Useful foreign word of the day: herenakkoord
One of the handier concepts to have come out of a foreign dictionary during this crisis is that of Anstaltslast, the German idea that if the state owns a company, then there’s an implicit government guarantee on that company’s liabilities. Essentially, it means that once a bank is nationalized, you can lend to it as much as you like, safe in the knowledge that you’ll get all your money back in full and on time.
Now Justin Fox has found another handy foreign concept: the Dutch herenakkoord, or “gentleman’s agreement”. That’s what the Dutch government has come to with the Dutch banking industry: the upshot is that the top 12 financial institutions won’t be giving themselves whopping great bonuses any time soon.
As Justin says, the very fact that it’s all a bit hand-wavy and vague is a strength: it’s definitely principles-based rather than rules-based, as it were. Trying to legislate executive pay never works. Signing a herenakkoord seems like a much better idea.