UPDATE: I’ve just seen the losses from HBOS – almost £11bn! Who knows how much more is lurking in other banks we’re currently propping up. If this carries on then we as a nation will have insufficient resources to support them. The UK’s CDS rates have been on the rise for some time now. We should stop now while we still have a chance to avoid national bankruptcy.
I heard on the news last night that Lloyds were to pay a bonus package of £120m. They said the average bonus is just £1,000. Averages are a nice way of hiding big numbers. If there were 10,000 staff and the bonus pot was £10,000,000 then the average bonus would be £1,000 even if it all went to the one man at the top if the tree. Do they think we are stupid?
Hold on… a bit more detail from the Guardian here.
Apparently the boss of Lloyds feels that if staff have met targets then they should get their bonus. Sorry, just run that past me again. Your bank is effectively saved from failure by massive injection of public money yet staff get a bonus. Is he trying to come across as some sort of hero of the people? Other industries are shedding jobs, in fact other banks are shedding jobs, and you want to pay bonuses? I have nothing against the junior workers but at least they still have jobs because of taxpayer cash. Surely that’s enough.
When banks are under pressure not to pay bonuses or just to reduce the bonus levels what do you think will happen? I expect those at the bottom of the tree – administration and ancillary services staff – will be the ones to suffer. How long before we hear ‘We’ve cut bonuses this year by 50%’ sotto voce ‘by only paying the top people’? After all, they are the ‘skilled’ people they can’t afford to lose. What a disgrace.
And what of the latest idiocy to come from Government – blaming everything on bankers when it was they who put in place the state of affairs that led/allowed the banking behaviour to develop. Despite their greed I do have a little sympathy with the bankers when they say what they did wrong was fail to anticipate the scale of the collapse. They worked within the framework that existed in order to maximise profits. That’s what shareholders expect.
The fact is that government policy (low interest rates for far too long), regulatory conditions (lax rules and not enough policing) and the (entirely natural) greed of bankers led virtually everybody in the banking industry to participate in practices that ultimately led to our current situation. The fact that they didn’t understand many of the financial instruments they were using is the part for which they cannot be excused. They didn’t understand the risks but proceeded with the gamble anyway. Or worse, they understood the risks and thought they could escape with the cash before being rumbled. Who could have predicted they would be rumbled yet still escape with the cash?!
Those at the top walk away with their millions from years of gambling excess while the rest suffer job losses and eroded savings. As usual the blame and the money goes right to the top.
UPDATE: an interesting take on the american solution