how to end up in someone's pocket

songs my investment bankers taught me

I didn’t want to talk about this while it was in the news, but I have written a few times in the past about the problems associated with politicians and hospitality. (For non-UK readers, basically shortly after our recent election a surprising number of lobbyists realised that people who would never have otherwise picked up the phone would go dippy for Taylor Swift tickets). I think the general standard of debate on this is confused in the extreme, and it’s mainly confused because the kind of people who really understand how corporate hospitality works tend not to talk about it.

The key thing to understand is that, as a rather good coverage banker once told me, “nothing is transactional. Transactions aren’t transactional”. This is the big difference between most people’s experience of life, and the way things work at the very high levels of the system.

You and I tend to work on the basis of getting things and paying for them. That is absolutely not how it goes down in the world of very large sums of money. People don’t look at restaurant bills, they don’t send invoices and they don’t keep score. To suggest that someone owes you an advisory mandate because you gave them a load of free research would be bad enough - to try and link it to a golf tournament would be just awful behaviour.

But somehow, people do business with people they know and trust. The very best relationship bankers don’t even realise they’re in a sales job - they just think of themselves as someone who’s very lucky to have so many friends who are capable of putting business their way. And there’s not even any real correlation between the value of the freebies and the strength of the relationship - I wrote elsewhere that good bankers take clients to expensive restaurants, very good bankers take clients to very expensive restaurants, but great bankers meet clients for a sandwich in the pub.

This is what people ought to be worried about with respect to lobbying of politicians. It’s not the value of the gifts, it’s the amount of face time, and importantly, repeated face time with the same people.