Friday, 14 January 2011

Bonus-mad bankers know no shame

The astronomic level of bank bonuses unites Brits of every political persuasion in hair-tearing rage. Some of our banks are still part-owned by the taxpayer as a result of the 2008 financial crisis. Even where they aren’t, banks still benefit from state support. Yet bankers are going to pay themselves about £7 billion ($11 billion) in the next bonus season. This is inexcusable greed.
The whole idea that bankers, who already receive handsome basic salaries, need multiples more in the shape of bonuses to incentivise them couldn’t happen in any sane world.
But then a thick skin and a lack of any sense of shame is the mark of the sociopath.
Politicians have consistently pledged to tame the bank bonus culture but these have proved to be empty promises.
Finally, prime minister David Cameron (pictured above) admitted today in a meet-the-people session in Newcastle that while part of him wanted to “tax these bonuses to hell”, it wasn’t feasible to “hammer” the banks.
To do so would be popular in the short term but the country needs strong banks. "We want a growing economy that is creating jobs, and that means banks that are lending money to businesses,” he said.
Banks owe their immunity to the deregulation of financial markets in the 1980s; our ‘Big Bang’ as it was called dates from October 1986. It encouraged the expansion of the sector by attracting new players and fostering the merger of investment and high street banking arms.
The new global dimension of what had formally been local operations gave bankers the upper hand when governments threatened to rein in their powers. “Persist and we’ll move our business abroad,” is a pretty strong bargaining chip.
It doesn’t help that the links between the institutional investors who sit on banks’ remuneration committees and executive directors are ‘incestuous’ – “you join my board and I’ll join yours.” Nor is it beneficial that when their political game is up, many politicians look forward to a cosy number in the City.
Only joint international action can hope to tame bank bonuses – and there is little hope of that.

2 comments:

  1. Well GC. I can't remember, who it was but one of these one of these anti-bank bonus campaigners came on the radio and questioned whether the bankers were worth their bonuses, says Jaffa.

    Nick Leeson was the toast of Barings Bank until he brought it down.

    The global sector be it banks or BP is beyond any single government's ability to regulate completely. Only when they cock up is it possible to do a bit.

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  2. Have a look again at the opening scenes of the futuristic film "Rollerball". Sub Docklands for the skyscrapers shown in those scenes and soccsr for tthe rollerball sport and you will see why the global infrastructure is beyond the aspirations and grasp of the people.

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What do you think? GC