Killing the goose that lays the golden eggs...in London

Jim_B_3

Wild_Rover wrote: »

And why for banks and not insurance? Why banks and not food distribution? Why banks and not lawyers? This is dangerous, dangerous territory.

It is. How about the idea that if an industry has demonstrated that it cannot be trusted and has caused enormous damage, it should be subject to increased regulation?

[Deleted User]

Jim_B wrote: »

It is. How about the idea that if an industry has demonstrated that it cannot be trusted and has caused enormous damage, it should be subject to increased regulation?

Too far - what this proposal is about is pay, not regulation of bad business practices, The problem was not how well the bankers performed their duties, it was that the duties they were allowed to perform were detrimental to the welfare of the banks and the wider economy. So regulate the activities, don't regulate the reward. Posters elsewhere have comments on the loopholes/unintended consequences of the proposal. If employees, fail, they'll get fired or get lower bonuses; if the management fails, cut their bonuses or fire them. Don't say to someone that it doesn't matter how well they do, or how far they exceed their targets they'll only get the same as someone who doesn't do as well as them.

For example, how much would it be worth to the Treasury if a bonus structure is in place that returns RBS share values to 20% above what they cost the Government? What about if the sale price is reached in 2 years instead of 5? Or 10?

Companies pay tax on profits. Rest assured that the rest of the world will be hoping Europe gets away with this proposal. Businesses, therefore employment and tax receipts will migrate to the most attractive environment.

WR

Jim_B_3

What if excessive pay based on short-term results that ultimately encourages the business to operate in a way that causes long-term harm is the bad business practice?

I wouldn't care at all about being fired in year ten when my ridiculous risk-taking finally caught up with me, because I'd have been massively well rewarded in the previous nine years.

[Deleted User]

Jim_B wrote: »

What if excessive pay based on short-term results that ultimately encourages the business to operate in a way that causes long-term harm is the bad business practice?

I wouldn't care at all about being fired in year ten when my ridiculous risk-taking finally caught up with me, because I'd have been massively well rewarded in the previous nine years.

It's clear that we are going to disagree! I am in favour of regulation of the bad practices that led to the crisis. One could equally argue that all sorts of industries have "failed us" - from food, through construction, energy, railways, even football with its match fixing allegations - but nobody - nobody - that I have heard of has ever suggested that the earnings of participants in these industries should be interfered with by "Europe"!

Have to go now!

All the best and thanks for an enjoyable exchange - so different from some of the (worse than me:eek:) ranters on the forum!

WR

Jim_B_3

Fair enough; I think it sums up that I contend the way they're paid is the bad business practice (or at least a significant aspect of it), and whilst you may (or may not) agree with that, you contend that the way they are paid should not be regulated.

Thrugelmir

Generali wrote: »

Much of the banking industry in much of the world continues to make huge profits.

Maybe the globalisation of banking is over. We are now witnessing the reverse.

shortchanged_2

Spirit wrote: »

I think you miss the point. That if London is an unattractive place for Bankers, Banks will make strategic decisions about where they do most of their business...and therefore where they need people. Specialist banking staff will relocate if they are talented so will not be unemployed, the lower down the food chain jobs will just go.

On the other hand it is perhaps another stage in economic evolution. It is a bit like UK not being an attractive place to manufacture or mine coal so we have few manufacturing jobs or coal mines. Perhaps we can replace banking jobs with more call centre, retail and leisure jobs.

Would it be such a bad thing not to have an economy so reliant on the financial sector?

grizzly1911

shortchanged wrote: »

Would it be such a bad thing not to have an economy so reliant on the financial sector?

Arguably we wouldn't have much of an economy.

Break out the hairshirts.

Thrugelmir

Jim_B wrote: »

It is. How about the idea that if an industry has demonstrated that it cannot be trusted and has caused enormous damage, it should be subject to increased regulation?

Political regulation?

Dangerous.

EU can't even get its own accounts signed off..........

chewmylegoff

A bonus tax imposed by the local government seems more sensible than trying to legislate to ban bonuses. Not that I think a bonus tax is particularly necessary - bonuses are already taxed at 50% and incur employers NI as well. They are a good money spinner for the govt. Banning bonus payments above a certain level will just result in silly practices to get around the law.


Happy for the EU to enact this. We'll veto as with Tobin Tax and thus it will just cement London's position as the primary financial centre in the EU.