'Should bankers' bonuses be stopped?' poll discussion

edited 24 November 2009 at 12:44PM in Money Saving Polls
72 replies 7.6K views
Former_MSE_LawrenceFormer_MSE_Lawrence Former MSE
975 Posts
edited 24 November 2009 at 12:44PM in Money Saving Polls
Poll ran 16-24 November 2009:

Should bankers' bonuses be stopped?


Legislation’s being mooted to control big bonuses for uber-earners in city investment banks (e.g. not the high street banks – think the likes of Goldman Sachs, JP Morgan & UBS).

Which of these is closest to your view?

A. No rules whatsoever. It’s an international industry, let the market decide - 5% (725 votes)
B. No rules for private sector banks. Yet limit them for govt-rescued ones. - 10% (1560 votes)
C. Reward long term results. Axe bonuses for short term risk-taking - 25% (4031 votes)
D. Cap the amount. Have a panel set out annual limits. - 10% (1528 votes)
E. Stop all big bonuses. The amount simply isn’t right. - 51% (8079 votes)

This vote has now closed, but you can still click 'post reply' to discuss below. Thanks :)

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Replies

  • I went for A but there needs to be something to control excessive risk and limiting bonuses is not it, the mindset is not bonuses for money's sake (after a certain point) it is bonuses as a competition and bragging rights. In this industry you measure yourself against your peers based on money whether that is annual profit, salary bonuses etc.

    I am a banking myself and I would be much more in favour of legislation that controls for instance if the senior executive or a bank, or any other company, destroy the value of the company through excessive risk and found to be criminally neglegent then they are pursued by the law and are liable for lawsuits.

    I'll through this out here to see what others think and I expect to be given a hard time for being a banker.
    The truth behind the PPI numbers...(Post 3712 on the PPI Reclaim thread 3)
    http://forums.moneysavingexpert.com/showpost.html?p=16347785&postcount=3712
  • the financial industry is the major contributor to our economy and stopping all bonuses will simply cause major banks to move abroad. the financial industry is so global now that banks can operate from anywhere in the world and with higher taxes coming to the uk, our position as the global financial centre is already under pressure - stopping bonuses would simply shift our financial power elsewhere.

    furthermore, its not as if the bonus's that bankers earn just sit there - they spend them! if a banker gets a big bonus, he'll buy a new car/house/holiday etc and that helps to keep other people employed, ie the profit that other people earn from bankers' spending will then generate other wealth and jobs and this is how the economy functions efficiently.

    a greater emphasis on bankers being payed bonuses in stocks may prove better as they then have more of an interest to keep their bank profitable and govt owned banks should not be paying excessive bonuses whilst they are still in debt.

    people don't realise that the banking sector affects most people's jobs as without a real industry in the uk any more to export to other countries and generate money, the financial industry is all we rely on. its easy for tabloids to criticise bankers' bonuses but it is these bonuses that are spent to create enough wealth for people to be able to afford items such as newspapers.

    our other major industry is the service sector - construction, retail, hotels, restaurants etc and these all rely on both bankers' bonuses and the attraction of uk banking to other countries who come to london for our expertise. push this sector to another country and we are all in trouble!!!
  • I work for the government and work my hardest and I never get a bonus or even a letter of thank you every year and to top it all off the government are in talks about stopping a pay rise next year for us!
    How dare they!!!
    Why should they get a bonus each year for just going to work and doing their job???? I don't!!!!
  • edited 16 November 2009 at 6:30PM
    RafterRafter Forumite
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    edited 16 November 2009 at 6:30PM
    We need to look to Scandinavian culture on pay and think long and hard whether anyone 'deserves' to earn more than the prime minister (£200k) for speculating with someone elses money, coming up with complex ways of avoiding tax, or charging one group of investors or borrowers more than a fair rate for their financial services requirement.

    While we are at it we should include local authority chief executives, civil servants and BBC executives.

    I have absolutely no problem with 'self made' people or business owners earning very large sums for building up their own businesses, but for employees of companies, banks or government bodies who don't take significant personal risk, their should be a rethink on how much they are really worth.

    Why should quite a large minority of people earn more in a year than the median person might earn in a lifetime for doing something that is of far less social value than say nursing or teaching for example.

    R.

    PS - I read John Varleys piece in the Telegraph defending investment banking and bonus. Whilst corporate banking is a valuable part of ensuring that money and capital gets to the right place, there is absolutely no reason why it has to cost so much. Similarly retail banking can be charged at a fair price to all without overpriced insurance or high charges just so a few 100 very clever and highly educated directors and senior managers can fleece customers for a few extra £1's each so they can pay themselves £millions in salary and bonus'!
    Smile :), it makes people wonder what you have been up to.
  • jmb2808 wrote: »
    I work for the government and work my hardest and I never get a bonus or even a letter of thank you every year and to top it all off the government are in talks about stopping a pay rise next year for us!
    How dare they!!!
    Why should they get a bonus each year for just going to work and doing their job???? I don't!!!!

    Part of the reason is that you trade off salary/bonus etc for perks.
    How many days holiday do you get a year? I get 25 days leave + 8 statuatory holidays.
    Whats your pension contribution and years to get full pension etc? I get 5% matched contribution, bare in mind final salary pensions cost between 15% and 20% of salary to fund.
    How many unpaid hours of overtime do you do a week? I am contracted to do 35 and regularly do 60+ and have never had 1p in overtime since I left university in 2001.
    Public sector also pay low skilled roles above what would be normal market rate. etc etc.

    As soon as we can eradicate the terrible use of resources and massive inefficiencies in the public sector then I am happy for there to be bonuses paid. The current focus on banks and bonuses just highlights the socialist mess of this country where by a reasonably small percentage of the population support the entire country and are then demonised for earning a good salary/bonus etc.

    I for one am of the opinion if things do not change I will not be in the UK in 5 years time and that is a similar mentality to many highly skilled and driven people of my generation.
    The truth behind the PPI numbers...(Post 3712 on the PPI Reclaim thread 3)
    http://forums.moneysavingexpert.com/showpost.html?p=16347785&postcount=3712
  • Lloyd Blankfein wonderfully defended the bonuses due to be paid to Goldman Sachs staff only last week. Difficult to argue with this IMHO.

    We seem to have forgotten that Shareholders vote on Directors' remuneration - even the MSE poll didn't allow the option to allow Shareholders to decide!
    Warning ..... I'm a peri-menopausal axe-wielding maniac ;)
  • the financial industry is the major contributor to our economy and stopping all bonuses will simply cause major banks to move abroad. the financial industry is so global now that banks can operate from anywhere in the world and with higher taxes coming to the uk, our position as the global financial centre is already under pressure - stopping bonuses would simply shift our financial power elsewhere.

    furthermore, its not as if the bonus's that bankers earn just sit there - they spend them! if a banker gets a big bonus, he'll buy a new car/house/holiday etc and that helps to keep other people employed, ie the profit that other people earn from bankers' spending will then generate other wealth and jobs and this is how the economy functions efficiently.

    a greater emphasis on bankers being payed bonuses in stocks may prove better as they then have more of an interest to keep their bank profitable and govt owned banks should not be paying excessive bonuses whilst they are still in debt.

    people don't realise that the banking sector affects most people's jobs as without a real industry in the uk any more to export to other countries and generate money, the financial industry is all we rely on. its easy for tabloids to criticise bankers' bonuses but it is these bonuses that are spent to create enough wealth for people to be able to afford items such as newspapers.

    our other major industry is the service sector - construction, retail, hotels, restaurants etc and these all rely on both bankers' bonuses and the attraction of uk banking to other countries who come to london for our expertise. push this sector to another country and we are all in trouble!!!
    O dear what a drama. If some banks or bankers move abroad it's not going to be the end of the world - apparently if a monkey tapped away on a keyboard for an infinite amount of time, complete works of Shakespeare would be reproduced, almost surely :p

    That said I voted A., because bonus is based on performance and in the event of banking crisis or bail out then presumably their performance would be found questionable enough to earn bonus - I fail to understand need for rules when they have fiduciary obligations to the enterprise they serve.

    The act that needs controlling is of the greedy among the consumers who want to borrow money from banks, which they cannot actually afford to. There are many people who love to live off the state and/or off others, utterly shamelessly, borrowing several times more than their salary for the ownership and enjoyment of things that bear little reflection of who they are, rather of who they want to be. When they don't get what they seek out or fail to fulfil contractual obligations, they get jealous and make the business community that churn the wealth that they yearn for, the scapegoats of every blessed crisis and try to cripple it. I'd say refuse custom to those who cannot afford to, as a start and then work upwards in the hierarchy to cast the blame.
  • You can't tell everybody what to do all the time.
    All forms of commerce are speculation, buying at one price and selling at a higher one. This has been the foundation of Britsh prosperity for centuries. The private sector must be allowed to be free and the public sector benefits from the profits by taxation which should be graduated; the more profit/salary the higher the rate of tax.
    However, if the government owns a bank then it has an absolute right to install any conditions it likes but we have seen in the past what a mess this produces.
    There probably is no correct answer and we must all just muddle through as always
    The only thing that is constant is change.
  • About a week ago I was walking down the street with a few friends. All of a sudden this sharply dressed young man came running up to us.
    "Hi guys, I need your help", he said in a panicked rush.
    "What's going ?" we asked.
    The young man replied that he had just lost a lot of money in the casino across the street.
    "I'm usually really good, I've made tons of money in the passed. Can you guys help? I just need £1000 and I can win the rest back. I really need your help, because it wasn't my money in the first place."
    My friends and I weren't keen, but unfortunately for us the government had decided we have to help people like this. We had a whip round and each put in about £100 to make up the £1000 that was needed.
    The young man was really happy and off he went into the casino.

    Yesterday, we bumped into the young man again. This time he was looking very happy, there was a spring in his step and a smug grin as he recognized us and came to share his good news.
    "Guys, Guess What ?"
    "What ?"
    "You remember that money you gave me ? well I got really lucky in the casino. I went to the black jack table and after winning a few hands I had £10,000. Then I went to the roulette and made £100,000. I was feeling pretty lucky so entered a poker tournament and won £1 Million." He informed us excitedly.
    "Wow, well done. What are you doing now ? Can we have our £1000 back ?" we asked.
    "Erm...well I've given some of the money back to the people it belonged to originally, and well I've decided to keep the rest. I'm off to buy a new house, a helicopter and a Ferrari...
    ...So, you guys will just have to wait." the young man said almost apologetically.
    "Hey !, wait a minute ! you wouldn't have any of that if it wasn't for us !"
  • brewerdavebrewerdave Forumite
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    Forumite
    Haven't got a problem with bonuses per se, as long as they are clearly based on an individual's and overall Company performance. ie in a bad year NOONE gets one. Also the higher the value of the bonus, the more of it should be paid as shares or on a deferred basis. Guaranteed bonuses - what the h**l are they??:eek:
    PS I voted option C
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