Scrambled Clegg....???

[*Bob*]

genwilliams Wrote:

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> Clegg's idea about limiting the banker bonuses to

> ?2500 is the only LibDem policy so far this

> election that I disagree with

It's an eyebrow-raiser.

But the substance of what they're saying is an interesting approach. It's only cash bonuses which would be scuppered. You could still receive an enormous bonus in shares (don't worry, bankers.. you can still get absolutely loaded!) but that would be tied-in with a longer-term commitment to the longer-term success of the bank, rather than doing anything you possibly could, regardless of risk, in order to get you buckets of filthy lucre at the end of each year.

I suppose someone in banking will be along to explain how naive I am being here, but, given recent economic events, I'll take any 'voices of banking authority' with a fistful of salt.

[Brendan]

Fuck ?em.

A ?2500 cash bonus would be very welcome to 90% of the population. Why should petulant investment bankers feel they deserve more? Their pay is already disproportionate to other industries.

Now if only we had that sort of leverage with lawyers.

[peckhamboy]

Clamping down on bonuses will just result in banks paying higher salaries in order to keep star performers, meaning that very little of their remuneration is linked to performance, whether long term or short term. Why can't everyone realise that there is no "perfect" solution, partly because nobody has actually pinpointed the problem? For all the talk of separating retail banks and casino banks, the worst hit "casino" banks (eg Lehmans) have no retail arm. The worst hit retail banks (Northern Rock, Bradford & Bingley) have no "casino" arm. LTSB ended up in the mire only because Gordon effectively encouraged, even forced, them to buy HBOS (waiving competition regulations in the process). Barclays was not bailed out, and that was partly due to the very strong performance of Barclays Capital cross-subsidising the retail bank.

The banks collapsed because they were encouraged to lend through the boom years, thanks to Gordon feeding the housing bubble by taking house price inflation out of the inflation measure used by the BoE to set interest rates. So banks (naively) lent ever-increasing sums on the basis of ever-increasing house prices, to people who had insufficient capital to cope if things went wrong. Additionally, Northern Rock held virtually no regulatory capital and relied on short-term market funding rather than customer deposits to finance its lending. Which was fine until the markets stopped lending.

As far as I can see, the problems were not caused by bankers' bonuses, nor were they caused by retail and investment banks existing side by side. And they won't be cured by saying that bankers can't be paid bonuses or retail and investment banks can't exist together.

And I defy anyone to come up with a definition of the "bankers" who ought to be punished. Board executives? IT staff? Legal staff? Compliance teams? Branch managers? Anyone who works in/for a bank? Frankly, it looks like a witch hunt. It also distracts from more important matters - like where cuts will be made after the election, which taxes will be going up and for whom, and how will England do in the World Cup.

[*Bob*]

PB

Is there anyone who works in the banking sector (I assume you do?) who thinks the Libs idea is of any merit, or do they all think it's totally mental, bar none?

[Brendan]

No it?s not that simple or that simply solved but when you?re talking about people being disproportionately remunerated because of artificially created, disproportionate inflation in the property market who then in turn have used the situation to grab disproportionately high shares of the property market, the reaction you?re going to get from any right thinking individuals is very simple. It starts with an F and ends in off.

[peckhamboy]

*Bob* - I don't work in the banking sector. Whatever happens to bankers' bonuses will not affect me personally. I'm just trying to inject some balance and proportionality into what has become a huge issue simply because the three main political parties are trying to outdo each other in the hope of gaining an electoral advantage. Do I think there are people working in the financial sector paid far more than they deserve? Yes. Do I think everyone associated with a bank (whether it struggled or not) should be clobbered with punitive measures? No.

Has anyone broken the law? If so, punish them according to the law. But don't make up the law after the event in order to punish a group of people for something that may not even have been their fault.

[Loz]

Apparently it's official - Nick Clegg is the new Chuck Norris...

http://www.ninja-monkey.co.uk/byte/cleggnorris.jpg

[Magpie]

Bankers are a suitable target for the unsophisticated, the naive, and the stupid. The people responsible for creating the collatrised debt obligations that caused all the problems probably number a few hundred (if that) versus hundreds of thousands working in London alone. Bankers get paid well because they generate a lot of money - most parts of the banking were highly profitable and remain so. Banking is probably one of the few industries where the workers get paid what they're worth (in terms of profit generation). Now some people may see it as gambling, and some of it is, but at its purest banking is about finding a home for the money that people want to save so that others can invest - the difference between the bankers keep - a finders fee if you will.

As Peckhamboy said bank lending went up because the cost of debt went down so we all borrowed - this was not evil gambling bankers screwing up, this was all people responding to the message they had in front of them, which was debt is cheap. The banks didn't hold us down and force feed us money, we all signed the mortgages and the credit deals etc

As to Gimme's post above - yes there will be real cuts, all parties will do this. And what is so wrong with a pay freeze? It is what virtually everyone in the private sector has faced for the last two years and at least it keeps people in their jobs.

Edit note - I do not work for a bank, but am in the private sector. I don't expect sympathy but no one in my firm (other than promotions) has seen their salary change since summer 2008, and its unlikely to change this year either. Seems perfectly logical to apply similar principles to the public sector.

[Brendan]

Magpie Wrote:

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> Bankers are a suitable target for the

> unsophisticated, the naive, and the stupid.

Substitute, ?Those who don?t agree with my point of view which is based on a vested interest?

Well played.

[genwilliams]

One of the arguments that's been put forward (for the record, I've never worked in a financial situation, so [a] my knowledge on this may be shonky and I've no personal bias re: bankers' pay) is that many people who work in these institutions - not the high-flyers taking risks with people's pensions, but people doing more routine work - have a smaller salary based on the fact that they will get X bonus at the end of the year. Reduce that to ?2500 a year and their pay packet could be severely and unjustly diminished.

Anyone with a better understanding of that, by all means correct me if I'm wrong.

[peckhamboy]

I thought you were better than that, Brendan. I'm not sure where Magpie's vested interest lies, either, unless you know something about him/her that wasn't mentioned in their post. Or is working in the private sector now a "vested interest" that puts us all in the same evil camp as the banks? Why should anyone in the public sector as a matter of principle be immune to economic conditions?

[Brendan]

I'm actually just being antagonistic.

[*Bob*]

Surely by its very definition 'bonus' should be something extra, not something you rely on and expect as a matter of course?

[Brendan]

In reality I don?t think that every pin-striped prat in a bank has sinister intentions any more than I think that the pin-striped prats like me in my industry do. I do however think that the sector as a whole has enjoyed a disproportionate rise in remuneration over (and because of) the bullshit years compared to other, more noble and socially redeeming professions.

[Keef]

Banking is probably one of the few industries where the workers get paid what they're worth (in terms of profit generation).

That is absolutely fine. It still doesn't mean they need a massive bonus on top of said pay.

[????]

Of course the banks are somewhat culpuble but if we'd had all the restraints on them we'd not have had the boom in the first place and the massive increase in public spending, public sector salaries, house prices, and economic growth that was benefiting nearly all of us. As it happens if we'd not had that boom it maybe would have been far better than the 5-10 years of pain we've now got ahead of us from deleaveiging from this 'success' but the politically driven excuse and naive acceptance by so many that without the rotten bankers the whole caboodle would have been going along nicely thankly IS scapegoating in the worse Daily Mail sense.

Basically we're going back to reality and that's about 1997 and that includes reducing the exprbitant rise in Public Spending too.

TO be absolutely clear I'm not a banker, never have been and never been in receipt of a city bonus.

[*Bob*]

What's wrong with shares instead of bonuses? Why not?

Apart from the obvious appeal of 'money.. now, please', which I can understand.. does not wanting shares say something about the level of belief and commitment people might have in their own company - and industry in general?

[Magpie]

Substitute, ?Those who don?t agree with my point of view which is based on a vested interest?

Actually - I mean those who buy into the simplistic headlines from the front pages rather than reading the business pages which tend to provide a more nuanced and sophisticated explanation - which I summarised in my post and which I note you didn't respond to. The banks and bankers are an easy scapegoat, cos they're all rich like and its the bank fault that I borrowed 10k on my credit card to pay for a holiday I couldn't afford.

"more noble and socially redeeming professions." like all the new nurses, teachers, doctors etc employed in the last 10 years - all of whom were paid for by the huge tax takes from the financial sector.

[????]

I think reducing some of the bonus payments to shares makes sense *Bob* and if we can genuienely get Global Reform that'd make sense too. But some of the mad things people say about what we should be doing to the evil banks would have left them as basket cases, our 'investments' well in the red and our economy right down the sh1tter given our over reliance on Financial Services, consumer spending and houseprice inflation. I'd like to see proper incentives put in place in areas like renewable energy to try and rebalance our economy.

[Mick Mac]

???? Wrote:

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

>

> TO be absolutely clear I'm not a banker, never

> have been and never been in receipt of a city

> bonus.

Are you sure about that Quids? Your colleagues all got one. You should complain.

[*Bob*]

???? Wrote:

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

> I think reducing some of the bonus payments to

> shares makes sense *Bob* and if we can genuienely

> get Global Reform that'd make sense too.

I'm not a bank-basher, nor do I know anything about the banking industry.

But it seems to me as 'the common man on the P13' that paying someone (plucks figure out of air) five million quid as a bonus for success over a five year period could produce a more sustained and committed interest than paying someone a million quid a year, based on what they just did last month.

[????]

But bonusing on share prices also has 'issues' *Bob*, cause and effect...most senior management and directors in FTSE companies in more traditional industries get bonused on annual share performance. The easiest way to get a decent share price is increase profits - if you can't do this by innovation/R&D etc (all long term investments) then the easiest way of doing this is cutting costs normally acheived by cutting your less skilled 'domestic ' workforce,by outsourcing to cheaper third world and developing economies and by reducing customer service eg using call centres, reducing cabin staff (BA) and shop staff for self-checkouts (all of the big reatailers) squuezing third party suppliers with huge buying power (Tescos et al again)...etc etc. Im beginning to revisit Marx and will continue to shop down the co-op...see ya in the queue.

[Mick Mac]

I guess a change in bonus culture is needed. But it should be a pre planned and implemented over a period of time.

The problem with the Lib Dem proposal is that currently bankers may have a remuneration package that is paid in 2 parts being "say" 50% salary and 50% bonus.

If you take someone on a 50k salary who gets an average of a 50k bonus each year then that person is going to be limited to ?52,500 under the Lib Dem proposal whilst their previous remuneration was annually 100k.

If the proposal was brought in - that person would negotiate a salary of as close to 100k as possible and forego any bonus.

Remuneration committees in finance houses use the bonus to allow flexibility in how they reward people. Limiting the bonus to a fixed number limits that flexibility. They would just have to pay higher salaries and the ?2,500 limit would achieve nothing.

It would also disadvantage the banks in that their remuneration committees would have no flexibility to be able to reward the right people and not reward poor performers.

So guess what - everyone gets paid their fixed remuneration irrespective of their performance - just what people complain about in the Public sector.

So lets all take a step back in time - thanks Nick Clegg.

I don't work for a bank either. If Vince Cable is an economics genius then fair enough but that does not mean he has a business brain. What does the head economist at Shell do?

[????]

I think Vince Cable is being hailed as a genius because he called the Bust. This was good and he was among a few dissenting voices but he does seem a bit of a one trick pony in that sense not seen him adding much to that one piece of foresight.

[Brendan]

50 year old brandy and ?5K hookers I?d wager.