The Aussie bank saviour who got away

The decision to strip former NAB executive Sir Frederick Goodwin of his knighthood requires a response from the Australian government. We should award his wife, the former Lady Goodwin, an AO in recognition that her actions were more important than anyone else in saving Australia from the global financial crisis.

The role of Lady Goodwin in our good fortune is a true story. Around 1996, Freddie Goodwin was a high-profile British accountant and was appointed chief executive of NAB's UK operations. Around this time he also picked up the nickame 'Fred the Shred', reportedly for his reputation of ruthless efficiency and cost-cutting.

When the successful NAB chief Don Argus was set to retire as a banker around 1997-98 and take on the job of restoring the fortunes of BHP (he became chairman), the board of NAB decided to appoint Freddie Goodwin as Argus' successor.

When Don Argus told Freddie of his appointment, Freddie vowed to turn NAB into one of "the world's leading banks”. He jubilantly returned to his Melbourne apartment to tell his wife, Joyce. But Joyce Goodwin became angry and refused to live in Australia, demanding that Freddie get a job in the UK. She stormed out of the apartment catching the next plane to London.

Freddie turned down the NAB job and followed his wife to the UK. He became chief executive of the Royal Bank of Scotland where he implemented the plan he had mapped out for NAB. The Royal Bank of Scotland became one of "the world's leading banks” after a series of huge acquisitions.

In the global financial crisis, the British government was required to spend around $100 billion to save the Royal Bank of Scotland from the consequences of Freddie's actions.

That's what rescuing NAB might have cost the Australian government, but for Freddie Goodwin's wife – who has lost her 'Lady' title as a result of the UK action – the least we can do is to give her an Australian award in recognition for her services. And someone needs to remove my tongue from my cheek.

But seriously, we were lucky on two fronts in the Goodwin affair because it was the failure of Australian banks to play the crazy global game that saved us. The man who became chief executive of NAB instead of Goodwin, Frank Cicutto, encountered minor international trading loss problems which prompted a Reserve Bank review of Australian international banking activities just when the market was at its craziest.

The global banking stage saw the US sub-prime crisis followed by the European crisis. Too many international bankers are bonus-driven with little understanding of risk. Freddie kept his Royal Bank of Scotland bonus which was one reason he lost his knighthood. According to Wikipedia, he has separated from his wife.