Financial crisis caused by banking chiefs plagued with Hubris Syndrome

Embargoed until 03 June 2009

The current financial meltdown has in part been caused by bankers who display the attributes of Hubris Syndrome, a former leader of the Social Democratic Party (SDP) has claimed.

Lord David Owen, a trained medical doctor, told delegates at the Royal College of Psychiatrists Annual Meeting in Liverpool that some banking chief executives –responsible for making the “rogue banking decisions” that led to the current financial crisis – displayed traits of the syndrome.

Lord Owen warned delegates: “The origin of the financial situation we are in lies in rogue banking decisions. The consequence of allowing these people to continue in power unchecked are pretty serious.”

According to Lord Owen, Hubris Syndrome is “acquired” and tends to occur once a person is in a position of power.  Margaret Thatcher and Tony Blair have both had it, he claimed.

Lord Owen said some of the characteristics of people with Hubris Syndrome include: 

• a narcissistic propensity to see the world as an arena in which they can exercise poor and seek glory.
• a predisposition to take actions which seem likely to cast them in a good light/ enhance their image.
• a disproportionate concern with image and presentation.
• an identification of themselves with the nation, or organisation, to the extent that they regard their outlook and interests as identical.
• restlessness, recklessness and impulsiveness.
• a tendency to talk of themselves in the third person or under the royal ‘we’.
• excessive confidence in their own judgement and contempt for the advice or criticism of others.
• exaggerated self belief, bordering on a sense of omnipotence, in what they personally can achieve.
• loss of contact with reality, often associated with progressive isolation.
• hubristic incompetence – where things go wrong because too much self confidence has led the leader not to worry about the nuts and bolts of policy.

According to Lord Owen, who has written a paper for the medical journal Brain, the phenomenon is captured in phrases such as ‘power has gone to his head’, ‘he’s taken leave of his senses’, ‘he’s lost his marbles’ or ‘she’s lost all touch with reality’.

Lord Owen also admits he was in danger of developing the syndrome when he was leader of the SDP.

To counter the problem, he said UK firms should learn from the United States where chief executives are contained and constrained thanks to a ‘mentoring system’. This involves bringing someone in from outside the firm, often in a high position, who people can look up to, and establishes a dialogue.

Lord Own concluded: “This is something businesses could and should get a grip on.”

References:

Annual Meeting of the Royal College of Psychiatrists, BT Convention Centre, Liverpool, 2 -5 June 2009