Hester half-answers bonus questions

The idea that bankers' bonuses are fixed at a "fair market rate" is laughable. They fix bonuses for their own cosy club, and set them at ludicrously high levels because they can.

Simples.

Having watched the whole Treasury Select Committee meeting with Stephen Hester, what I found disappointed was how easy an inverview they gave him. He could make statements like business don't want money which is why we won't meed our lending targets and that statement was taken at face value with our any request for facts and figures to back this up.

What I found interesting was his repeated comment that "you asked me to take this job" with the impression that if you push me too far I am going to leave because I don't really want to do it anyway but you offered me so much money I couldn't refuse.

I would like to know why this RBS Role was not offered out to the open market and why Mr. Hester was picked as the person to do the job at any cost it appears.

If all banks can pay multi-million pound bonuses, then there is something drastically wrong with the market. Banks are clearly operating as a world-wide cartel.

The Treasury Select Committee - have become a 'joke'

The thought of investment bankers at RBS taking my tax, using it to make profit then giving that profit to themselves why we the tax-payer lurch between the rock & the hard place out in the real economy makes me sick to the core.

Yes curiously it is what I expect from this country. The rich will always be a self protecting crowd, have a very exclusive membership requirement and always profit at our expense. As in the film "Fight Club" we should tear down these institutes, write it all off, take the whole sum and split it between everyone. Start again on a level field. I know this can't happen but I cannot stand to think that Hester's next new car has been bought from my taxes whilst his bank refuses me a loan for me to buy a car, as example.

Come the glorious day, the first against the wall...

1. Banking is NOT a 'free market' business.

2. Banking only exists by virtue of regulatory protection/permission.

Even Stephen Hester's mother thinks he is overpaid.

Either take away their banking licences and see how their fair in the real free market, or regulate their pay.

Bonuses would be determined at RBS in mid to late February based on two factors:

1) the financial performance of indvidual bankers and their respective teams;

2) what other banks decide to pay their bankers, othewise known as the market price of bankers.

some of the problems i have with these are:

1) i) Financial performance has been heavily influenced, to say the least, by massive government cash injections the tax payer will have to pay for
ii) the literal wording is that this does nothing to address casino mentality, if you get a bonus when your bet comes off but no sacrifice when your bet loses then this will continue to encourage greater and greater risk taking

2) i)market rates at least put a smile to my face, how can you talk of a market when you are guarenteed by taxpayer money not to fail, a market would have dictated the colapse of RBS
ii) surley those who could leave RBS for better things would have already done so.
iii) we seem to be entering an esculating circle here. i.e RBS needs to pay more for staff because of its "tainted past" non nationalised banks need to match RBS pay levels.

"Market Rate" I would like to know what market Mr. Hester shops in!

There's no such thing as "overpaid": there is simply what other people are willing to pay you. Subjective value judgements as to somebody's "true worth" are utterly spurious; they have no sound logical basis, as (manifestly) one person's upper threshold of acceptable pay is another person's lower threshold. Unless we accept that the views of the majority should prevail in the matter, and why should they?

RBS should not be paying market-rate for its staff. If the public wants to maximize the profitability of its "investment" into the firm, it should be encouraging RBS to pay far in excess of market-rate.

Seems to me these people have learnt nothing. Time to get really tough.

I think the problem here is simple, Bankers have no incentive to do anything but milk the system. Most Major banks should have collapsed over the past couple of years, they did not, only because the ordinary guy in the street could not allow it to happen he will now spend all his working life and most of his pension go towards paying for this.

Most senior bank staff are still in place if not hugely rewarded for leaving. Yes they probably got a fright at the thought of what they might lose, but generally have not suffered the job losses and business closures that the tax payer has.

I can understand why Hester feels that he is worth so much in comparison to the rest of us.

Besides there is a limit to how many normal jobs and livelihoods the £1.5 billion could save, I reckon only about 50,000 and lets face the bankers must be worth at least that

I’m Alright (*)
(*)=Horace Andy, Keith Hudson & Friends

The ? Remainz (*)
(*)=Gang Starr
The question remains.. which MC's will reign
Which ones will gain, how many suckers will feel pain
"Ask yourself the same question"
"What is it.."

This is a battle rhyme in case you haven't noticed
You get replaced you get demoted

The assertion from RBS that "business doesn't want to borrow" is a nonsensical statement, when RBS in particular is actually in the throes of cutting many business overdrafts and loan facilities. The Select Committee surely knows that business is still being hammered by banks so why were their questions not a lot more forceful ? Caledonian Comment

9. mad99:
'There's no such thing as "overpaid": there is simply what other people are willing to pay you.'


RBS is mostly state owned. The people who are now paying the wages of those employed there, through several bailouts and QE, are the tax paying public. And they aren't willing to fork out a single penny more.

Can't bankers understand that?

#1 Bankers bonuses are set at market rate in much the same way that footballer's salaries are. Now I think both are overpaid but there is a lot more openness about the process than salary reviews in most private companies.

#2 Hester was making general statements rather than talking about specific businesses. There is a lot of evidence that overall the British business community is reducing its bank debt not asking for more.

#6 Is any business genuinely "free market"? All businesses are subject to regulations about what they produce and how it is sold, even if just about safety. Banking has more regulation than most businesses even if the regulators fail to apply it coherently. The one thing banking most definitely is not is a monopoly or oligopoly at least over Britain as a whole, there are some issues about lack of institutions supplying banking to the SME sector but in general it is a very competitive market - the problem is that the customers are apathetic and do not change banks often enough - try it you may find you get much better service.

So Mr.Hester argues that he is only paying the going rate.
The going-rate for what??
What is the going-rate for a Prime Minister; an experienced Doctor; a street-cleaner; a teacher?
Please don't tell me that these people are worth these massive salaries compared to all the other professions.
Mr Hester is the head of a nationalised company. His staff are public employees.
Why are they not treated as other workers in the public sector?
Why are the bonuses not paid back into the public purse?
Can someone please tell me what is the difference between an NHS nurse and an employee of RBS?

Cordon sanitaire - A barrier designed to prevent a disease or other undesirable condition from spreading. [I had to look it up which annoyed me but I guess Robert is just better at writing for the common man than the common man is at understanding the phrases he uses!]

Are we keeping the investment bankers in the cordon sanitaire or are they keeping us out?

Presumably that undesireable condition would be pay linked to the real world versus pay linked to 'market forces' - except that the market also seems to be protected by a cordon sanitaire where only the Eton boys etc can get in - not what but who etc

Something smells rotten very rotten in the cordon sanitaire and its been smelling like that for a long time.

Looking at London and the City from The Grim North everything looks far too cosy and needs a massive shake up.

I presume that the politicians,bankers,media, treasury select committee members etc all go to the same posh restaurants and the same functions and are all mates.

I think if they wanted a committee to really ask questions and not accept the half answers and waffle whether on Iraq or Bankers bonuses they could do worse than select a committee of 5 people from this blog.

I think Stephen Hester may have worked up more of a sweat answering our questions.

@ warwick:

You're nearly right: except that you or I don't own any RBS by virtue of the bailout -- our government does. And I would agree completely that if the government wanted to act as a proxy for public opinion, then they could & should install somebody onto the board of RBS who would only allow some ridiculously small bonus - if any.

Consider though that the talked about $1b bonus pool is already causing public outrage. Consider also that compared to the rest of the industry that amount is already (very) small. Then ask yourself what level of bonus would the public actually accept (if the government was to act as a true proxy for their wishes). Probably no bonus at all would get the vote of most members of the public, I'd guess.

Now finally: consider what would happen if the government (as our proxy) actually made this happen, i.e. no bonus at all for RBS... what do you think the people working there would do? Stay? Not a chance in hell. People only work in the capital markets because it's well paid. You would have resignations from the board all the way down. Net result: the public's investment into the firm would have been destroyed -- by the public itself. The government would never recover the tax money that it had put in -- the firm would die.

This is why governments, quite rightly, do not act as a direct proxy for public opinion. On this issue (and most others) the public has not a fraction of the required competence or most basic understanding of the issues at stake, in order to arrive at an informed opinion.

Believe it or not though, I do understand the anger: to have your money stolen by the government through taxation always hurts. Especially when you feel that fat cats are getting rich on the back of it. But bank CEOs getting rich from the bank bailouts are no different to CEOs of utility companies getting rich from the money that's put towards building roads (every year, every day, without any public outrage.)

I just can't stand the constant whining about the issue. There are ways to legally minimize ones taxation burden -- to very low levels. A high-court judge (no less) actually ruled that it is not only every person's right to do so, it is their *personal responsibility* to do so.

I particularly loved the comment re paying the market rate on bonuses.

To use a football analogy it is like suggesting that a team that gets relegated should get a similar bonus to the team that won the league.

Without a huge taxpayer bailout RBS would be bankrupt and even with this bailout they are still losing a huge amount of money which they are trying to hide off as non core activities.

To continue my football analogy a club decides that defending is a non core activity and as such goals conceded will be ignored in where they think they should end up and how they should be rewarded.

It is no use if a striker scores two goals if the team concedes four it is still a loss and if they keep losing they will get relegated and the manager sacked.

People cry about Corporate banking making GBP 6 billion profits but if the rest of the bank loses GBP 24 billion it is still a GBP 18 billion loss.

Well these so named good bankers are doing a wonderfull job with my endowment investment its compound growth over the last 20years has been 1.3%!

My anual statement arrived today 20 years since taking it out, putting the monthly preimums (less the life element) into a bank account paying 1.3% per anumn after tax would have generated £15 pounds more than the "investments" current value.

My bigest complant is re the anual fees (which 20years ago looked ok but now i pay more in fees than receive in value), and the cost of indervidual traids which have increased year on year.

What market place in Bankers?
The level of bonuses will have no impact on the ability (or lack of it) for staff to move between one bank and another.
As I understand it, few banks are willing to take staff from other banks, due to a lack of trust, in the same way that a lack of trust led to the inter-bank lending crisis last year.
Furthermore, some banks won't let staff leave if they can possibly help it, for fear of losing confidential information - especially "whodunnits"!
SO they pay them whacking bonuses and keep secrets and dirt in the same place, under the carpet!

As one investment banker stated on Radio 4 this morning...'a monkey in a suit' could have made huge profits just by sitting on an existing pile of assets (that couldn't be sold early last year!)....How you may ask?...by just booking the profit on an asset valued on 31-Dec-09 compared with the value booked on 1-Jan-09. Where's the talent in that?

Nice work if you can get it though!

"otherwise known as the market price of bankers. "

Please note everyone - this is the market price and crucially not the market value.

This little play on words is how the bankers pay themselves. The reality is that price is totally subjective, people do not equate the price of an item with it's value, but now it's a case of "can I afford it" - whether the item is actually worth that or not becomes irrelevant (I mean who would buy a new flashy TV but not feed their kids decent food - and yet you can find these people up and down the country)

As I have explained previously the connection between price and value is skewed, FRB helps, the extraction of surplus value from the workforce also helps - but neither is sustainable and neither work properly once people start to look at value again (as they are now).

So of course bankers get paid the market price - because price is no longer ocnnected with value. That means the value of the work a banker does is x but he gets paid xxxxxxxxxxxxxxxxxx.

The 'profit' is not real and is in fact demand brought forward from the future - and the consequence of bringing forward demand?

Overproduction

...and what does that cause?

Asset devaluation

....and what does that bring on?

Bankruptcies

.....and what does a lot of those make?

Recessions

My real concern here is does Stephen Hester simply not understand this? Is he so mixed up in a ficticious world of acronyms that he doesn't have a clue what reality looks like anymore?

Scary stuff - I mean who are you lot going to blame when RBS is still a publicly owned bank in 2020 and still losing money?

This is a very experienced banker we're talking about here - reportedly one of the best - and yet not once has he explained the root cause of the crisis (and no, lending in the US is not the cause, it's just a symptom), not once has he explained how RBS will avoid it again, and not once has he put forward a credible case that he understands the problems faced - and now he's steering the ship no less.

Want to know why I despise the world of finance and all it encompasses?

Fools in rich men's clothing - nothing more, nothing less.

Want to know how to manage the bonus structure at banks?

Only those who can actually explain where the profit came from to make up their bonus can be issued with it.

As not one of them can do it - there will be no bonuses paid this year......or in fact any year from here on in.

....unless of course someone breaks ranks and admits it comes from the exploitation of the workforce - at which point he gets his bonus but he might be torn to shreds by a very angry workforce....

He believes that the "carry trade" I mentioned yesterday - of banks borrowing from central banks to finance the purchase of high yielding assets - is less prevalent than many bankers tell me, and de minimis for RBS.
He used the word 'believe'. The predecessor didn't believe RBS had a problem, did he?And we all still believe in Santa!

Given even Mrs Hester Snr thinks he earns too much, you'd think he would have be premeptive enough on his salary to demonstrate his worth and at least provide evidence rather than dumbly sticking to belief.

Why did the evidence committee accept this rather than pointing out it was an evidence committee and they would prefer evidence rather than belief?

At 3:19pm on 12 Jan 2010, EuroSider wrote:
So Mr.Hester argues that he is only paying the going rate.
....
Mr Hester is the head of a nationalised company. His staff are public employees.
....Can someone please tell me what is the difference between an NHS nurse and an employee of RBS?

Eurosider, an excellent point. The answer is simple.

Both an NHS nurse and an employee (banker) of RBS will "fix" you.

It depends how you wish to be "fixed" as to which you "value" more.

An NHS nurse would win my vote everytime, for the responsibilities they undertake, the commitment the make and the lives they hold in their hands - a tremendous value to society.

The only value a banker appears to have, is when it comes to paying bills - shortly to be replaced by computers. Roll on the day!

Steve wrote:
"Banks are clearly operating as a world-wide cartel."

That's hardly a surprise, can you think of any international industry that isn't operated as a cartel ?

As long as they keep pumping money into political parties then the situation is never going to change, the answer is therefore very simple (in the UK at least), only allow individuals to donate money to a politician, political party and election campaign and only ever allow them to donate money if they are eligible to vote for that party or politician.

16. EuroSider:
'Can someone please tell me what is the difference between an NHS nurse and an employee of RBS?'


NHS nurses perform jobs that are not 'socially useless'.
It seems that the whole reason for the bailouts was to stop the ailing bespoke tailoring, offshore banking and yacht building industries from going bust.

I'm not sure what other useful functions bankers serve. Can't we have them all banned or shot or something?

I'm just amazed he didn't give the Select Committee a two fingered salute at the end!

Why don't the banks outsource investment bank jobs to India?

Surely they would only need a phone and a laptop to get started...

I'm sure this would drastically reduce wage/bonus costs!

Banks are a bit like greengrocers.

At the end of the day there is always 'stock' left over. Luckily the greengrocer has sold enough to pay for the stock (because there is a mark up) and the result is he goes home with armfuls of fruit and veg for his wife and family - a perk of the job.

Bankers do the same, they make enough money through their markup (interest charged) so after a days work there is excess lying around. The banker collects this all up and takes it home to his wife and family - a perk of the job.

Unfortunately the difference is that the greengrocer PAID for the original stock, whereas the banker has merely BORROWED it through deposits left by savers. He's even 'created' additional stock using FRB to create an even greater excess at the end of the working day for him to hoover up.

Alas, the consequences are the same, the greengrocers wife is sick of sprouts and carrots and is constantly finding new ways of cooking with it or using it at home. The bankers wife is no different and is busilly finding new ways of spending it on pointless rubbish - and as that money has never actually been 'earned' it's ability to be spent wisely is much diminished.

This is anohter reason whhy unsustainable bubbles occur - the excess value sloshing around the Economy is only temporary and eventually the game is up.

Unfortunately the 'greatest minds in finance' have either failed to work this out, ignored it because it's not in their interests, or simply fail to understand it - possibly because they are busy chasing green bits of paper around the city.

19. mad99:

I take it you've never heard of moral hazard then? As someone who works in the industry you should be familiar with the term.

It seems to me that if the finance industry can't change the way it behaves and operates, then it will wreck itself utterly where no bailout will ever be able to save it. (there's no money left in the pot anyway)

You can keep justifying the massive pay and bonus structures, but unless your industry is reined in, and the pay issue dealt with, when it all goes pop again (and it will) you'll all be out of work.

You should be thinking for the long term future. far, far beyond the next bonus. Or is the temptation just too much?

I can't find the link to post but what happened to the story that without changes in the way the accounts are reported by RBS the investment arm would have shown much lower profits?

Was Hester asked about this in justifying the size of bonus?

24 WOTW - I can not accept that they are all fools (answer A)- therefore I need to find another explanation for their behaviour.

B) The conclusion (if they are not fools) is that they are knowingly taking the rest of the population for a ride and screwing us.

C) There is a third possibility which is that they are not fools and that what they say is the truth and that they all deserve to be paid the money they are paid and they are all worth it both for themselves and for the country.

A, B or C - take your pick.

If it is A then they should not be in their jobs.
If it is B then they should probably be executed for crimes against the state.
If it is C then well done them and I look forward to years of prosperity for the UK - hahahahahahahahaha!!

19. At 3:34pm on 12 Jan 2010, mad99

Aren't you trying to justify the bankers bonuses by comparing the industry to all the others? - fair enough.

....but the last time I looked I didn't see the recession being set off by a 'water crunch' or a 'electrical storm' - it was set off by the extension of credit well beyond the means of the borrowers ability to pay it all back.

If the bankers want to plead ignorance (i.e. they don't understand why it crashed) then I am happy to discuss - but as their defence is "it was a credit crunch in banking started in the US" - they are admitting that a baking failure - which they should have been aware of - was the cause, and that puts them right in the firing line.

It's a beautiful situation really - contradictions everywhere, all stacked against each other in a state of temporary equilibrium - but something must give....and when it does......

How can RBS insist that paying the staff more is justified, when those same staff made the decsions that helped the bank collapse?

I understand the bank is worried about losing those staff to competitors and wishes to retain them - but they are unable to solve this contradiction in terms.

Capitalism = Crisis = Contradictions.

I could be wrong, but the more I think about this meeting, the more I get the feeling that Stephen Hester is looking to leave, he just didn't give the impression of a man who was up to the challenge or even wanted it anymore.

Wouldn't be surprise if he left in Feb when the issue of bonuses comes back on the table

Whenever there is a discussion about high pay in any sector, footballer's salaries always seem to get a mention. I think this raises a couple of interesting points. I should point out that I'm not a fan so feel free to correct me on anything.

Firstly it seems that a bit of pay restraint and wealth redistribution within football would be a good thing. At the moment a handful of big clubs are completely dominant and that makes the sport less interesting, which in turn is bad for the business as a whole. High player costs also cripples some clubs.

Secondly, football is subject to various entirely arbitrary rules. One of these rules is that only eleven players can be on the pitch at any time. If I was allowed to ignore this rule then I would be very successful. My team of 440 players on 25k a year would destroy any team of eleven £1,000,000 per year players every time. Other businesses, banking included, do not have this restrictive rule. At least, not a written rule...

#24 WOTW wrote:

The 'profit' is not real and is in fact demand brought forward from the future - and the consequence of bringing forward demand?...

...My real concern here is does Stephen Hester simply not understand this? Is he so mixed up in a ficticious world of acronyms that he doesn't have a clue what reality looks like anymore?

------------------------

I'm certain he understands this perfectly!

26. At 3:48pm on 12 Jan 2010, copperDolomite

I think the real problem is the committe don't know what questions to ask - not that the banks have the answers anyway.

The interesting point made by GRIMUPNORTH is maybe if the committe were ordinary folks asking fundamental questions without embarassment would totally wind all the bank CEO's - just as that lady floored Tony Bliar by asking him straight and fundamental questions in the street.

This is the same way the banks were able to get around the treasury and make sure they were saved. Right or wrong the game was to claim armageddon and for the blame to be the Government's for taking us over the cliff and not the people who brought us to the edge.

It's good to see that the VAST MAJORITY OF PEOPLE ARE NOT FALLING FOR THIS

I'm sure the bankers and their friends will be on soon claiming that 'most people in my circle of friends don't think this is a problem' - as GRIMUPNORTH said, the city is a fantasy and it needs some good Northern reality to come down and bite it.

16 EuroSider asks,

Can someone please tell me what is the difference between an NHS nurse and an employee of RBS?

Somewhere in the region of a million quid I would imagine.

19. mad99

I think your being unkind in saying people are whining, what choice do they have? contact their mp ? vote the other mob in at election time ? change banks ? demonstrate and risk being arrested under terrorism laws ?

The plain and simple fact is people quite rightly angry because it is immoral and unfair. Fine if they bankers are making money and doing a good job, they can make laws to suit things very quickly when it suits them nowadays, a law to go after the ones who have run off with the loot would be a start because I do understand that the head people in place were not responsible for the fraud that went on. But they also knew what position they were taking no one is forcing them to do it, in fact give me the job I'll do it purely based on results and 30k a year I wager I would do as well if not better and I'm no banker.

I despair, I really despair. It's like the terrorist holding the detonator. We shoot them they'll release the switch and we'll all go down. We leave them, they'll still release the trigger eventually. They have us and they know it. Their smug expressions are almoist deafening. Let the banking community move to Frankfurt with our blessing. Lets be rid of them and lets learn to do without their tax revenue. Lets stop being run by our economy and return to running our economy. Give us the political leadership we so crave........

42 & 43 - Romeplebian and Romulus - the old Empire out in force today!

Nobody can lucidly defend the bonuses..or the so called 'system of remuneration' by anything other than this 'going rate' argument; the 'we'd lose staff if we didn't pay the going rate' drone.

The Government bang on about shareholders having to supply the brakes as it's their money ...but we (the govt.) ARE the shareholders.

The problem lies in the government and the opposition alike and the apparent terror of just taking these people on.

They wrecked the country by doing their rocket science number juggling to create their bogus rewards of millions of pounds in bonuses--- the money wasn't about to stop coming out of the Holes in the Wall because these people weren't competing well...it was precisely because they WERE incentivised to go out and make colossal and almost criminal mistakes---and then repeat them.

If every single bonus buddy left for Zurich that wouldn't bring this country to anything like the disaster that we faced when they were all here working hard last year and the year before----it could turn Switzerland into Iceland though....

@ romeplebian: What can be done? Yes, that is the question.

* Reduce the amount you handover to the government? (see previous)
* If you can't beat them, join them? ;)
* Emigrate?
* Form a political party?

These may seem like fatuous suggestions, but they're all do-able (they just take a *lot* of effort, which is where I get sick of people expecting a better world to be delivered to them, gratis.)

@ WOTW

I'm not sure that I accept the (very easy) allegation that the "crisis" was *caused* by banks. I think that history actually teaches us that periodic recessions are an inevitable and necessary part of the economic cycle. It's not a crisis: global warming might be a crisis, or world war 3, but not this.

40. At 4:23pm on 12 Jan 2010, writingsonthewall wrote:
'I think the real problem is the committe don't know what questions to ask - not that the banks have the answers anyway'

Now I disagree with you WOTW.

I think the committee did know the questions that needed asking, but didn't want to ask them. And I reckon that the banks know the answers to, but don't want to give them.

If you and I can figure it out, they can as well.

Speaking as a taxpayer, who are the people guaranteeing this madcap farce of greed and stupidity masquerading as sage and solemn integrity, WHERE IS MY BONUS?

A wheelbarrow or two stuffed full of used twenties rolled to my front door by Mr.Hester and his very valuable colleagues will be very gratefully received. Pending such an act of generosity I can only spit and growl at this immoral disgrace.

Why not point the finger at the "villains" that started the banking collapse? The politicians and bureaucrats that brought in "mark to market".
This process rendered "paper assets" that the banks were not unhappy to hold for the long term to ridiculously low levels.
It should have been obvious to anyone with a little thought that an imperfect, or tiny market would lead to massive losses if everyone has to "mark" to the first "distressed seller".
The public will get their money back because by lending it, and "cycling up" the banking system the asset values destroyed by this rule will be recovered.

A last roll of the dice for the financial sector?
A very risky affair as the British public have finally woken from their stupor, its a shame the wheels are about to fall off the wagon.

What bonuses? In a recent unsolicited letter from my MP, Dari Taylor she unequivocally states "Banks that have received support from the taxpayer will not be paying bonuses this year, with the exception of counter staff earning between £15,000 - £20,000". She even put it in bold on parliamentary paper so I didn't miss it. You're not suggesting she was massaging the truth (lying) are you?

ego_non post 38.

A further outrage is some of these big money stars and events are salaried by the tax payer

The Open in golf and the AT&T WilliamsF1 Team to sports personalities of present and past such as Andy Murray, Jack Nicklaus and Sir Jackie Stewart, Newcastle United and rugby union , Athens 2004

20. At 3:35pm on 12 Jan 2010, Ian_the_chopper
A very precise, excellent analogy.

40. At 4:23pm on 12 Jan 2010, writingsonthewall

I've a few questions I'd like to ask them and I'm sure you've even more - so the sooner you get yourself on that committee the better for all of us!

As to the committee members, I couldn't watch it today so it sounds as though they should spend some time studying Evan Harris (LibDem)and how he goes about the task of questioning as part of a government committee (https://www.parliamentlive.tv/Main/Player.aspx?meetingId=5221%29 - still not quite how I'd put it but hten I'd never score too many points for being polite to those who would sell snake oil....


Grimupnorth has a really good point.

ego_non post 38

Its not just football sipping the champagne delights of taxpayers cash from banks sponsorship ,,,,,, cricket, formula 1, rugby, golf, the list goes on and on and just the thought of my hard earned cash funding their lifestyles makes my blood boil.

I feel like screaming. Will someone please tell these uncaring, smug, people they would not be in a job if it wasn't for taxpayers money. They were a failed institution, yet thanks to colossal amounts of our money they have kept their jobs and now want bonuses! They would not be in a position to earn a bonus if they were allowed to go under last year would they? When will this idiotic government get a grip? It is grossly unfair particularly to the huge number of innocent people who have lost their jobs because the government did not consider their companies "big enough" to bail out.

#49 Bob Pearce - aaaaaaarrrrrggggggghhhhhhhhhh!!!!!!!!!!!!!!!!!

What you state may be right - I'm not qualified to say.

But lets be clear - the politicians (corrupt as they are) get paid between £80 and £200k I would think.

The bankers across the world would all have lost their jobs if certain banks had not been bailed out and would have had to start again - I suspect all on much much smaller salaries.

However we did bail them out - presumably for the reasons you state.

But how do we then leap the chasm from calamity to huge bonuses - whoever's 'fault' it was or is this is an industry that ran out of its raw material and had to borrow from the tax payer - Stephen Hester is running a bank that had to give its business to the tax payer in return for survival.

The legislation that has caused the collapse has not been rectified sufficiently as far as I can tell and this needs done by the politicians so they have a role in mending the system.

But the people operating in that system should not be earning the sums they are - it is simply wrong and we must make a stand.

The major parties will not do it and it is simply not feasible for any individual new party to get the funds and momentum in place in time - if any Lib Dem MP is reading this then your party should break ranks and declare legislative war against the City - take them on - take a chance, the public are behind you - you will win this election if you take on the City - YES YOU CAN!

This is compliance issue. Hester & other bankers have a fiduciary duty to shareholders not to other bankers. Executive Directors like Hester are in effect foxes in a hen coop when it comes to bonuses.

This is a worldwide problem but it is in America where this culture has it's roots & Paulsen is chief fox.

Bonuses to employees (bankers?) should only be paid when performance is exceptional above the level an employee would be expected to achieve, i.e. by Benchmarking to industry standards (a role for FSA?). If agreed levels of Performance pay is to be paid it should be within 100% of annual Salary.

e.g. Last year the VIX (Volatility Index) was at record levels. Anyone day trading with reasonable expertise would make a healthy profit in these conditions. This is especially true for employees of bank who have the insider knowledge, databases & sophisticated 'models' available only to trading banks.

If trader/investment bankers think they can a better deal elsewhere, there are plenty of ex-bankers out there who may think differently.

#38. At 4:20pm on 12 Jan 2010, ego_non wrote:
...Other businesses, banking included, do not have this restrictive rule. At least, not a written rule...

Well, it's true that very few businesses are limited to 11 front line employees, but they are subject to many other rules, including corporate and taxation laws, accounting rules and rules relating to stock exchange listings etc.

In addition, banks are subject to a whole slew of rules relating to all of their regulated activities. These activities include high street banking, corporate banking, mortgage lending, credit card activities, trading operations – in fact, just about every activity that banks undertake.

These banking regulations are set by the government and the regulator (being the Financial Services Authority in the UK). The FSA defines its goals as including “promoting efficient orderly and fair markets” and “helping retail consumers achieve a fair deal”.

The FSA was set up by government and has significant powers to oversee and control the activities of anyone undertaking a regulated activity in the UK.

So, virtually everything that RBS did was under the oversight of the FSA, a UK government agency. Bradford & Bingley was regulated by the FSA too. So were Northern Rock, Alliance & Leicester and HBOS.

If the banks were doing something stupid, the FSA should have known about it. That doesn’t excuse the stupid activity, but one has to ask why the FSA didn’t stop the stupidity.

When asked by the Treasury Select Committee why the FSA failed to spot or act on reckless lending by banks, the chairman of the FSA has been quoted as attributing much of the blame to the politicians at the time for pressuring the FSA into "light touch" regulation.

So, the FSA suggests that the government pressurised them into not looking too closely to see if the banks were doing something stupid. That doesn’t excuse the stupid activity, but one has to ask why the government would apply such pressure.

Let’s paint an analogy…

A woman wants to go out for the day and asks her husband to look after the children. She really likes it when the children tell everyone how much fun they have and so she asks him to use a “light touch” and let them do pretty much what they want to.

He sets the children a set of rules which are long and complex. He is very careful to tell them not to torment the dog by pulling his tail. He then leaves them to play and, as requested, don’t watch them too closely.

The children dutifully avoid pulling the dog’s tail. However, they are not properly supervised and they pull the dog’s ears (which whilst stupid, isn’t against the rules).

The dog bites the children.

Who is to blame? Is it the dog that bit the children, the children who tormented the dog, the man who didn’t supervise the children properly, or the woman who told him how to supervise them?

Or, to put it another way…

The government wants a thriving financial services industry and consumer debt fuelled economic growth. It tells the FSA to use a “light touch” when regulating the UK banking sector. The FSA sets detailed rules, but then, as requested, uses a light touch when applying them. The banks lend money to people who probably cannot pay it back, which is stupid, but not against the rules. The people shouldn’t have borrowed the money anyway and default on the loans.

Who is to blame?

To say it’s all the fault of the banks is a simplistic analysis.

It’s like suggesting that the bites on the children had nothing to do with the actions of the man, the woman or the dog.

However, I’d bet that all of the man, the woman and the dog would rather you blamed it only on the children…

Anyone wonder how much of the bonus pool has been generated simply by the government's quantitative easing programme?

Dr Dave - the issue is not about penalising or blaming the bankers.

The issue is about not rewarding the bankers.

Only a banker could see the reduction/removal of ludicrously high bonuses as a penalty.

I wish someone would explain to me what these parasites do to demonstrate their 'talent'?

I have no doubt that a bank system is essential to our economic development. I am sure that investment banking can also encourage economic development. But what I don't see that given that they are in the position to make these decisions, they are anything special. Or that what they do requires the exceptional talent that would merit these massive bonuses. Actually I don't see why we need to support investment bankers, what we need is bankers which help businesses make real profits. On 'Wake up to money' they were talking about who would benefit from the Cadbury/Kraft deal - one answer was the bankers, advisers etc - the shareholders were a long way down.

Or have I missed the point that to be a good banker you need no conscience so that you can push a hard deal? Of course then it would be easy to expect massive bonuses.

Or have they missed the point that the whole banking sector has been bailed out by QE and that they are really living off state handouts.

This is a bit of a ramble of disconnected thoughts

58. At 5:43pm on 12 Jan 2010, Dr Dave wrote:
"Let’s paint an analogy…

A woman wants to go out for the day and asks her husband to look after the children. She really likes it when the children tell everyone how much fun they have and so she asks him to use a “light touch” and let them do pretty much what they want to.

He sets the children a set of rules which are long and complex. He is very careful to tell them not to torment the dog by pulling his tail. He then leaves them to play and, as requested, don’t watch them too closely.

The children dutifully avoid pulling the dog’s tail. However, they are not properly supervised and they pull the dog’s ears (which whilst stupid, isn’t against the rules).

The dog bites the children.

Who is to blame? Is it the dog that bit the children, the children who tormented the dog, the man who didn’t supervise the children properly, or the woman who told him how to supervise them?"

---------------------------------

Are you saying bankers are like children? Perhaps we should be stopping their pocket money and sending them to bed without any dinner.

'Who is to blame? Is it the dog that bit the children, the children who tormented the dog, the man who didn’t supervise the children properly, or the woman who told him how to supervise them?'

Dr Dave's analogy is excellent. What it demonstrates is that the system is set up to fail, time and again. You can try to fix one bit, but then someone somewhere else will take advantage of the flexibility and anonymity of the monetary system.

Boilerbill says 'what we need is bankers which help businesses make real profits'. Well, I guess they do, which is how they get their hands on so much cash. But profits are just money. What we really need is bankers that help businesses that create real life-enhancing value.

The market for bankers is a self-serving competitive market of the rich versus the rich to pay clever but gullible lackeys to do their bidding. Exactly how much they end up being paid compared to the rest of the rich will vary, but you can be damn sure it's more than most of us. If this market sucks in a bit of taxpayers' money to pay Mr Hester then so much the better for the rich and so stupid of the rest of us.

It would be interesting to see how many people would jump ship if they never got the bonuses they were hoping for. How many jobs are there out there and what would be the real impact on profits if the few that did get other jobs left. Also are they not already tainted by the stigma of working for RBS that would count against them applying for other jobs. I suspect there's a lot of crying wolf going on. I don't think there's many ships out there to jump ship to and I don't think they are looking for absconders from the good ship RBS.

I am disgusted by reading this report and so should the top level bankers in all of these organisations.
It is down to these people and their actions that we have so many out of work as companies have folded because they can no longer get credit. As a result of this homeowners have lost their homes and possesions.
These people has lost touch with reality, they should all be put on a living wage, probably paid no more than counter staff.
Their defence that they are paid so highly as to attract the best talent is in ruins ever since the system collasped. It's no good having bankers that are just throwing money away and come cap in hand to the Government asking for more when things turn sour.
The Bankers should be made to realize how lucky they are as their jobs are safe now, with full Government backing. There is roughly 2.5 million unemployed who do not have that same luxury.

The Treasury Select Committee’s and the RBS.

Having pondered for a moment, I see it as stage managed political posturing, nothing more.

It would have been far more interesting to watch Mr Robert Stheeman (The Chief Executive of the Debt Management Office) give evidence to the Treasury Select Committee in early November and confirm that they were cooperating with the Bank of England in the gilt market, but that when Q.E. stops, there could be a problem selling gilts.

We didn’t get to watch that one did we.

Can’t remember the business section of the BBC reporting on it either.

The funny thing is, that if the truth was actually told, most would probably praise those who actually told it, such is my perception of demand for some honesty at this point in our country’s economic plight.

#58 Dr Dave wrote:

"If the banks were doing something stupid, the FSA should have known about it. That doesn’t excuse the stupid activity, but one has to ask why the FSA didn’t stop the stupidity."

++++++++++++++

There you have it. Why didn't they stop it?

I think they did not understand what these instruments were or what they were worth.

Not the FSA, not the bank risk management departments, not the Rating Agencies, not the BoE, Not the US equivalents of these (nor any other country's).

Fair warning was given by Mr Warren Buffett about 'financial WMD's but he was not heeded.

More ignorance than 'stupidity' perhaps.

Give them the money and then wack 'em with higher rates of tax and use the receipts as venture capital for scientific-based manufacturers and/or companies with strong export growth potential. This country needs to generate real wealth and you don't do that riding round on a financial merry-go-round or inflating property prices to a point where the multiples are beyond the reach of all but speculators.
The more people who are engaged in the economy - real not imagined - the greater will be the common wealth. The model we are presently using will continue to enrich the few and impoverish the many. Then the powerful and privileged will ask the rhetorical question: Why is crime, vandalism, violence, addiction, delinquency, mental illness, incarceration and discontent so prevalent in our society? They could answer the question but then they might have to look at their modus operandi and accept that it principal beneficiary is them.

If you want a decent society, you have to have a more sensible salary ratio between the top and the average than one that runs into three digits.

59. At 5:51pm on 12 Jan 2010, NickBloggins wrote:
Anyone wonder how much of the bonus pool has been generated simply by the government's quantitative easing programme?

That is probably the most incisive question I've seen on this blog in my 6 weeks of eulogising. Well done Sir !

I would suggest all of it and more but am not clever enough to back it up. Over to the experts.

When will folk realise we need bankers?
We need them just like we need university students.

We need inefficiency to soak up the potential unemployed.
Just what would the millions of bankers be doing if they were not living off the backs of the productive ones?
Same goes for students. Do we really want cities full of roaming unemployed?

Bonuses do rankle though. Just like universities undercutting industry.
We must just learn to live with them. Like taxes.

Bankers - and universities must learn to live within our means though.
The government should learn them to do it right.

#68 armchairstrategist

Wee Harold (Wilson) tried to do what you suggest with his Selective Employment Tax. The distributive trades union got his measures thrown out. That was probably the start of the City run. They knew from that moment on that they were unstoppable. We have lived in an unreal world ever since.

What a lot of whingers and moaners, time to give it all a rest. You are all playing into the hands of the government, who love this stuff.....takes the heat off them with an election coming up...blame the banks for everything is their motto!
We need these banks to make a profit and pay us all back for the billions invested by the government....slagging them off will only delay that day.

They only stold from retirement accounts what was needed. I guess we should all look to bankers for moral leadership and ethical standards...I didn't realize they were so much like the clergy. Excuse me, I must wipe the tears from my eyes because of their sacrifices. Maybe a new charity could be formed to help them out. Oh, we have already done that.

I think we need to keep it simple. It's not past the realms of sanity for politicians to pass laws that can actually help resolve unfair practices.
I feel the problem lies in paying bonuses in multiples of annual salary, instead of paying bonuses in terms of a percentage of annual salary.
Implementing such a simple rule will identify the hard working profit making employees who will be rewarded with a substantial basic salary, and substantial bonuses on top.
Clarity and transparency, and ideal start to the recipe required to re-establish trust between the general public and banking institutions. The remuneration system unregulated is unsustainable and will end in disaster for us all.

Just give them the bonuses if it will stop them whinging on about it at every opportunity.
Oh yes and whilst I'm feeling generous, the government should be printing banking licenses like confetti, a little competition never hurt anyone.

What is the difference between an NHS nurse and somebody who works for a bank?
An NHS nurse earns about 50% more than about 60,000 RBS workers. Not saying its a bad things but just remember that 95% of bank workers don't earn huge money and huge bonuses. Quite the opposite I am sure you will find

Oh well!

Normal service resumed...looks like we'll be heading for another crash then!

#60 Sadly, we are in the “plumbing dilemma”

We have employed a plumber to work on our house in November. Sadly, he didn't do the job very well, so on Christmas eve at 11pm we have water pouring through our ceiling.

We could just turn the water off, and wait until after Christmas to get it fixed, but it's hard to see us having much fun with no water for a week.

We could fix it ourselves (surely plumbing can't be that difficult) – but the reality is that we don't have the experience, tools or time to learn plumbing.

We could call out a 24 hour plumbing service and pay an almost unbelievable amount to get a plumber one hour before Christmas.

With a heavy sigh, we pick up the yellow pages and start dialling.

The plumber comes and fixes the problem in 10 minutes flat, with tools and skills that seem easy to acquire (had we known that we'd need them one day) and charges us the enormous advertised call-out charge. Sadly, we don't have enough to pay, so we have to borrow on our credit card. It's all the more annoying because the problem was caused by a plumber in the first place.

We are annoyed that we have to pay a banker to fix problems caused (at least partially) by the activities of bankers. We don't like the fact that bankers are likely to have the skills required to sort this mess out – particularly when we feel that it cannot really be that hard. We don't like the fact that we have to pay a high going rate to get a banker.

However, realistically #19 is correct – we the taxpayer are less likely to get back the funds invested (never mind make a profit on them) if RBS is not run by people with appropriate skills and experience. I don't know if the current team have those skills and experience, but in any competitive employment market, if you don't pay the going rate for a particular job, you had better be wary of what you get for your money.


#49 – spot on, in my opinion. Too little has been made of the destructive cycle caused by the interaction of m-t-m accounting and regulatory capital.


#62 – I'm not sure that the analogy stretches this far (but see below for a little extension). I'm also not sure how well overleveraged borrowers would take to dog food (but they might have no choice, provided they don't put it in packed lunches).


#63 – I think that the system will periodically fail (like most systems). However, we should be able to reduce the frequency and severity of it's failing. We used to have a principles based regulatory system, where broad rules established a framework, but anything unusual required explicit examination and approval. This is no longer true.

To use the analogy one more time, we really should expect more of the father than to simply ask whether “pulling the dog's ear” is inside or outside of the rules. We need him to ask himself whether this activity is a sensible thing to do (irrespective of whether a rule explicitly covers the point) and supervise the children accordingly.

If he cannot decide if something is sensible or not (should you feed a dog chocolate?) the answer has to be no.

We also should expect the mother in our tale to encourage prudent (sorry) supervision. This has historically proved difficult both for the UK government (who wanted a booming financial services sector to boost tax revenues and also a debt-fuelled consumer spending boom) and the US government (who, it is said, deliberately provided for Fannie and Freddie to underwrite higher risk mortgage lending for political ends).


#72 – I am afraid you are correct.

PS - just in case the RSPCA are watching - NO the man should NOT feed the dog chocolate, unless it is in the form of special dog chocs.

(and for the avoidance of doubt, if he allows the children to eat the dog chocs they'll get terrible diarrhoea)

Having just watched yet another tremendous statement from Vince Cable on the BBC 10 O'clock News ... his depth of knowledge on the subject astounds me given the profile he is given.

Here we are with Robert talking about bonuses for investment bankers and he chirps in comparing base rates with lending to businesses at up to 20%, suggesting that can't be difficult.

It had absolutely no relevance to the news piece in question which was more about investment banking that that he described.

However people herald him as the guru for all things finance I just don't understand I hope those that do wake up before it is too late.

He goes all the time for popular opinion rather than understanding and the gullible fall for it all the time as he continually bangs the same drum - just a one trick pony looking for votes.

Look on the bright side!

We have a public debt problem that would bury many countries.

There's no way we can manufacture ourselves out of it a la Germany or China.

Thankfully, we are world class at an industry that the Chinese can't compete with, that can really make profits fast even with a flat economy, and that employs lots of knowldege workers and ancillary firms.

Get behind them!

Honestly. I mean it, I know you think this is sarcastic - its not! I know many here think that we are duffers at finance. We didn't screw up worse than the Americans, we did screw up - badly - but for decades now British banking has performed very well.

OK, rotten eggs now please....

(not a banker)

And now we have the possibility of wounded soldiers being asked to leave because we can't afford to give them desk jobs while hiring more infantry. I'm sorry, but these men are the ones who should be receiving bonuses than to the ruthless bankers who feel no compulsion in demanding what the banks owned by this nation can not afford and and should never pay.

https://news.bbc.co.uk/1/hi/uk/8453369.stm

A possible £50 billion in banking bonuses (global). Just think what that would do for hunger, energy research, malaria research, cancer research, dementia research, heating bills for the elderly and many, many more good causes.

It's just wrong, so wrong.

If the banks can afford to pay such big bonuses then surely they can afford to pay back the tax payers loan? If I were to get in to financial difficulty and need help, I would be allowed to keep enough to live on, the rest would pay back my debt!
Why should I be taxed extra for somebody elses mistakes?
Bankers basic wages are pretty hefty without the need for extra bonuses.
Legal theft is what it amounts to. And you MP's arent fooling anyone, you all have your snouts in the trough, setting the rules, cosying up to the bankers, making sure your nests are feathered!

Oh forgot to add ... he said banks were borrowing at 0.5% .... don't see too many high value bonds used for funding issued, at that level, because at that rate of interest no organisation would shift them.

Electioneering twaddle !

The whole thing is a charade with the government , regulators and the banks all acting their parts with the public at large picking up the bill and expenses.

Without doubt Hester will be gone within 12 months and at best we will break even with RBS in the years to come.

Saving the banks (World) will prove to be a massive mistake by GB and the tax payers will be paying for his folly for the next decade or two...

#15. Justin150 wrote:

suggesting that banks are just like all other businesses in the area of regulation etc.

Sorry, but I disagree. A few years ago one could set up a bank quite easily - all one had to do was potter along to the Bank of England in top hat and tails every so often and send it the appropriate reports. (I know as that is exactly what one of my colleagues did.)

However, since the chain of secondary bank collapses entry to the market has been considerably restricted. This increase of protection took place at exactly the same time when the banks started to become extremely profitable. No other industry is so hugely protected as the Banks are protected. Their profits are monopoly profits resulting from the cartel that exists. I thus directly disagree with your comment that banks are not a monopoly.

Let's get realistic. Firstly, I don't and never had shares in RBS. Secondly, the Gov in it's infinite wisdom put Hester in place to sort out the mess left by the Shred. Thirdly, we should judge him primarily on getting this dreadful Bank back on it's feet so it has some value to repay the support given. Throwing vegetables at Hester because he feels the incentives necessary to get this pathetic bank back on it's feet are outlandish bonuses - so what! If he delivers and we get our money back that is the test. Stop whingeing! If you want to let Rubbish Bank of Tartanland fail, keep sniping at the man who just might reverse the stupidities of the Shred.

This comment was removed because the moderators found it broke the house rules. Explain.

Republican senator John McCain and Democratic senator Maria Cantwell agree on the solution to preventing the next financial crisis – reinstate the Glass-Steagall restrictions on the activities of commercial banks. Most importantly, they would prohibit commercial banks from underwriting offerings of stocks and corporate bonds.

'A mistake that will make banks riskier'
https://www.ft.com/cms/s/0/06cfecac-fecf-11de-91d7-00144feab49a.html?nclick_check=1

89 DebtJuggler

I seem to recall Mr Hester being quite strongly opposed to a reinstatement of Glass-Steagall during his evidence this morning...

Would that have anything to do with the fact that it would lead to the break up of RBS by any chance? He can't have much in the way of company loyalty as he's only be there a year and he himself was at pains to point out the difficulties of attracting staff to a bank with such a bad reputation. So what is his incentive to protect RBS against such a measure? Answers on a postcard...

I think this cartoon about sums it up....

https://www.artypolitics.com/

swans herd
whales pod
fish school
starlings flock
geese gaggle
bankers wunch

at least according to wikipedia...

This comment was removed because the moderators found it broke the house rules. Explain.

"When I hear the constant vilification of corporate America, I personally don’t understand it,” Jamie Dimon, J.P. Morgan CEO, speaking at a Chamber of Commerce in Washington while someone passes him a hanking and we get out our violins to play some melodies, can someone please remember to ask him what his parents think of his salary!
Is that corporate America, or did he really mean to say the financial industry based around Wall Street?

He doesn't understand it! No, and the pope doesn't understand why condoms sales are rising.
Perhaps Mr Dimon needs a new communications manager, 'cos the one he has is making him look real dumb...

Mr Peston's article has missed the point as usual.

RBS is not an investment bank and generally does straightforward, low fee (by banking standards) work. That is why they're not paying employees much. Given the huge size of the company (~ 175,000 employees), GBP 1.5 billion bonuses equates to an average of just over GBP 8,000 per employee. We're not talking a lot of money here.

Why not look into the detail and provide something interesting, instead of just making up some quick opinions? This really is low quality, sixth-form level journalism.

90

The answer is simple, like it or not the investment arms of the banks are the bits that have generated the lions share of profits (and risks) in the good times. To effectively do the job he has been asked to do, make RBS self supporting again, profitable and basically minimise the losses to HMG from the rescue, he needs the investment arm to function and thrive as objectionable as that seems.
If you forced a separation of investment and retail at the current time, I strongly suspect that he would be unable to do the job asked of him.

The investment arm is likley to be a key part of his strategy to meet the targets he has so as to obtain the renumeration which his parents think is too much. He has to sell some non-core but profitable businesses as part of the deal so whilst retail is profitable, the returns are not exiciting so the share price etc would never enable his bonus arrangement to kick in.

If Hester was a minister, regulator or the governor of the BOE then I would expect a different response to the question , but he isn't, why these groups seems not to be prepared to address it is more baffling. They are I think too beholden to the investment banking system that they cannot contemplate it - they need it more than it needs them.

The system is the system and Hester works within it. The regulators, central banks and governments have to define the system and put in place suitable regulatory mechanisms to control its excesses.
They are the ones who need to step up to the plate and deliver the change to the system.

Hester has a job to do and I hope he succeeds in it but that job is not to be the industry Jonah, it is to make RBS self supporting and successful.On a personal level he may not like it but if he stood in the committee yesterday and said you know what , we will not be paying bonuses at all becuase you are right it is all a bit lucky and they are too big anyway, the result would be permanent damage to RBS and the potential losses from the rescue increased - so long as every other competitor in that market can do differently.

I thought his responses indicated clearly that he does not support the excessive bonus culture but he cannot alone change the facts of the market he operates in. After all, even should he succeed in all his targets he stands to earn around 3 million per year max including bonuses, it must be really galling to know that some of his employees will be picking up his 3 year package in 1 year based on luck and smart accounting.

#94 Barry

What makes you think that RBS's employees are entitled to a bonus at all?

There is a strong case for docking their pay for incompetence.

It seems this blog has now become a sounding board for angry people with Robert the leader finding any storys about banks that may create some reaction. The BBC should be ashamed.

I have a problem with bankers pay and bonuses on a number of levels.
1. If I borrowed money to stave off bankruptcy, I would feel duty bound to pay that money back before I went off on holiday or bought a new car - this basic morality appears to be missing from the city.
2. The argument that we need to pay these salaries to attract the best people is plainly nonsense. Most career plans rely heavily on serendipity and if you put other people in these roles they would be just as capable.
3. Given the fact that banking seems exempt from the free market in as much as it cannot be seemingly allowed to fail, surely a semi-trained monkey could do the job of most of these people?
4. Why did we have to save these banks? Perhaps it would have been cheaper to guarantee the savings of individuals beyond the arbitrary limits set and then let the market see whether banks survived or failed. The recession may or may not have lasted longer but why should the majority of the population pay so much to so few?
5. The city generates a vast amount of income for UK plc and it will not disappear overnight just because a few overpaid bankers throw there toys out of the pram and go elsewhere. By contrast government support for investment in manufacturing is neglected. Ironic that we appear to be on the edge of a fuel shortage yet we believe that mining should be subject to the pressures of the market. Similar arguments could be applied to public transport etc.

Perhaps it is time to call these peoples bluff? If the city is a bastion of capitalism, then surely it is time to let the market decide on the worth of these people and of individual banks?

Finally and perhaps a little cynically, politicians (with a few notable exceptions) seem unable to either see the view of the majority on this point or they actively buy into the city of london nonsense. Could it be that they have an eye on jobs/non-exec roles in the future? After all in the same way as bankers etc are irreplaceable, politicians are all driven by altruistic motives!

I'm sure there's more to this banking mess than meets the eye. Anyone agree?

I would be amazed if the banks that got support had not effectively held the government to ransom with dire predictions of what might happen 'if'. Implicit or actual threat dunno. Maybe Brown figured it out for himself but if he did he would have been out for revenge now, but he ain't.

It would explain the easy ride the bank bosses got thru it all - and continue to.

So they got what they wanted, an easy ride with the low-end staff taking most of the 'hit' such as it needed to be; stopped a 'run' on those banks and started one on the BOE with 'quantative easing'

These unsavoury characters keep going on about market forces and how they have to pay competitive remuneration, etc.

Fine. Let the market rule then. And who makes the market? The customers! So if you disagree with the way your bank operates, take your business elsewhere or simply withdraw your money. Another Northern Rock run on these banks will soon stop bonuses. They need your money more than you need them.