‘Take the money and run’ must no longer be an option for bankers

 Iain Macwhirter

WE WILL fight them on the bonuses, we will fight them

on the share options, we shall never surrender.

The British and American governments are standing

four square against France and Germany,

who want to cap banker's remuneration.

How dare this continental anti-capitalist axis

meddle with our bonus system.

Bankers must be allowed to pay themselves

whatever they can get away with

or the entire system will collapse.

Really, this is beyond satire.

What happened to all those promises to end

the risk culture in the City?

To ensure that failure is not rewarded and that

greed should no longer dominate economic life?

At yesterday's G20 summit of finance ministers

in London, a Labour chancellor joined

with Barack Obama's people to block

a modest proposal on bonus reform from

conservative governments in Germany and France.

Yes, that's right.

The supposedly right-wing governments

of Nicolas Sarkozy and Angela Merkel

are proposing curbs on bankers' pay that

our own Labour government and

the great liberal Obama are trying to block.

A face-saving compromise was agreed

at the summit under which bankers will have

to declare what they earn but there will be

no cap on the amounts they can pay themselves.

The fat cats can rest easy - thanks

to Britain and America,

the bonus culture lives on.

How can Barack Obama be supporting this?

Only last January he said that bonuses

were "shameful" and had to be curbed.

He was elected by millions of Americans

who were disgusted with the greed

and irresponsibility of Wall Street titans

such as Dick Fuld of now-defunct Lehman Brothers,

who paid themselves colossal salaries

while destroying not only their own companies

but also the jobs of millions of Americans.

The French finance minister, Christine Legarde,

claims that bonuses were a major cause

of the financial crisis and that it is necessary

to limit remuneration if history isn't to repeat itself.

She is absolutely right, and is only echoing

what the Financial Services Authority has been

saying in this country - and what the prime minister,

Gordon Brown, promised in April.

It is obscene for the bosses of institutions

such as Royal Bank of Scotland to be paying

themselves multi-million pound bonuses

when they have been rescued by hundreds

of billions of taxpayers' money.

Yet, as BBC's Newsnight revealed, RBS has

been handing £2m win-or-lose bonuses to new staff

and its chief executive, Stephen Hester,

is paying himself £9.7m.

All the banks are paying colossal bonuses

again as they coin it in from government subsidies.

It's fine for high-rolling hedge fund chiefs

to award themselves huge salaries - when

they cock up, they go out of business.

But it is moral and economical madness

for largely state-owned retail banks,

who are only in existence because

of public funds, to be playing the same game.

Alistair Darling's argument that it is not worth

trying to cap bonuses because bankers

will get round them is a cop-out - it's like

saying that there is no point in levying

income tax because people will evade it.

So is the argument that we may lost the

"brightest and the best" in the City because

they will move to countries where bonuses

are still paid.

But not if there is concerted international

action they won't - yet it is precisely such action

that the British and American governments

are trying to block.

Anyway, if they want to up sticks and move

to the Cayman Islands, let them - they've

done enough damage already.

Every serious commentator on the

financial crisis, from the FSA chairman,

Lord Turner, to the Financial Times columnist

Martin Wolf, agrees that the paying of excessive

short-term bonuses encouraged excessive risk-taking.

When bankers are engaging in deals that could

make them independently wealthy within

a couple of years they are hardly going

to be bothered about the long-term health

of the financial institution they are working for,

let alone the wider economy.

They take the money and run.

Like Sir Fred Goodwin, who destroyed his bank,

handed the losses to the government

and then walked away with a pension pot of £13m.

But where is the outrage?

It seems only yesterday that the Sun was

attacking "scumbag millionaires"; the Treasury

Select Committee has called for an end

to the bonus culture and even

George Osborne, the shadow chancellor,

called last month for an end to bonuses

in state subsidised banks.

Every opinion poll on the subject has shown

that the voters are disgusted by the bonus culture.

(This has nothing to do with the politics of envy,

let alone Marxism.

What the bankers are doing has nothing

whatsoever to do with private enterprise.

If the free market had been allowed to function,

all of them would be out of a job.)

The bankers have simply become too powerful.

They are deaf to public opinion, beyond

political control, dismissive of regulation

and seemingly immune to any kind

of moral constraint.

There must be outrage - if we allow them

to get away with this, we will only be laying

the ground for the next financial crisis.

It is time for the public's voice to be heard.

Link here

             J-L K.
Procurement Consultant
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