years.23 The temptation is to boost short-term profits and get higher executive rewards before moving. As a result, banking and the financial sector more broadly, has been permeated by a culture of risk-taking shading into downright fraud. While governments insisted on light touch regulation, a series of scandals have rocked the sector involving insider dealing, misselling of pensions, endowment mortgages, investments, precipice bonds, split capital investment trusts, payment protection insurance and rip-off charges on loans and overdrafts. Through their use of tax havens, secrecy and financial skulduggery, banks have become leaders in tax avoidance and evasion but continue to disarm critics by producing glossy corporate responsibility brochures.24 21 This section owes much to the account in Jerry Coakley and Laurence Harris, ‘Financial Globalisation and Deregulation’, in Jonathan Michie (ed.), The Economic Legacy, 1979-1992, (London, 1992), pp. 37-57. 22 Andrew G Haldane (Executive Director, Financial Stability, Bank of England) “Patience and Finance” speech at Oxford China Forum, Beijing, on 10 September 2010 (http://www.bankofengland.co.uk/publications/speeches/2010/speech445.pdf). 23 ‘Experience shows experience counts’, Financial Times, 25 September 2008 (http://www.ft.com/cms/s/0/85faed34-8b25-11dd-b634-0000779fd18c.html#axzz1abhKykOd ) 24 Austin Mitchell and Prem Sikka, Pension Crisis: A Failure of Public Policymaking, Basildon: Association for Accountancy & Business Affairs (2006); US Senate Permanent Subcommittee on Investigations (2008). Tax Haven Banks and US Tax Compliance, Washington DC: US Government Printing Office; US Senate Permanent Subcommittee on Investigations, (2003), The Tax Shelter Industry: The Role of Accountants, Lawyers and Financial Professionals, Washington DC: US Government Printing Office; US Senate Permanent Subcommittee on Investigations, (2005), The Role of Professional Firms in the US Tax Shelter Industry, Washington DC: US Government Printing Office; Prem Sikka, Smoke and Mirrors: Corporate Social Responsibility and Tax Avoidance, Accounting Forum, 34(3-4): 2011, pp. 153-168.
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