The world of finance needs a shame culture Two broad objections have been advanced to the government's decision to strip Fred Goodwin of his knighthood. Both have to do with fairness. The first is that the punishment does not fit the crime - or, to be exact, the non-crime. Mr Goodwin may have made disastrous decisions at the helm of RBS, but he has never been convicted of anything. In the past, honours have been taken away only from those who have been found guilty of a criminal offence or censured by some regulatory body. The second is that he is a scapegoat for the mistakes of many. He may have run a large bank into the ground and left taxpayers with a £45bn bill, but he was not the only one to do so. As Alastair Darling, the former chancellor, observed: "What about the honours of the others who were involved in RBS and HBOS?" He might usefully have added all the providers of reckless loans and derivatives that helped to bring down the whole system. The first objection is easy to dismiss. If it is fine for the state to hand out gongs as gold stars (Mr Goodwin's was for "services to banking"), then surely there's no reason why the same gold star shouldn't be peeled off when the "services" in question turn out to have been destructive. These things happen in the real world: naughty boy scouts can have their badges taken away; the journalist Johann Hari lost his Orwell award; and, as my wife reminds me from time to time, I was stripped of my Oxford scholarship for unredeemed idleness. Indeed, an honour is the one thing you can remove when someone behaves as grotesquely as Mr Goodwin did over the collapse of RBS. In the absence of outright criminality, there is no point trying to impose real (ie monetary) sanctions, as the government found when it sought to separate him from his giant iron-clad pension. (£342,000 per annum until he draws his last breath.) That is firmly tied up in legal boiler-plate. But a gong belongs to the mysterious realm of official whim, which explains why so many members of the gongable-classes are fretful about the precedent set by this public debagging - while most of us could not care less. For there is something preposterous about the chorus of business chiefs (many with honours, or expectations of them) denouncing Mr Goodwin's treatment as anti-business, as if it might deter foreign investors from putting money into Britain. Since our reputation as a place to put money is the biggest victim of his incompetence, this deserves a particularly hollow laugh. What about Mr Darling's concern that others have got off too lightly because of the scapegoating? Well, a wholesale removal of crisis-era banking honours, such as Mr Darling appears to suggest, has a logic, but thanks to the rumpus, it probably isn't necessary. Anyone with an honour who was involved in the collapses of RBS and HBOS, not to mention other less noteworthy disasters, is surely sleeping a little less easily as a result of Mr Goodwin's dishonouring. Those who hope to be summoned to the Palace may think a little bit harder before holding out for a giant bonus. They might also take note of the decision of RBS boss Stephen Hester to turn down nearly £1m rather than be reduced to pariah status. Most bankers - and directors of public companies - move in relatively closed circles. They want to think well of themselves and to present their actions, even if they encompass value-destructive takeovers and eye-stretching pay demands, as serving shareholders" interests. Most do not want to be pilloried for being greedy or anti-social. The government has recently announced a number of worthy policies designed to restrain executive pay. It is also seeking to impose regulations designed to make the financial system safer. But if they are to change banking, they will need to be accompanied by a real change of heart, habit and expectation among practitioners. Bankers must recognise that what is in their interest is not necessarily in society's. There should be an end to the belief that things should return to pre-crunch business-as-usual. Mr Goodwin's sudden dishonouring may shame some financiers out of their complacency. If that is the case, it will have been worthwhile, for all the rough justice involved. The writer is the FT's chief leader writer