Pete, An interesting debate! Morally, I have to agree with the EU(must be a first). But this needs to be the start of a wind change with otherfinancial centres following suit. Let’s hope this happens as otherwise Londonwill feel a negative impact. Some hard facts (ok opinions) that relate to the question(perhaps a little tenuously): · Some choose professions that pay huge amounts,sometimes to pretty ordinary staff who just work for the right company and sit on a chair, on the right floor. · Some Banks should have been allowed to fail. · Some Bankers should be serving jail terms and bebarred from the financial sector for life. · Wealth is, and has been, flowing dramatically from West to East. Our standard of living is heading South. · Technology will doom more and more people to unemployment. · We’re all going to die.
I think there is far more 'sharp practice' in the non-financial sector, where there is relatively very little regulation of commercial business and negotiation. The financial sector is one of the most heavily regulated industries, bar none, and there are very strict guidelines on the disclosure of information, pre-trade and post-trade. EVERY trade is reportable in [investment] banking, and many are subject to same-day trade reporting requirements. So to castigate bankers for 'sharp practice' demonstrate significant misunderstanding. Sales people and traders are required to take numerous industry examinations before being allowed to practice. There are very prescriptive manners in which prices are quoted, and sales/traders have little ability deviate from these distribution and RFQ mechanisms. Even the OTC (over-the-counter) market where voice trades are quoted and executed are subject to the same reporting requirements. In the retail banking sector, customer complaints are recorded against individual salesmen, and are submitted to the FSA on a regular (semi-annual) basis. The very few who try to bend the rules are a small handful, and sadly they have also been the demise of many. The biggest issue around the 2008 collapse was an exposure of how poorly the regulators understood the macro impact of when systemic economic failure occurs. Markets are so intertwined that when one domino fell, the entire market collapsed. Since then, regulators and market policies have changed to ensure distribution risk is shared by the market, to minimise the possibility of one domino affecting the entire domino set. So I would suggest that your resentment of bankers is somewhat misplaced. The reality is that almost all workers in the Square Mile are just following the rules and doing their jobs, subject to the rules and regulations that govern the industry, of which there are many.
Our chief weapon is surprise... Surprise and fear...fear and surprise...our two weapons are fear and surprise and ruthless efficiency..our three weapons are.........etc.
Ah, good to know that the City has gotten its house in order - you know, doing the right thing at every juncture, not rewarding failure with enormous bonuses, not requiring the Bank Of England to apply pressure to get banks to lend money to businesses without the threat of negative interest rates, that sort of thing. All is well. Makes you wonder what people are upset about, really.
Silly me, I thought everyone had now accepted as established facts that bankers had mis-sold PPI on a vast scale, mis-sold interest rate swaps on a vast scale, fraudulently manipulated LIBOR for years, falsely misrepresented sub-prime mortgages as good risks, deceitfully bumped savers into low-rate accounts when higher-rates were available, etc etc. Now I see I was mistaken - those facts are just accepted by everybody except you, Sparepants. My apologies.
Think Loz has it right. More control on banks if the shareholder base/ownership is a majority govt owned. The best option fairness wise (although probably unwieldy) would be to make executive/bonus pay something that required shareholder approval via vote at an AGM/EGM etc. To fix bonuses just because, is essentially capping people's motivation to work, and generate revenue for a firm. I'm sure nobody would disagree that bonuses need greater control/transparency/justification etc, but in most cases, performance bonuses are paid as a reflection of performance. If a salesman generates 100,000£ for their firm, and they get a slice of that as a bonus, then I can't see how that is unfair? A trader/salesman/analyst etc at a bank, might generate 10's of millions of pounds in revenue for their firm, so if they are clearly 'adding value' to the company in this way, then it seems logical that they can be incentivised with an amount that is calculated as a direct proportion of their value to the firm in £ terms, regardless of amount. Capping bonuses to salary, instead of ensuring bonuses are an accurate reflection of contribution to a business, is anti competitive, it's anti free markets, and it's probably a further step towards the state we should all be in fear of - the one with huge government spending, and nobody to pay the bills. We are already losing out to other countries due to a backlash against the financial world, and the financial world feeds the business world. Financial workers over here are from all over the world, and they will be from all over the world in New York, Dubai, or wherever they go when we have sufficiently messed up our position as a country that is still slightly relevant in the global marketplace. The government should protect the public, as they failed to do pre the crash by not restricting proliferation of financial derivatives that came from the everyday public's debt and in many other ways. They let everyone load up hugely on borrowing on the assumption higher gearing was ok, because we were getting so 'sophisticated' at managing the risk, oops. UK business (including banks) needs to be free to expand, contract, start and go bust - living by the consequences of their decisions; as long as the man on the street has got reasonable protection, and better education than they do now. Last thing we want to do is curtail people in trying to be more and more successful, however distasteful the idea of a young guy/girl making obscene amounts of money versus us in our normal lives can be. I think there's a distinction between the right decision, and the decision that makes us all the same regardless of our decisions and how we choose to live our lives. phew! Just for the record I don't work at a bank..
ps. clawbacks, or calculating bonus received over a longer period of time than 1 year, would be examples of ensuring longer term stability in finance. I think that is a solid idea and i'm glad to see that is getting adopted on a larger scale in the corporate world.
Hahaha, schoolboy name calling now. I shall bow out from this thread now. Clearly you seem unwilling of giving respect to others' thoughts on a topic unless they agree with you. However, even this last post of yours demonstrates you understand very little about the markets; and you ungracefully discredit the many thousands of otherwise honest hard workers who have also been affected by the few flagrants. Regards -
Hey Pete, I don't think you can consider a retail bank (PPI, subprime), with an investment bank (LIBOR, IRSwaps). Also a company will do whatever it can legally to make a profit, which is how I think it should be. It's the government/regulator's job to make sure that the rules are clear and protect us. If you sign up for an option rate arm mortgage, or one of these products that many people say were mis-sold and caused problems, then the burden is on you to understand what you are getting in to. People need to develop a much much better education of their own financial health I think going forward in the Western world. Personally I don't think people think about the liability they take on when they buy something on credit at least half of the time. Could debate the details of your post further but I suspect I wouldn't be able to change your view much. I don't have a problem with Wayne Rooney being worth £45,000,000, and he kicks a ball around, so why not people operating within our countries economy? I know they aren't on sky sports. Financial markets are a lot more regulated than other industries like construction, retail etc. And so they should be - it's still not enough.
There are 'mis-sellers' in all jobs...you only have to look at the media industry (phone tapping anyone?) or met police (selling info to media or abusing position?), accountants manipulating the books, tradesmen not declaring income to HMR. Or wore still taking money for not doing the work...there is no escape from dishonesty. Just that when the few in the city do it, it such a scale it affects more than the old lady who's roof isn't fixed or alleged speeding motorist who's been stitched up by a copper. Point is, regulation, control and punitive sanction is the way to control the rogues and alas those who created the mess have probably made the most from it. Still don't agree with capping nor think it will make any positive difference whatsoever Bit of a pointless discussion now...anything more to be said?!
Hi Spareparts, if you read my posts on this thread, specifically #88 and #132, I think you will find that we agree on many points. I think Pete does too, but I also think he likes being mischievous!
Discussion is never pointless in my opinion. What I would like to say in addition is that I would really like to get on my bike in March. I live in the sticks, and the state of the roads is a concern. Saw lots of bikers out today though, very encouraging. Also, I have a Daivel, and I love it. Styling, performance, sound, handling, all good. Don't care if folks agree or disagree, I am happy.
Quite a few years ago, a long time prior to the latest economic bust-up, I was informed by my then bank that my overdraft facility was being cancelled and that I needed to discuss with them how I was going to achieve that. At the meeting, I was told that I could convert the overdraft to a loan and I was asked if I wanted PPI. At that time I was a civil servant, so I told the bank that there were no circumstances where I would need PPI, so no thank you. I was covered for illness or death and unemployment was, frankly, just about impossible. The "financial advisor" then told me that there would be no loan without PPI, so can I tell them please, my plans for clearing the overdraft within the next thirty days. I got the loan and the PPI. Not long after that, I was getting a mortgage for my first home. The estate agent of the seller was in the same building as my lender, and both firms, although separate, had names that began with "Halif". I made a confidential inquiry with the lender which somehow, miraculously, became known to the estate agent and thence to the seller - thereupon causing a degree of awkwardness and friction. Imagine my delight. I've yet to see any subsequent change in the moral character of any financial organisation I deal with or hear anything of.
