"London is now the worst place in the world to do business..." - The Daily Mail

CLAPTON

pqrdef wrote: »

It's not just what they've done. It's the conviction that they haven't changed and will do it again.

The government is planning a draconian programme of reform and regulation to try to force the bankers to run the banks properly. The bankers are going all out to prevent and circumvent this. Who do we think will win?

is that the draconic plan that saying things will have to change by 2020?

drc

property.advert wrote: »

Did people get it wrong ? sure they did. As for bonuses, would you be happy to have a significant part of your salary held back until the end of the year and then perhaps not receive it all ? or have it paid in share options you could not exercise for years ?

I thought that most companies pay on performance rather than a guaranteed payout each year. If the payout is in company shares and is based on performance then there is a) more incentive for the employee to do a good job and b) he/she has more vested interested and allegiance to the specific company they work for as it benefits them when the share value of the company goes up. Look at the success of John Lewis. It works precisely because the employees are shareholders and they have a vested interest in doing a good job and seeing the company share price rise.

I never understood why bankers were being rewarded for bad work. Obviously they are more likely to act recklessly if they are rewarded whether they do a good job or a bad job as it doesn't affect their pay.

Degenerate

The_White_Horse wrote: »

all it would take is for one of the big boys to leave the UK and the Govt would !!!! their little pants, because they know how important banking and financial services are.

This isn't going to happen because some fat cats got publicly vilified until they gave up their ill-advised bonuses. If they leave, they'll do it because of genuine changes in the regulatory or tax regimes that make some other place more attractive to do business. Then they'll up sticks and leave without a moments thought, regardless of whether they are being vilified or deified at that moment in time.

Hysterical wailing like that Daily Mail article means nothing. They have no loyalty to this country and the country owes them no loyalty back. It's purely business.

homelessskilledworker

pqrdef wrote: »

It's not just what they've done. It's the conviction that they haven't changed and will do it again.

The government is planning a draconian programme of reform and regulation to try to force the bankers to run the banks properly. The bankers are going all out to prevent and circumvent this. Who do we think will win?

The Banks caused a situation where too many people were loaned money that they were always going to struggle to pay back, and today they are now playing the "responsible parent" and rationing lending and mortgages.

So you now have one group who are the walking dead, terrified that one day interest rates WILL rise, and another group totally priced out of the property market who can also cannot get a mortgage.

Something will give, the sooner these bankers leave our shores the better, I am sure there will be pain like a alcholic coming off the booze, but the future in the long term will be far better without these worms.

property.advert

Can people who want to bash bankers please grasp this simple fact: investment banking is where the money and bonuses are, not in retail banking (outside the very top), which is what you all experience and where you were miss sold your loan insurance, dodgy pension, crap mortgage, poor performing investment product, low interest paying account, high overdraft charging account etc.

The fact that Joe Public borrowed too much and failed to pay it back (just where do people take responsibility for their own actions here ?) was largely their own fault and secondly the fault of the retail bank. The investment bank side only got involved to repackage these loans lent to delinquent borrowers, the same delinquent borrowers who are now complaining by the way. The demand for cheap money meant that the investment bank created products to facilitate it.

The investment banks did get it wrong. They bought insurance from people who reinsured and at the end of the day the guy at the bottom couldn't pay and the house of cards fell down. However, it only fell down because some ar5ehole didn't pay back what he had borrowed !

I called into question the booking of a multi million profit on a deal without full provisioning against it. However, every model in existence at that time and all the combined processing power could not get near the amount we had reserved and held back. Like all science, it is a bit of try and see and then adapt.

So what if bankers get paid a lot ? Jealousy will eat you up and yet you don't even know who it is exactly you should be jealous of or indeed what for !

julieq

In point of fact, Joe Public in the UK is paying his borrowing back by and large. The idea that there are widespread defaults is an urban myth, as is the idea that there are millions on the edge and terrified of rate increases. The so called credit crunch was caused because banks were holding so called toxic debt - very poor quality sub prime debt sourced from the US - as nominally high quality capital assets on their balance sheet mixed up with all sorts of other borrowing of better quality. When this unwound it was such a complex mixture that it was very difficult to assess the level to which banks were solvent under existing rules which is why bailouts - loans and guarantees were used to stabilise the situation while things were sorted out via recapitalisation and more stringent capitalisation requirements.

And they're not playing the "responsible parent", they're mandated to recapitalise with higher proportions of high quality assets. Banks ultimately make money from lending, as do savers incidentally, and they'd like to do more of it to expand, but with the limited money they have available to lend they can create higher quality balance sheet assets by targetting lending to specific sectors. That will change over time, and probably quicker than many expect.

Banker bashing is ridiculous. They happen to be convenient targets for both politicians and public opinion, because it distracts attention away from the problems caused by an ever expanding state and entitlement culture. It's like blaming a baker for obesity. Ultimately we'll always have banks, but we may not have the 12% of total tax take they generate (down from 14% and dropping) because at some point if the government and court of public opinion is making their businesses impossible to manage they will go somewhere else.

vivatifosi

macaque wrote: »

We haven't had healthy banking sector for a long time. The banks are double dipping, overcharging and misselling to customers everywhere you turn. Small businesses survive in spite of banks, not because of them. When they do use them they get hit with userous charges. Banks are also behind the destruction of many of our best companies. These activities go under the guise of restructuring or take overs and they do it until the company has been completely stripped.

We definitely need financial services but our need for conventional banks is dwindling. The one thing that banks are brilliant at is self promotion and lobbying.

But that's the crux of my point too, which was quoted out of context. We need a healthy financial services sector in order to make sensible loans to businesses, loan sensibly on houses, provide quality banking services to the population and so on. No amount of moaning about one bloke and his bonus is going to achieve this.

What we do need is sensible reform so that the sector is fit for purpose; regulatory bodies - both national and international - that are up to the task of regulating the system; politicians that support meaningful change; and the bringing to justice of those that have played a big part in breaking the system through their own actions, such as Fred Goodwin.

It may well be that larger bonuses should be reformed and I'd certainly argue that they should have long term ramifications; such as being taken in shares and not withdrawn for a minimum period. However sending out lynch a banker sentiments and a message that we are not welcoming banking business are unhelpful.

CLAPTON

julieq wrote: »

In point of fact, Joe Public in the UK is paying his borrowing back by and large. The idea that there are widespread defaults is an urban myth, as is the idea that there are millions on the edge and terrified of rate increases. The so called credit crunch was caused because banks were holding so called toxic debt - very poor quality sub prime debt sourced from the US - as nominally high quality capital assets on their balance sheet mixed up with all sorts of other borrowing of better quality. When this unwound it was such a complex mixture that it was very difficult to assess the level to which banks were solvent under existing rules which is why bailouts - loans and guarantees were used to stabilise the situation while things were sorted out via recapitalisation and more stringent capitalisation requirements.

And they're not playing the "responsible parent", they're mandated to recapitalise with higher proportions of high quality assets. Banks ultimately make money from lending, as do savers incidentally, and they'd like to do more of it to expand, but with the limited money they have available to lend they can create higher quality balance sheet assets by targetting lending to specific sectors. That will change over time, and probably quicker than many expect.

Banker bashing is ridiculous. They happen to be convenient targets for both politicians and public opinion, because it distracts attention away from the problems caused by an ever expanding state and entitlement culture. It's like blaming a baker for obesity. Ultimately we'll always have banks, but we may not have the 12% of total tax take they generate (down from 14% and dropping) because at some point if the government and court of public opinion is making their businesses impossible to manage they will go somewhere else.

whilst it is true that most of the (retail) bad debts were in US, much of the commercial lending in the UK has defaulted.

However, it was the bankers decisions to buy securised debts and to reduce their capital ratios to very low levels in the search for even higher profits and prestige.
They chose to abandon 'simple' banking and this caused them to become insolvent.

So yes, the bankers were to blame for the crash.

We need to break up the banks into smaller components so that if they fail they fail.

CLAPTON

vivatifosi wrote: »

It may well be that larger bonuses should be reformed and I'd certainly argue that they should have long term ramifications; such as being taken in shares and not withdrawn for a minimum period. However sending out lynch a banker sentiments and a message that we are not welcoming banking business are unhelpful.

Hester's bonus was to be paid in shares that couldn't be cashed in until 2014. Maybe not long term exactly but not a load of immediate cash either.

sabretoothtigger

Interesting, 2 years is quite short term but I agree it is different from cash. 5 or 10 years would be more like it. Its a simple solution that allows for capitalist rewards but also responsibility towards actual performance long term.

His millionaire pay really doesnt matter at all, it is a fallacy to object when screwing up his job would lose this country billions. Use the bonus conditions to secure the more important factor


If Goodwin had been paid in 5 or 10yr shares instead of cash. His pension would be 20k a year now instead of the 500k we are paying him