.comment-link {margin-left:.6em;}

Monday, February 09, 2009

Tackling excessive bonuses

The Financial Times reports a Vince Cable anecdote that in the early 18th century, after the bursting of the South Sea bubble, a parliamentary resolution proposed that bankers be tied up in sacks filled with snakes and thrown into the Thames.

Even the Liberal Democrats would not advocate such a drastic measure as a solution to excessive bonuses. There is no doubt that something must be done. It does not help though if the Treasury's own team are also getting big bonuses. The Times takes up the story:

UK Financial Investments Ltd (UKFI), the Treasury-run body created by Alistair Darling to manage the state’s stake in the banks, is set to approve more than £1 billion in bonuses for bankers bailed out by the taxpayer. The Royal Bank of Scotland, which is 70 per cent owned by the state, wants to pay staff close to £1 billion in bonuses. UKFI is also being asked to approve bonus payments in another part-nationalised lender, Lloyds Banking Group.

........

Since its creation UKFI has hired around a dozen senior bankers and other financial experts. They include John Kingman, a senior Treasury official, John Crompton, formerly managing director of Merrill Lynch, and the banking analyst Tim Sykes. The Government has so far refused to say what UKFI’s staff are paid, but a spokesman yesterday admitted it intends to run a bonus scheme. The full details had yet to be finalised, he said.

Such a revelation surely helps to put the Chancellors review into the way banks are run into context. This is one bubble that needs bursting.


Comments:
My preference would be for say half the Banks' Executive and non Executive Directors to be swinging from the lamp posts in the City pour encourager les autres. Stalin would have known what to do!

However being realistic, should any bank pay bonuses, is there not a sensible sanction linked to the tax status of all the finance houses along the lines of a proper Inland Revenue audit/investigation into their affairs with regard to Corporation Tax etc and the bankers in relation to any Income Tax dodges? In other words screw them down on avoidance.
 
Wouldn't work. They'd eat the snakes.
 
Isn't every bonus 'excessive' in the current economic situation?

Surely bonues should be restricted o people who have a) performed exceptionally well or b) worked particularly hard.

If bonuses are paid routinely then they are not bonuses at all, they are wages.

The banks have failed. Senior Executives, who get massive salaries on the argument that you have to pay competetive salaris to get the best, have shown that that theory doesn't work.

No banks should be paying bonuses now. Senior Execs should be having their salaries cut.

The Government, which now owns large chunks of the banks, should be enforcing this.
 
Post a Comment



<< Home

This page is powered by Blogger. Isn't yours?