Banker bashing season is in full swing with even normally business friendly media hitting out to some extent. And for good reason? Possibly, along with many who were once 100% behind high incentive packages for high performance. When one considers that with RBS (the one in the spotlight right now because it is essentially taxpayer owned), the balance sheet is about 1.4 trillion quid, i.e. the same amount as generated annually by UK plc; AND look also at the multi billion losses they make AND look at the multi million salaries that the bosses receive without even taking into account the long-term** share incentives (figures that are now headlines in every newspaper). Needless to say it was Crash Gordon (enthusiastically backed by Ed Miliband anyone?) who sorted these contracts BUT it is Cameron who must now sort it now and he knows it isn't going to go away (the next few months hold many more such news stories). However, the usual problems arise: if the state wants to pay bankers a "normal" salary then they would just go and get another job wouldn't they? To pay them less they would have to put in strict contracts and probably nationalise all the banks, wouldn't they? And then, or pretty soon, all the banking talent would leave for foreign owned banks. The Independent puts the one side - what is happening, people's frustration and anger, politicians dilemma etc. - all rather well but the toothless outrage doesn't explain how to get out of the mire: that is the pile of do-dos that Cameron has to deal with [edited midday].
** Bonuses in shares are not due to be paid until 2014 - surely best to wait?
2 comments:
For me the balance sheet is key here and a long time I ago I posted that George Osborne's biggest decision with the banks would be when to sell the taxpayers share and not to cock-up like one of his predecessor did with gold - well why not do it now. Make the company use that value to buy back the shares and then RBS can do what it likes with the bonuses.
I don't have a problem with high performance bonuses but in this case there doesn't seem to be much of it. There was an interesting exercise on Sky on Friday night where four people were set-up to discuss this, there was a woman in works in the City and an ordinary guy (i.e no suit) and they were so representative of the two sides to this argument that you could see there will never be even a middle ground.
As I said on one of the BBC boards much of the economy is down to some sort of voodoo economics, which was a Gil Scott-Heron phrase in the 1980's to describe Reaganonmics. Times change but people don't.
I think you're first paragraph is very true and a good idea, people would still moan but it would be 100% RBS money.
One of the things I read this morning mentioned voodoo economics, not sure if it was DT, Mail, Guardian or other.
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