Faisal Islam: Mandelson, Darling, and the Conversation I Can’t Forget
For over a decade, one private conversation with the late Alistair Darling, Chancellor of the Exchequer under Gordon Brown, has lingered in my mind. This discussion revolved around the financial crisis and a tense phone call Darling received from Jamie Dimon, the Chief Executive of JP Morgan, in late 2009. This call was prompted by the UK government’s announcement of plans to tax bankers’ bonuses.
Key Takeaways from the Conversation:
– The Threat from Dimon: During their call, Dimon expressed his frustration, even threatening to reconsider JP Morgan’s plans for a massive new headquarters in the UK. This aspect had been reported at the time, but the contextual details have recently surfaced in the Epstein files.
– Mandelson’s Involvement: Surprisingly, Peter Mandelson, then the Business Secretary, appeared to suggest that Dimon might issue mild threats regarding the bonus tax. This revelation raises questions about the intricate connections between high-profile figures during the financial crisis.
– Insights from Darling: In a series of interviews for his book, Back from the Brink: 1000 Days at Number 11, Darling shed more light on this call. Dimon noted JP Morgan’s significant role as a purchaser of UK government debt, hinting at the bank’s leverage over Britain’s financial borrowing.
Darling vividly recalled the pressure he faced from numerous bankers, who seemed to follow a script in asking for a reversal on the bonus tax. He even became adept at predicting their complaints, having heard them repeatedly. Darling recounted Dimon’s anger during their conversation, stating:
> Mr. Dimon was very, very angry… he wondered if buying UK debt was still a good idea. I reminded him that they were buying our debt because it made sound business sense.
– Financial Stakes Involved: Despite the pressures, the proposed bonus tax on earnings over £25,000 remained in place, and JP Morgan eventually continued purchasing gilts. This episode starkly illustrated the power dynamics between government policy and financial markets—demonstrating the phenomenon of bond vigilantes.
– Epstein’s Role: The revelations suggest a disturbing orchestration involving Jeffrey Epstein, with Mandelson allegedly communicating strategies via email. For instance, Mandelson wrote to Epstein in December 2009, stating, Treasury digging in but I am on [the] case. Subsequent emails revealed tactical discussions about the structure of the tax, emphasizing the interplay between political decisions and financial interests.
– Concluding Thoughts: Mandelson has remarked that every UK and international bank was advocating similar positions regarding the impact on financial services. He clarified, My conversations in government at the time reflected the views of the sector as a whole, not a single individual.
This conversation holds critical importance not just as a historical account but as a demonstration of the intricate relationships between government figures and financial institutions during a crisis. As we reflect on this pivotal moment in Britain’s financial history, the ramifications of such interactions continue to evoke questions about power and accountability in times of economic turmoil.