I should imagine as 1 in 10 MP have or are involved in banking that they would not be very happy about the capping http://www.telegraph.co.uk/finance/...010-bankers-become-MPs-in-new-Parliament.html
I made a distinction between 'casino' and 'highstreet' banks. There should not be large incentives for being reckless with peoples trading and current account funds.
May I set out my own personal view, if anyone is interested? All banks should be regulated by central institutions, so that propriety, solvency and liquidity are maintained, regardless whether they are in the public or the private sector. The purpose of regulation is to prevent abuses such as theft, fraud, insolvency, and gambling away other peoples' money. Abuses include payment of excessive and unjustified remuneration to directors and employees, to the detriment of customers and shareholders, which it is perfectly proper to limit by regulatory systems. In the modern global world it is no longer possible to impose effective regulation within a single country alone; it is necessary for regulation, to be effective, to be applied in a broad and uniform way across national boundaries. There is no mechanism for achieving this across the whole world as yet, but the best we have is the EU which is the world's largest single market. The recent EU decision was difficult to reach, but now we have it every EU member state should adhere to it. The next priority is to pursue the issue through the G8 and G20 and other institutions to ensure that all the world's significant banking nations join together and adopt similar policies. The UK govt's foolish position as a spoiler could damage this, to the detriment of all. So in short, I support the EU decision. The EU is always in favour of free trade and the creation of talent, as it has demonstrated in this case.
So in the case of highstreet banks, you support the EU decision against the UK govt position, but you are frightened to say so clearly even when challenged to do so. Most amusing, John.
I enjoyed your post, Pete. Nice ideas. One minor flaw but basically very self-consistent. Will the US be signing up to this capping idea before or after ... oh, Satan sets up a skating rink franchise?
I love this bit in the Telegraph quote: "Mark Reckless, who was an economist for Barings ..." I also note that you too do not want to answer the question posed. Which do you support, Ducbird, the EU decision or the UK govt opposition? Politics isn't just about wishful thinking and ideal situations; it's about difficult decisions, choosing between unpalatable options. So come on, what's it to be?
Aren't you on the EU gravy train tho Pete? So is this self interest of keeping you in Ducati parts and leathers, idealology of one world - one state, or because you think its the right action to bring the UK back into the black and resolve the UK economic issues? Do yourpriorities lay with the super state that is the EU or your country (assuming it is) the UK? And I asked for your opinion, funny enough. This is definitely a debate I'd rather have over a few pints in the pub....
I'm in favour of the cap. I'll be even more in favour when the whole world signs up to it. It would be a bit like capping the salaries of footballers. You'll end up with the same talent but cheaper. It is sad when the country's most talented people are lured into banking because of what it pays. Sad but totally understandable. At best, bankers are parasites, in that they don't create real wealth, just skim off a bit of the added value created by others. It has to be good for the country to encourage talented people into real invention and commerce, rather than just pushing paper around and making phone calls. In as much as the bankers went cap in hand to the taxpayers to keep their jobs, it seems only reasonable that the taxpayers, in the form of governments, should call the shots. But I am still ambivalent, as Government shouldn't really interfere in employment contracts in the private sector, unless it is to ensure that people are being paid enough. If shareholders think that bankers are paying themselves too much, the simple thing to do is to sell their banking shares. I did. it is no surprise that the UK Gov't was against the proposal. The UK is run by the City. In fact, the UK has got a good outcome. It hasn't pissed off the bankers, by appearing to support them, but having lost the vote, it will now reap the benefits of a fairer pay structure. Result!
If our membership of the EU means we have influence, but agree that concensus (democracy?) should prevail, then the EU deal should be the one we support. The UK stance that we could lose the best "financial" talent to other countries should be challenged. The 'best talent' screwed up significantly since 2000. Also, for most laymen (and women), when RBS announces £5bn losses, and £600m bonus payments, we are somewhat confused. Can someone offer an explanation of why this might be good news for the taxpayer (who owns 80% of the bank). Bonus should be linked to success.
Much easier to blame the few reckless bankers than the millions of reckless borrowers (sorry, I meant voters) eh Pete? As you say, all about the tough decisions. lets no-one take any responsibility for living recklessly beyond their means for several generations. After all, that's champagne socialism for you. Inter generational accounting anyone? casino banking is an easy scapegoat, it wasn't the "reckless casino" of derivative trading that collapsed your banks, it was the mainstream lending activity of the wholesale banks lending mortgages to borrowers that were not creditworthy or not creditworthy to the levels that were extended, supported by successive governments keen to extend the credit expansion that had fueled the lifestyle to which the 1945 to 1970 generation (voters) had enjoyed which wasn't sustainable any other way...... The rest is sideshow...... Regulation is usually reactive to the last problem rather than addressing the next, 'twas ever thus. i agree with you about the purpose of a bank to society, shame that it has been your governments over the years that have most distorted or utilized their power principally to their own ends......... When it goes wrong, easy to blame the few. When they need to finance a war, monetary expansion etc, any complaints then? There have been some egregious behaviors by bankers, I quite agree, which should be reduced, but short of bringing out racial descriptions of money lenders, this argument couldn't be much more distorted than it is right now. Basel III is similarly poorly thought through. What we need is "good legislation" not just "more regulation".
How do you know they werent a success, and without their efforts it wouldnt have been a 15b loss? And thats the point; the measures are key, not the bonus per se
Even if RBS were 100% state owned, I would not support a cap. Banking, as a profession, is not the civil service, and it operates in a fiercely competitive majority-private-industry. Banking employees are free to choose from a variety of banks - most of which are not majority-state owned. RBS competes with peers in the private sector, and for it to compete it needs to attract the same/better employees who can find jobs with 100% private banks. To attract, it needs to offer equivalent compensation packages. Banking, as an industry, pays more than many other industries and there is a commensurate number of young people who want to work in banking because of the compensation. Many non-bankers deride bankers thinking they can do the job... well, if they think they can and want the pay, then ante up and apply for the job. Pay for play I say.
I'm not in favour of the bonus cap - any company can simply off-shore it's workers to the US, Dubai, India, Isle of Man, etc to get round it if they really need to. Don't think it won't happen because it will and it does already! These are the guys bringing in hundreds of millions of pounds of money into the banks and are worth paying the bonuses to because of the money they generate.
I think I was very clear. In the case of highstreet banks I am aligned with the EU decision and with casino banks I am fully supportive of the UK government.
Chickenfeed. Our government generates billions with the click of a mouse. The point being here, just what is real and what is an illusion ?
This is a very seductive argument Pete. Unfortunately it also chills me to the bone, it brings to mind Winston Churchill's quote regarding democracy being a poor way to run a country, until you look at the alternatives. Maybe we do need a New World Order to prevent a collapse into anarchy, but the Hayek view of Serfdom is the other scary vision that comes to mind.
the logic is good but fatally flawed, to limit bankers bonus's the limit has to apply world wide other wise the banks will just relocate to some third world country that is exempt controls
Will capping bonuses actually lead to a more prosperous time for the great unwashed, or bring in more business, or alter our evil ways? I can't see what good it will do. Please enlighten me.
