I admit I am not a financial expert, but what puzzles me about bankers is why they are very well paid to do a job and rewarded with a huge bonus on top of it, sometimes several million pounds. Is it too simplistic to expect them to enjoy their work in which they should strive to succeed, and that they should do it for an agreed salary like the rest of the working population. If the salary needs reviewing, so be it.
If bonuses are to be applied, I rather like the John Lewis co-ownerhsip and profit sharing scheme which benefits everyone within an organisation; I regard it as a great incentive and would certainly welcome more schemes like this which reward hard working staff.
There was a time I used to get a bonus at the end of the year from the newspaper where I worked as a journalist – sometimes up to a month’s salary at Christmas – but it stopped when profits took a dive, and was never reintroduced when their fortunes changed. It really motivated staff who in this country today can count their blessings if they have a job at all, let alone a bonus.
Agree completely – stop the bonuses.
Bankers and MPs (and MEPs) have set very poor ethical standards indeed. Whilst I don’t wish to labour the point about tube drivers (I do not support them over striking on the Royal wedding day btw) we need to get in perspective the fact that their claim is over a piffling few hundred quid.
We’re on very dangerous ground indeed. Mr Cameron has failed to address these problems. The message is loud and clear: the oiks must learn their place and that’s to shut up and stump up and pay for it all.
Bankers do themselves no great favours with them, especially with the low interest customers get.
Is it too simplistic to expect them to enjoy their work in which they should strive to succeed …
It is when there is an agenda.
Ahh, this is a debate that David and I have had many times Ellee. As a young banker myself, I’m sure you can understand which side of the argument I lie on. However it is a very interesting debate and I fully appreciate why it can be hard to understand.
Fiona, thanks for your comment, and I know how very hard you work right through the night. I think it’s the system that’s wrong, but it’s going to be a hard one to change.
Kevin, the same goes for politicians, where the system is changing, hopefully.
Obviously, I quite agree that this issue must be visited again and again. This post is as relevant here in the U.S. as it is there, Ellee. Well said.
In the good old days the City was run by partnerships which meant than profits would be shared but also that losses had to be suffered which focused the partners’ attention on risks being taken. Now that banks are plcs, mindsets have changed: no employee has to pay for losses yet profits are rewarded handsomely. This increases desire to take on risk. Bring back the partnership system!
How can I urge restraint among my colleagues (as their union rep) ? The very first thing they throw up is this issue and they’ve won the argument.
The very best people, giving of their best (and for very low pay) can be found in the military, clergy or junior ranks of the medical profession (among other jobs.) It’s nonesensical to say that the banking system will fall apart if people working in it aren’t paid millions a year in bonuses – especially when there don’t seem to be any consequences for getting it wrong.
Fiona ‘fully appreciates why it can be hard to understand.’
How very patronising.
electro-kevin – Apologies if you interpreted my comment as patronizing, far from it, I am simply appreciative of the arguments against bonuses, despite being a banker myself.
We really must stop only blaming the banks .
It was in large part down to a truelLy appalling government who in the time honoured fashion of all Labour Govs spent all the money plus billions more they didnt have . They didnt make the banks keep to the rules ( too busy pandering to them and the rich who were so popular with the likes of Blair and Mandalson , come aboard my Russian yacht or my Italian palace !! )
Then we had that prime idiot Brooon who decided to sell the gold reserves at the bottom of the market .
The benefit culture has turned into a financial nightmare.
Instead of being there in emergencies its now to keep whole generations on their sofas all day watching Sky and eating Big Macs and crisps and drinking fizzy pop ( the size of them beggers belief )
State owned organisations such as the NHS grew like Topsy ( in the office waller classes , as did local gov , all those gender and equality officers who are so vital to all our lives ! )
We now have a new gov who appear to be as clueless as the lot before as well as remarkable in the amount of promises both parties can ditch now in power .
We are ruled ( as always planned ) by Germany and at home by political correctness and the lout culture , we are all going to hell in a handcart if somebody doesnt come forward and turn back the clock .
Where oh where are the likes of Winston or Maggie ?
As a teacher, I’ve also worked very hard over the past 14 years and we have seen a year-on-year increase in achievement by our young people. Have I had a bonus?
These wonderfully talented bankers have run our country into the ground and STILL get a bonus.
Fiona – you seem to imply that this is right and that it should go on. That I disagree is down to a failure to ‘understand’ on my part.
A GP or a consultant surgeon probably earn in the region of £100k pa (possibly up to £200k)
Now before you say “Ah. But bankers are dealing in large sums and paid on percentages of those sums and doctors aren’t …” I must make clear to you that you’d be missing the point.
The fact is that skill, intelligence and talent far better than the vast majority of bankers is bought at a fraction of the price.
“Ah. But – rather like footballers – we need to pay World class bonuses to secure World class players.”
Would you like my analysis on that fallacy too ?
This bonus issue is incendiary and a very good explanation needs to be given to key workers who are about to vigorously dispute wage freezes and retrenchment.
OK. To debunk the ‘superstar’ pay argument about bankers:
I don’t object to real banking Superstars having their money (when they’ve performed well, that is)
Superstar pay (Master of the Universe stuff) is based on rarity of talent.
Footballers in a similar bracket (and I don’t object to their pay either) number in the tens of hundreds in this country.
Bankers in the million-pounds-plus bracket number tens of thousands !
“Monkey Boy” says it well: “These wonderfully talented bankers have run our country into the ground and STILL get a bonus.”
That is certainly what happened on our side of the Pond. Buoyed by taxpayer money (paid back by hiking fees and interest rates on credit cards) the bankers still managed to pay megabucks bonuses to themselves.
I have a retirement CD earning interest at one-half of one percent and credit cards charging 24% interest a month. Kind of hard not to make a lot of money on that spread, wouldn’t you think? But the geniuses who ran Wall Street weren’t satisfied with mere banking. They had to go out and destroy the housing market… and lost billions of everyone’s money in the process.
So the highest paid in the land are ?
You guessed it. Those with the keys to the safe !
Fiona offers no defence because there is no defence. This system of putting the gamblers in charge of the cassino has virtually brought the West to its knees.
Yudansha, I happen to know Fiona and she is only a student and a lovely, genuine person. She is probably working round the clock right now for her bosses, but it is a job she enjoys doing and she is very good at it. It’s not Fiona’s fault that the banks work this year, it the system, as you say, and I agree with.
Curmudgeon , if I remember rightly it was during that great man Bill Clintons watch that he and his advisors and fellow Democrats pressed down heavily on the American banks to give loans to people who they must have known would not be able to keep up the replayments ( blacks ,Hispanics and the like on very low wages , get the picture – social engineering or by another name vote catching )
So blame dear old Bill for starting all the mess and now you have a new socialist in Obama who will bankrupt the country with his plans .
You have been warned .
This week, as part of my ministry, I was called upon to give comfort to a man who had lost his home. Jon, as we shall call him, had been made bankrupt, and his home had to be sold to pay his creditors. There was nothing practical I could do to prevent this, and I had to confine my self to providing such spiritual comfort as I could.
Jon is a good man, in middle age, with a wife. He had made mistakes to be sure, but he was also another victim of the recession and credit crunch. I was very upset.
Which brings me back to bankers. And with my tin hat firmly on, a full on moral attack on the banks, those “Masters of Universe†who sit in command of them, and their pay and bonuses.
This week has seen in the latest chapter in the bonus saga, with Britain’s best paid banker, the aptly named Bob Diamond, Chairman of Barclays, giving evidence to the Treasury Select Committee. “Diamond Bobâ€, by the way, must make do with a pittance of a basic salary of £1.25 million per year, but fortunately is probably able to stave off his own bankruptcy with the aid of a bonus rumoured to be in region of £8 million.
The Committee indulged in a spot of banker baiting about bonuses. Diamond Bob adopted a hurt demeanour, like a puppy that had been kicked for pooing on the carpet, or an overpaid premier league footballer unable to understand why administering a good roasting to a 16 year old girl should not be a natural and proper perk for him and his mates. He seemed baffled by the whole issue. What was wrong with earning over £9million a year? Like some annoying woman in a shampoo advert, his view was it was ok “because I’m worth itâ€.
Let me say at once that I have always been of a laissez faire point of view – within reason. If a man has talent let him use it and work hard, and reap whatever rewards may come to him.
And when it comes to taxing the banks, and the payment of bonuses, the logical arguments for the Government treading softly are quite clear:
The banking industry makes a colossal contribution to “UK PLC†in terms of employment, profits and hence the taxation.
In order to maintain its position – some say pre-eminent position – the City needs to attract and keep the best. That means big payouts.
If there is over taxation and control of bonuses then the banks will simply decamp. Indeed, on the radio this morning I heard someone mention that HBOS had already started to move key staff to Hong Kong, and make preparations to move its entire administration. That would be the same HBOS I presume, which together with RBS Lloyds TSB received a bailout from the UK government – no, taxpayer – of at least £37 billion.
It is clear therefore, that my moral qualms as to the level of payment to senior figures in the banking and indeed hedge fund business are foolish and impractical. New Labour once famously promised to deliver an “ethical†foreign policy. It was a farce; the realpolitik of foreign policy, with its dirty little wars and dodgy trade contracts saw to that.
The gross salaries and bonuses of the Masters of the Universe are a necessary, if unpalatable means to the greater good, the tax harvest that flows from the City.
Are they?
First, I ask the question: are bonuses in the sum in issue “moral� Are they, in other words, “just†when the great mass of the population groans beneath the burden of debt and taxation, spawned to a significant degree by the follies of these institutions? Is there no such thing as a moral dimension in this issue?
I have always taken the view that there is no need define the words “moral†and “just†with intellectual precision. Indeed, quite the opposite is the case. Like an elephant, you know it when you see or feel it. Mankind (and especially the stoic, patient British, for some strange unfathomable reason) possesses an internal compass for these purposes.
I have examines my internal compass: it says they are immoral and unjust.
No, they are not just where so many of the banks have done their best to push the world into crisis and owe money to the very public upon whom they gorge themselves like slick corporate leaches. No bailout for Jon, of course.
No, they are not just, because the banks with their Ponsey Scheme economics have wrecked lives.
No, they are not just because the men and women who claim them have not built business and contributed creatively to their communities; what they have done is shown skill in climbing the greasy internal pole of power in corporations which, fundamentally, organise manipulate and control the monies of others.
The threat by banks to remove their operations bears some consideration. It strikes me that it is rather like a dealer and pimp who threatens his junkie streetwalker. Behave, comply, and let me continue my abusive behaviour; he says. In return, you may have your fix of white powder, but you must whore yourself in return.
That is what the government – all governments – have become: an addicted whore. Spending money is its addiction, and it needs cash to service it just as a junkie steals to feed his habit. To do this it whores itself to the vested interests of the banks.
The correct moral and practical response to such a situation I have described above are clear and coincide, although they are painful in the short term. To hell with the dealer, and go cold turkey.
The insidious threat of those with their hands on the controlling levers of financial power that they will take their bat and ball home (or elsewhere) should be seen for what it is: bullying.
It should be met by a robust and practical response from the State. There I have said it! The State! A word which is perhaps anathema to many who read this blog. It is not anathema to me.
I define it thus: the legitimate expression of the collective will of the people organised for the good of the Commonwealth. And I have no qualms about it using its sovereign power to take on and deal with any evil which affects the good of that Commonwealth. And I include bankers within that category, without qualm.
Perhaps I am now Gildas the Marxist! Well, there’s something I would never have expected to say!
I also believe the threats and blandishments about the need for employing the best talent are themselves a form of blackmail. These are not in fact the “Masters of the Universe.†Look at their works and the results of their works! All powerful intellects, serenely guiding us and their institutions? No, to slightly misquote Eddie Murphy in “Trading Placesâ€, what you guys are is a bunch of bookies.
Is it to be said that it would be impossible for this nation to organise rivals to such corporations, with the wealth and talent available? Would it be impossible to attract new talent every bit as good as Diamond Bob, and pay them very well, but not in obscene amounts? Would it be impossible to form mutual, conservative, not for profits institutions like so many of the Building Societies used to be, until under the influence of yuppie wunderkind, they joined the lemmings of the financial community in a headlong charge to debt and ruin?
To those banks controlled and propped up and owned by the State – us – I say; reign in your pay or we bust you, and seize your assets. To those free of State control, I say, well done, and pay what you like; but never at the expense of the people, and your directors shall pay tax on every penny. At a proper rate.
Or literally, go to Hell!
I agree with Monkey Boy.