EU Bankers' Bonus Cap

I don't support either option.........They are seriously flawed and not solutions.

Why?

1) Because the UK has one of the largest banking industries and capping bonuses will lead to larger salaries, thus uncreasing base costs for the banks, which will then affect the population.....

and/or 2) Bankers can get jobs not just in the UK or the EU, therefore they can move their employment elsewhere, thus reducing the massive tax take for the UK revenue.....

then 3) To not cap the bonuses, leaves the banks and the bankers to gamble high stakes with 'our' money; make massive bonuses, while making massive losses (as has just been reported)....something which is alien to me if the bonuses are supposed to be performance based........Since when does a massive bonus in the face of losses equal 'performance'?

AL

 

I am not for the bonus cap. Its simple greed is good. It makes the world go round. We are all guilty of worshipping at the alter of money in pursuit of our nice shiny things. We criticise the so called fat cats but really people in glass houses should not throw stones. Just look at some of the threads on the forum for proof. The watches thread for starters. Oh and just one last thing. The bankers get a kick in for taking bonuses however you never hear about shareholders and the pay outs they get. Its selective vilification. (Pete will correct if I have used that word in the wrong context)

 

The thing with the bonus cap is that it is not a salary cap. You can still earn millions if you want to. But there is a strong difference. Suppose you have a banker - we'll call him Nigel - and he is a star turn. You think he's a massive talent and will earn your bank squillions. So you take him on at a salary of say £2m. if he does really well for you, he can potentially earn another couple of million. If he turns out to be rubbish, well, you've rather lost the £2m you paid him as salary. But Nigel will not be so encouraged to take monster risks or casino style decisions. That's because he is already assured of a comfortable wedge and doesn't need to gamble to make sure of a banker- style salary.

Of course, if you don't think Nigel really is worth £2m up front, you won't pay him. It depends on your view of banking staff. If you have read Taleb's "Fooled by Randomness" (and if you haven't, you should, if you want to join this debate), you can see that banks might take on 20 staff for not much pay, reward those who made the correct gambling decisions massively with monster bonuses, and boot out the other traders who blow up. It looks like they are backing the winners, but not really. They are just backing the lucky. If they are serious about rewarding talent, they will have no problem coming up with big base salaries, confident that these people really do deliver value.

Taleb's view (and he's a banker and a mathematician, so he should know) is that success in banking is more a question of randomness and luck than anything else. If they were all so gifted and skilled, how did the financial crisis ever happen? Suppose in the nuclear industry, you knew that generally things would go swimmingly, but that every decade or so there'd be a core meltdown. How comfortable would people be with nuclear power then, eh? Banking looks a lot like that scenario.

 

Whether it is salary or bonus, it is still 'pay'.

I find it obscene that people like the bankers can earn huge sums of 'pay' incuding bonuses when their companies are making a loss, yet at the bottom end of the scale there are millions of people just about scraping a living; with others being forced to work for no pay and losing benefits..........(The people that are rightly on benefits, that is.........not the scroungers in society).

AL

 

I find it interesting that nobody has brought footballers into the equation yet?

Take the example of Manchester City; they lost £97.9m in 2011 and yet they still paid Carlos Tevez £200,000 A WEEK as his base salary, excluding bonuses. I don't see anyone shouting to get the salaries and bonuses of the kick-ballers capped when their clubs make a loss?

As for bonuses being paid when a company makes a loss, some people obviously don't understand how large multi-national businesses are run. There can be many departments that make profit, all dragged down by one department which makes a loss and wipes out all the profit. How can you justify NOT paying a bonus to all those people that made profits for the company? That is their incentive to make profit for the company be it in share dealing, swaps, derivitives, making motorcycles or selling widgets. If you sweated your ass off for a year, putting in 14 hours shifts, and made a profit for the company you worked for only to be told that you were not getting a bonus because of someone else's mistakes, how would you honestly feel? Do you think the company would want to keep you or the guy that made the losses? If so, how do you think they would keep you?

 

I thought that's what I already said at post 42.

AL

 

You seem to be advocating the abolition of performance based pay which extends far beyond that of just banking. In fact, most commercial industries have a strong element of performance based pay. Even councils and the Police have quotas because of... performance based pay.

Banking is the same as ANY commercial business in that calculated risks are taken towards achieving a profit. The larger the risk, the larger the commercial reward. The commercial reward and profitability of banks is significant - generally only matched by the largest technology and blue chip industrials. And in those industries, salaries and compensation is just as high - if not even higher - than in banking. eg, technology/oil/gas/manufacturing/etc.

The general problem is that Joe Bloggs on the street in the UK has no comprehension or understanding of the stakes involved for a typical [investment] banker (which is where the likes of bankers criticisms are). Local business (eg, the greengrocer or postman) simply does not have the same challenges/wagers/personal investment/dailyconsiderations to make in their job that a senior manager at a multinational corporate does (industrial or banking). If the greengrocer wants to be responsible for a multimillion/multibillion pound budget, then no doubt the greengrocer will demand commensurate compensation for doing so. If, however, he only wants to be responsible for the greengrocer budget, then he can be happy on the greengrocer salary. As I said, pay for play.

 

Private companies should be able to make whatever payments they want, it is not for states to intervene in employees salaries, they phuque up enough in the public sector. Doesnt matter if it is a bank, a football club or a sweet shop. The states should individually set salaries on their own public sectors, doesnt feel right the Eu imposing caps Europe wide on anyones bonus, the next step will be they impose caps on basic salaries.We are not all the same.
Any individuals receiving any bonus will pay tax on it, the bigger the bonus the more tax and the bigger the bonus the more the individual will have to spend on meals, holidays, Ducatis etc thereby stimulating the economy on a small and local basis so really the state should be happy when bonuses are paid.
Shall we move on to scrapping all taxes on low income workers and reducing them as you go up the pay scale next? That would really give people an incentive to work and do well . It would reduce the number of people receiving welfare payments such as income support too.

 

Thanks for putting all that down sparepart. Its all the things I wanted to say and agree with but could not be bothered to write.

 

I thought we had a capitalist economy rather than a communist one?

 

Maybe the shareholders, investors, fans, footballers and other staff out of a job?

 

not the other side of 25 you wont! I was made redundant applied for said job and was told that people in their mid thirties were at the tail end of their careers!

How condescending. How dare you try and condone this action. No blue chip company has ever plunged a nation into the shite we're in now because of it's excess, and please correct me if I'm wrong but no corporation or multinational has ever fucked up on a global affecting scale. The global banking industry has a moral duty to cap itself until the global economic crisis is under control and a distant memory. It is after all, a mess that they perpetrated and the green grocer pleb of whom you speak is footing the bill for this involuntarily.

I like everyone in this country apparently am to pay over twenty grand in my lifetime as my share to bail these incandescent exalted cream of society out. I wasn't asked, I wasn't consulted nor was I given the choice. If I had been told that my mortgage / personal unsecured credit or tax would be relieved to the tune of twenty grand, I could have understand it. As one of the thick turds who deserves nothing less than the greengrocer salary in your eyes, I can compute such a simple calculation. As it is, I cannot see how, where and when I will get this twenty grand back - perhaps you as a man who understands the greater meta of this might like to enlighten me and my greengrocer peers in more plebeian terms.

I understand your argument, but that is still not justification enough for those who have lost out and had to suffer privation due to the actions of these institutions, especially as a more of their scandalous behaviour emerges day by day, and however sensational only serves to enrage the mob who by default have to chew on gristle because they (the bankers) must have their prime beef.

If a corporate giant wants to pay their directors millions of pounds in bonuses, I don't care. If their sales and marketing teams feel that they are worth twice what they earn as a bonus, I don't care. When those same people cause me deprivation and hardship, and take the money from my pocket against my will, without my choice, record losses and then use my money to pay themselves what they in their arrogance think or believe they are worth, then I do care.

So I stand by my initial thought, until this crisis is averted, they have a duty to accept that if they have to be kicked in the bollocks like the rest of us, that's the way it is. They can shop at marks instead of fortnums, and slum it in an aston instead of a pagani - but as far as I'm concerned they played... and now they can fucking pay.

Yours Sincerely

The fuckwit grocer.

are you related to Royum?

 

Sev, I was moved by what you said there.