Tories fighting to protect bankers bonuses

Fair enough but "should banks be state owned" is a different argument from "should employees have their wages capped". And demanding an input into the salaries of an entire sector is different from demanding an input into a private company that is 60% government owned.

We are maybe debating with cross wires. I dont really object to RBS and Lloyds being under public scutiny but not the employees of an entire sector.

 

I believe they can/should be state owned and still pay the top dogs big money, including bonuses. I've no problem with people being rewarded for success.

 

If bankers bonuses are based on performance then why were all these * earning a fortune while they were making decisions that were helping to run the country into the ground?

 

As I said in my post, there's nothing wrong with a bonus for good performance, but you're right Marky - why were bonuses paid to those who were at the helm when these institutions needed bailed out?

I suppose what muddies the waters is that some of the business decisions which brought them to their knees were slow burners which were made by previous incumbents.

I do think people bandy the word banker around too generally. Specifically, it's the boards of these banks that need to be scrutinised and asked why they were prepared to reward failure.

 

The whole thing needs looked at in my view. Everything from the lack of regulation by the government right through to the level of bonuses on offer and the current lending strategy of the banks.

The banks got us into this mess and now, instead of lending money to businesses to get the economy moving(like they are supposed to be doing), they are hoarding money to improve the appearance of their balance sheets while still paying out huge bonuses at the same time.

Self serving *. As long as their nose is in the trough they're happy enough.

 

The banks and their * cavalier attitudes to OUR money is the main reason why our countries have gone to the *.

These bankers should think themselves lucky that they are still in a position to be receiving a * wage i.e. still have a job, whilst the rest of us plebs make do with the £70+ a week dole money, or minimum wage salaries that we are over-qualified for on account of the lack of jobs.

 

These types of posts annoy me to no end.

Do you personally know any bonus rich bankers to comment on their attitude, or is it all what you see on panorama and other shock doc's?

No one minded at all when these bankers where building the economy to new heights and everyone was making money before the recession? Why? because its the age old problem, blame the guys that are making the money.

Bankers do not get paid unless they perform, little billy banker who * up or loses money for the bank does not get a bonus, in fact most likely he gets sacked and no reference making him almost unemployable, especially in the banking circles.

For bankers to make these large amounts of money, the banks need to first. When the banks make the money, the economy makes money. Simple as that, with a few extra toppings.

Stop pointing the finger at these people.

 

So what about RBS who has just posted losses of £5 billion,all the while still paying out bonuses and sponsorship of the 6 nations of £40 million,how can this be justified by a bank owned by the taxpayer,I do get your argument of banks more than paying their way and others being better than others,but why when poor banks fail should we be the ones to help bail them out,the biggest gripe I have is lloyds TSB buying over RBS then asking for a bailout if you have enough for a takeover then why the * do you need a bailout,it's a total whitewash and coverup of not only the banks but our government

 

You make a fair point, but in honesty it is far more complicated that you make it sound.

First off, I think the bail out and taxpayer buy out was 60% for RBS? Maybe I am wrong, lets work on that hypothetically for a minute.

RBS - Is not just the bank you walk into to deposit money, or take out from. There is many different forms and divisions. Some of these divisions post losses, some post massive profits. It is about diversification and hedging risk. Every major financial house does this, as not every business line will be profitable year in year out.

The bonuses RBS would have paid this year, will be contractual bonuses to those that boosted profit for the divisions of the bank that did not suffer a loss. Also, the only way you will get your bank back on track is if you keep your best talent and pay them accordingly.

Sponsorship - This would have been contractual. This again, would be down to the branding division and the idea that in fact without this sponsorship the balance should could have been worse.

RBS in general - The cry was RBS was too big to fail. I did not agree with this, I personally would have let them go to the wall. Their take over or other banks and expanding into regions they had no idea about was just overly aggressive and trying to take advantage of a boom market. It did not work for RBS, but did for CITI, Barclays and HSBC at the time. Probably Standard Chartered too.

Lloyds - The take over deals are always complicated and I am not educated on the ins and outs of this one you mention. What I would suggest though, is taking over a big brand name should boost share interest and in general, the image of the bank, even if only short term on borrowed money. Sometimes attack is the best form of defense, so to speak.

End of the day, you pick two banks out. I know their failures are rather monumental but the ripple effect has been felt literally across the world, especially with RBS. Banks like ANZ, Citi, StanChart, DBS and many others have learned a lot of lessons from the failure and not only the banks but your regulatory houses, like the FSA, MAS etc etc.

In reality, these guys especially the top ones make a lot of money. However, unless you understand the job they do and the effect they can have on the performance of a bank, you will always think they are over paid.

 

Thanks for explaining it out a lot more,I do agree with bankers getting bonuses but it has to really reflect performance,but I think you have misunderstood me I don't agree with Brussels making decisions on London this in my eyes is total hypocrisy,it for me is Europe trying to use London as a bargaining chip but still doesn't make it right

 

No worries mate, I just try to offer my opinion/knowledge on the subject.

I do agree with you, but that was in the documents regarding joining the EU. Sadly.

Something does need to change, the people with the real power sit at the FSA and they can maybe ask for more separation between the high risk investment banking side, and the everyday highstreet banking side that effects the average person on the street. But they won't sadly.

 

Very well written and well thought out post.

Agreed with everything you said there. Great post.

 

Thank you, Sir.

 

I'm not pointing the finger at your regular "Joe" Banker - in fact, I know quite a few low-rate bankers who have been made redundant, or been left with a workload of three men because banks have been teaming up.

I stick by my original point here - the dealings by the banks have thrown our country into this "double-dip" recession - leaving thousands of us in turmoil and without jobs - and many of us ending up in low-rate jobs because of the economy.

My point being that more people should be happy that they still have a job to get a wage from - unlike many unfortunate victims of stupid lending/spending.

 

Your point makes no sense, as much as I enjoy reading your posts you are completely misguided with your post on this subject, Patrick

Still love you thoughbd

 

It makes sense to me, Christopher.

Love ya right back

 

There is a book by an American author called Tom Hartman where he has a chapter about what he calls the Cancer stage of capitalism. Certainly in the US the distribution of wealth is massively off kilter and has been getting worse since Reagan came into power in the 1980's.


The following article was written in late 2011 and is based on 2007 data so the numbers are likely even worse now in 2013.

1. The Top 1 Percent Of Americans Owns 40 Percent Of The Nation’s Wealth: As Nobel Laureate Joseph Stiglitz points out, the richest 1 percent of Americans now own 40 percent of the nation’s wealth. Sociologist William Domhoff illustrates this wealth disparity using 2007 figures where the top 1 percent owned 42 percent of the country’s financial wealth (total net worth minus the value of one’s home). How much does the bottom 80 percent own? Only 7 percent:


As Stiglitz notes, this disparity is much worse than it was in the past, as just 25 years ago the top 1 percent owned 33 percent of national wealth.
2. The Top 1 Percent Of Americans Take Home 24 Percent Of National Income: While the richest 1 percent of Americans take home almost a quarter of national income today, in 1976 they took home just 9 percent — meaning their share of the national income pool has nearly tripled in roughly three decades.
3. The Top 1 Percent Of Americans Own Half Of The Country’s Stocks, Bonds, And Mutual Funds: The Institute for Policy Studies illustrates this massive disparity in financial investment ownership, noting that the bottom 50 percent of Americans own only .5 percent of these investments:


4. The Top 1 Percent Of Americans Have Only 5 Percent Of The Nation’s Personal Debt:
Using 2007 figures, sociologist William Domhoff points out that the top 1 percent have 5 percent of the nation’s personal debt while the bottom 90 percent have 73 percent of total debt:


5. The Top 1 Percent Are Taking In More Of The Nation’s Income Than At Any Other Time Since The 1920s: Not only are the wealthiest 1 percent of Americans taking home a tremendous portion of the national income, but their share of this income is greater than at any other time since the Great Depression, as the Center for Budget and Policy Priorities illustrates in this chart using 2007 data:


​

As Professor Elizabeth Warren has explained, “there is nobody in this country who got rich on his own. Nobody…Part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

 

Padmill, I have to agree with UncleHo. The recession was a cyclical one. Now our deficit was made worse by the bailout of two banks, but it was a cyclical recession none the less. I am not defending the actions of some bankers, but it is a misconception that they caused the recession. They didn't.

These are good stats eire.

I think the issue highlighted by your Professor is absolutely right. In years gone by I think even the richest workers had a notion of who helped them get there. Factory owners may not have associated with the labourer but they knew they were there. They may not have even cared but they saw the tangible effort the worker put in towards making him richer. Nowadays the mega rich do not see that. They send menial labour overseas, and they make business transactions online. Im sure the richest employees of multinationals have never stepped inside a single factory floor of their company, and Im sure many don't even know where in the world their stock is being created. In the context of banking, it is no longer a tangible process. People trade money online and with anonymous partners. They do not see where the money comes from, where it goes, or the thousands of workers who make this process possible. This all leads to the idea that they got rich on their own which as you say they did not.

Another way to look at wealth disparity however is that for a period of perhaps 80 years or so, the working class in nations like the UK and US were hugely spoiled. They earned a wage for their labour that few other nations enjoyed, and they could use that money to buy cheap goods made by their counterparts in China by people doing the same jobs at them but for a lot less money. They in effect benefitted off both having their own wages protected, but even more so because those doing similar jobs abroad did not have such protection.

Over time we moved more and more production abroad because of this and now finally we are seeing an emergence of a middle class in places like Indian, China, and Brazil. Which of course is good for them. Only in doing this we no longer have production jobs of our own, and our labour is no longer competitive. We are now seeing a global rebalance where our lower classes are getting poorer as the emerging markets poorer classes are getting richer. And if workers in China and India ever get to the stage of demanding minimum wages, etc, then things are going to get a whole lot more expensive for us.

This impacts disparity in our own nations because the professional class have jobs and money that cannot be outsourced, while almost every menial job outside of the service and retail industries can be. I don't see it as the "cancer" stage of capitalism - I think it is more of an inevitable stage of global capitalism.

 

The Conservative Government fighting against the current EU regulations is no surprise (and Labour would do the same no doubt).

A cap which stops a bonus being twice the amount of a yearly salary is pretty lenient to begin with. Exactly what do the government want to see? Bankers get three, four & five times their wages in bonuses?

Absolute madness.