Don’t let’s be beastly to the bankers

Charles Flaccidwifger

The bankers were a nice convenient scapegoat for Gordon Brown's excesses and the present government have continued the position in both respects.

Boulay

What the hell is radio 4 doing in taking such a partisan slant.

When the today presenters start getting paid in line with their performance then maybe they can start a moral campaign. Until then the BBC should stick to reporting facts and stop prosthelityzing their liberal idealist (or in other words "no experience of business and the real world") religion.

Trapped

Of course. Blowing the dog whistle would not have been needed has Labour and the Conservatives collectively pulled their finger out when this all went down and forcibly split retail banking off, and let the commercial banking sides of these companies implode. Yes, it would have cause economic chaos for a while, yes, it would have been temporarily messy, but it would have cut the banks down to size quickly and efficiently and we'd have a better system coming from the ashes.

Julian F

Is it right to conflate under "banker-bashing" the separate matters of bonuses for bankers, Railtrack directors' proposed bonuses and the decision to remove Goodwin's knighthood?

I welcome the idea of reversing some of the ridiculous honours dished out in the Labour years. Perhaps it could be extended to the public sector. Diplomats honoured for their work with Gaddafi spring to mind. And I can't see how removing Goodwin's undeserved gong harms the nation's wider interests.

Why should Railtrack (Network Rail?) directors receive bonuses? I don't use the railways much but I don't see any evidence of outstanding work to justify bonuses.

I completely agree that government should stay out of private sector arrangements, including bankers bonuses, but Network Rail is a state-owned company, isn't it? And the honours system is government run.

I can't see why you link the three things?

Peter From Maidstone

Cameron is a natural leader? Hmmmm. Fraser is really desperate fir a job in a rather creepy manner.

David DP

What's the proportion of the country's wealth accounted for by the top one percent? Surely that's the more relevant figure?

David Cockerham

Surely the only people whose opinion matters on this are the shareholders of the banks. It's their money the banks' top brass are paying themselves. Either they are shafting their shareholders, in which case their shareholders should get wise, get together and shaft them back; or they are not shafting them but acting in their best interests, in which case we and the politicians should all shut up about it. Maybe what's needed is a special G20 conference at which the world's top politicians and the world's top big bank shareholders could discuss whether the shareholders are being shafted and if so what they and the G20's leaders should do together to get the shafting stopped.

Jayu

"Number 10 sometimes behaves as if it has hired an opinion pollster as its chief strategist,..."

Call yourself a political commentator? Did you not hear of Andrew Cooper of Populus being made Downing Street director of strategy?

Austin Barry

The cabal which has ruined the country is the politicians, not the bankers, but the catatonic electorate, suffused with the banality of Question Time righteousness, just doesn’t see it or get it.

Bob Wachovski

"and forcibly split retail banking off, and let the commercial banking sides of these companies implode."

Pray tell, Mr. Expert-in-banking, what was the commercial arm of Northern Rock? Or Bradford and Bingley? Or HBOS?

Answer: they were retail banks and didn't have investment banking arms. So much for your clever, insightful opinion.

Herbert Thornton

1. I do not see how it can be reasonable to assume that all bonus payments to bankers represent the giving of money in return for receiving good value. When in such circumstances there is a gross disparity in values exchanged, is there not a question of whether the exchange is unconscionable?

The outcry against the bonus amounts recently paid to bankers may, as Fraser says, not be a new phenomenon, but is that the point? A great many people would say that there is at least a prima facie case for saying some of the bonus payments do represent a gross and unconscionable disparity in value exchanged.

The first question of course is whether the general opinion is right - has there been a gross and unconscionable disparity in the values exchanged?

Herbert Thornton

2. But the most important and difficult problem of all is how should the presence of gross disparity to the point of unconscionability be measured and who is capable - and can be trusted - to make the assessment of whether it existed or not? One question to be asked, for example would be - has the banker been negligent?

The task may no doubt be difficult, but can it be right to shrug our shoulders and say that the problem is too difficult for anyone to reach a fair conclusion and that it should therefore be ignored?

In2minds

"Justine Greening has just told Sunday Politics that she’ll vote against Railtrack directors’ bonus"

So what will she do with the money then, build another six inches of track for the HS2? The woman is an idiot.

Don Benson

David DP: ‘What's the proportion of the country's wealth accounted for by the top one percent? Surely that's the more relevant figure?’

Exactly! Real wealth is created by factory and farm workers, miners and fishermen etc who get up in the morning and actually make or harvest things. A small proportion of the top one percent may well facilitate this process but I would guess that most of them are just clever with money on their own behalf – not very laudable, especially when it’s at the expense of everyone else.

Frank P

Austin Barry

Frank P

"The cabal which has ruined the country is the politicians, not the bankers, but the catatonic electorate, suffused with the banality of Question Time righteousness, just doesn’t see it or get it."

insert after "politicians" - "and the prissy little press poodles from the Westminster Village who feed their egos -
the mincing paeans of metrosexual narcissism.'

Thanks Andy - good find that!

TrevorsDen

bash a banker happened because the press whipped it up (clearly egged on by the BBC it seems). So point your barbs against your fellows Mr nelson.

The bankers responsible for the crash certainly do deserve opprobrium, but I can see little insight into the knee jerk of the current reactions.

Heartless Curmudgeon

. . . a natural leader like Cameron . . .

Fraser!!!! - you OK me old love - OR WELL OILED?

Peewit

jayu - spot on. this Nelson is blind in both his eyes.

http://conservativehome.blogs.com/thetorydiary/2011/02/cameron-likely-to-appoint-über-moderniser-as-his-head-of-strategy.html

Maggie

I can't bear to believe that Cameron or the Conservatives have found common cause with the banker hatred of UKUncut and the Occupy campers. I can only tell myself that it must be the vengeful barbarians of the Liberal Democrat party in pursuit of a vote or two who've pushed them into it. After all, at the height of the anti-Hester campaign, it was Lord Oakshott who was jumping up and down and flouncing around on our TV screens bursting with righteous Huhne-like indignation.

Fergus Pickering

Come, come, Fraser. We haven't even started. We could always do a Gaddafi on the fellow. And then there's Tony Blair...

Frank P

Peewit

"This Nelson is blind in both eyes"

Aye and he appears to keep his telescope where the sun will never shine, too.

Bob

(1) All the BBC was doing was providing a hashtag to collect answers to a perfectly legitimate question.
(2) Yes, as someone else observed, quoting the 28% figure means nothing if we don't know their share of total wealth. And many of the super-rich, I suspect, avoid more tax in a year than most of us will pay in a lifetime.

Prodicus

The BBC started this hash tag? The BBC? What? *That* BBC?

Put that tumbrel into reverse. There's some one at Broadcasting House who needs a very severe talking-to.

libertarian

Dear Don Benson,

One wonders then why these vast wealth producing workers don't own their own businesses? I guess you also never noticed that large numbers of factories producing cars etc don't actually have many people in the way of "workers" any more being as that lots of the wealth is now produced by robots!

Who do you think it is exactly that own these mines, factories, service businesses etc? EVERYONE who works for them from the MD down is a worker.

If you are too dim to work out actually what it takes to make income from products and services I suggest you get a job in government you'll feel at home there.

Colin Cumner

Perhaps the reason for all this 'bank bashing' is down to the fact that people feel they are being asked to embrace the policy of austerity in order to get the economy back on track while those at the top of the tree seem to be sacrificiing nothing. Indeed, some seem to be becoming even wealthier at a time when we are told the national purse is full of holes! Surely no one begrudges the CEO of a profitable, well-run company from receiving a bonus for his efforts but it's when glaring failure is rewarded that the grumbling begins - and rightly so.

Trapped

@ Bob Wachovski

Clearly you've never heard of asset 'vehicles', such as Granite and so on. Most of the really dodgy stuff happens under the surface, Northern Rock and RBOS were -definitely- no exception to that, they just got caught with their pants down.

daniel maris

Colin Cumner is completely correct. If bankers and other CEOs are showing no restraint, well there is no reason why the great mass of people should show any. After all, these are the people who claim to lead our economy.

daniel maris

What are the reasons for these huge bonuses? I don't believe there is a real world market in bankers and I don't believe banking,done properly, is a difficult trade. Certainly not difficult with starting a new successful business, bringing a new invention to market, dealing with the pricing of thousands of products in a supermarket - to name a few.

Mostly these bonuses are the product of bankers marking each others' performance.

daniel maris

That's why these remuneration companies awarded huge bonuses to people like Goodwin who weren't even taking the basic steps of checking what was in those (toxic) debt bundles.

We are a nation of 60 million. We have a long history of finance. There is no reason why there can't be thousands of potential bank CEOs in our population who will perform well.

But a wider question is whether we want to carry this risk of a huge financial services sector sitting on our economy. It has all sorts of negative effects including sucking in a huge migrant workforce who require an equally huge infrastructure investment. It concentrates wealth in London and the surrounding area and leaves the rest of the country short-changed. It inflates house prices in London and the south east. As we saw in 2008, it puts the whole of the economy at risk when things go badly - much more so than if we have to cut car production for a while. Finally, there is no reason to believe it has a long term future...

Patricia Shaw

Frankly P, you re just so diagusting. Either engage constructively or put your hand over your stupid big mouth

Sylva

Hahahaha Fraser Nelson, l am baffled by your bullshit "Cameron a natural leader" which planet are you in?Whenever l read your article l feel like throwing up.

Britain has a Prime Minister and Chancellor that has no brain.
Fraser please stop embarassing journalism.

Dimoto

Fraser Nelson said{
"The Twitter hashtag #BankerOutrage was launched by Radio Four yesterday summing up a very popular mood".

Crap.

Synthetic rage manufactured by our lynch-mob media, amoral, sleazy, irresponsible, irredeemably trivial, out-of-touch and mostly incompetant.

Richard of Moscow

TrevorsDen
"The bankers responsible for the crash certainly do deserve opprobrium..."

I know this is pedantry, but the bankers (and the politicians) were responsible for the artificial boom (and the accompanying madness, such as the obscenely high bonuses and public sector wages and pensions), not the crash.

The crash was caused by that nasty monster, always lurking in the shadows, that goes by the name of "reality"

EC

Austin Barry, Feb5th, 2012 6:52pm

Wot you said, exactly!

EC

Can any of you financial gurus out there explain to me how speculating on commodities helps keep prices down?

EC

Prices have risen considerably in the last 12 months. eg. coffee which has gone up by almost 50%.

EC

Are these rises due to shortages, or have prices been driven up by the activities of the financial wizards in the city who are taking a big fat slice off the top?

Kevin

Perhaps the apparent oddness in the timing can be explained by the spreading realisation that the freezing of the base rate at 0.5% for three years is indicative of a ruined economy. There is perhaps a further realisation that continued well-being in this territory (it cannot be a country if, as you say, it has a transitory population and wealth) is reserved for those "boys" among whom the plum jobs have already been distributed. And that is only assuming that the mugs at the lower end of the scale do not take advantage of globalisation and migrate elsewhere.

Conservative accounts of so-called capitalism often seem to assume that the theory operates in a moral and social vacuum. The reality is that getting a (new) job involves ingratiating yourself with someone who simply may not like you, or be likable himself or herself. There is nothing Adam Smith's invisible hand can do about that. Trade is equally nefarious, with some people quite happy to impose higher moral and ethical (and legal) standards on others than they are willing to accept themselves. Things do not even out to a fair price, because human beings do not think exclusively about value, but are also affected by pride, sloth, avarice, envy, gluttony, lust and wrath. Factor these into your economic model and you might be more inclined to agree with Private Fraser than Fraser Nelson.

DavidDP

"Exactly! Real wealth is created by factory and farm workers, miners and fishermen etc who get up in the morning and actually make or harvest things"

Dunno how you got that from my comment, but that's total rubbish. Finance generates real wealth too. My point that if you are trying to run the argument about disproportionlity as Fraser is doing, then the relevant figure to use is surely the proportion of the nation's wealth they account for, not their number.

I note that this morning (6 Feb), that noted lefty Lord Lawson has criticised the current state of banking.

The problem with the bonus issue is that it appears to most mere mortals as having got out of hand. The large bonuses of the pre-crash years were seen as fine as there was an implicit assumptionthat if these people cocked up, they'd suffer as much as they gained when doing well.

They cocked up, and it emerges that the rest of us end up giving money to them to make up for their mistakes, and they still receive large bonuses way beyond anything the rest of us could hope for.

When the reward system in a market pays out in times of failure as well as success, that is a clear sign the market is not working as it should.

Sean Haffey

It's up to the board and shareholders to decide what to pay bankers and employees in other industries. The government should avoid bringing forward legislation or regulation in this area.

However, it's hard to believe that someone getting paid several million a year is (a) earning it or (b) irreplaceable. In any such company, the shareholders and customers pay this money. Every time my pension plan trades investments, for good or for bad, I get charged and part of those fees go to Mr Irreplaceable Bank CEO. Yes, those immense salaries are geeting paid by my pension (and yours).

Incidentally, this is why I loathe the Tobin tax: it's skimming yet more money off my hard-pressed pension.

What should governments do? I suggest, as I did in a blog entry a couple of years ago, that governmments should take excess salaries into account when deciding where to spend money. for example, it would count against a company by a small by significant amount where the ratio of the highest salary to the lowest exceeded 100.

sean-haffey.blogspot.com/2009/10/who-wants-to-be-millionaire.html

Trapped

The system is broken, it's been broken ever since bank seperation of retail and investment arms got shredded, and the only way it's going to get fixed is by letting things hit the wall and rebuilding from the ashes. The first opportunity was the credit crunch, since we've now socialised debt and privatised profit, the next chance this might happen is when Greece defaults.

Steve

Perhaps this is a suitable time to reaquaint ourselves with the concept of " moral hazzard" , I mentioned it once but I think Ive got away with it.

anxiouswarrior

wealth creators dont make me laugh, this mob together with the square mile , the rip off energy companies, , the establishment and the royal family have been plundering this country for years, still there is always the unemployed , the immigrants, the sick and people with disabilites to carry the can for the free market fanatics

David L

I've said it before, and I'll say it again.

Any politician or journalist who eplains the current crisis by saying "blame the bankers" is either a fool or a scoundrel, or both.

DavidDP

Thanks, Fraser, that seems a more appropriate figure to use.

Not as mindblowing as 1% gives 28%, but still shows that they pay a decent sum.

Tom Pride

Sean Haffey
February 6th, 2012 10:20am
“It's up to the board and shareholders to decide what to pay bankers and employees in other industries. The government should avoid bringing forward legislation or regulation in this area.”

But Sean, it is the unintended consequences and failings of legislation in this area which has created the problem. The solution is to identify, address and re-balance the existing legislation to ensure a level playing field between the shareholders and the stewards who run their companies.

Tom Pride

2
If you and I owned Barclays 50:50, would the pay structures to the senior executives be as it is now? Allow unlimited number of shareholders, a tax system and regulation that encourages intermediate institutional shareholders (unit trusts, pensions funds, investment trusts, insurance companies, investment managers) and you deprive the beneficial shareholders (actual real people who own the business) any meaningful say in the pay structure of the directors.

The directors (starting in the US) spotted this absence of control over their remuneration and lacking any moral discipline started the relentless rise and, getting away with it, have pushed the boat out ever since.

Tom Pride

3.
For starters how about for all quoted comapanies:
1. All directors’ contracts are unenforceable until approved by shareholders at the AGM
2. The terms of the contracts must be simple and transparent – with criminal sanctions to back this up
3. Only real living shareholders may exercise a vote on remuneration matters.
4. Institutional shareholders may only exercise a vote on remuneration matters if they have sought instructions from the beneficial owners.

Tom Pride

4.
5. Any bonuses must be held in escrow for at least seven years for which period they may be clawed back if the profits or performance were illusionary.
6. For the words or words meaning “our directors’ remuneration to be in the top quartile” be substituted “in the bottom decile for the next five years”

Tom Pride

5
7. The directors’ must ensure that at all times there is within the organisation at least two nominated individuals capable of immediately taking over the stewardship of the business if the directors were to die simultaneously.
8. Any bonus package must have a downside cost if the targets are missed – no returns without participation in risk.

Sorry about having to split the comment to get round the restrictions.

anxiouswarrior

wealth creators dont make laugh, the banks , the square mile, the rip off energy companies have all been getting away with murder for years, still there always the immigrants, the poor, the sick, and people with disabilites for the tories and the right wing press to blame and persecute

EC

I agree with much of what Sean Haffey says above.

Dimoto

It is obvious from this blog that Labour and the usual suspects in the media, ably abetted by a craven "coalition government", have succeeded in turning the spotlight away from the gigantic screw-up of the Brown crew, and onto "the failure of capitalism" and other such simple-minded nostrums.

What next ? The (shadowy) manipulators of Uncut and Occupy invited into the cabinet ?

Hopefully, Cameron is being given a few home truths in old-fashioned English, right about now, by "industry".

What a truly gutless and depressing performance by this "government" in the face of a (small) band of nihilist twits !

Is there anything that Cameron believes in ?!
Does he understand anything about his electorate ?!

Mr Danger 1

First of all, who are the bankers? Everybody that works in the square mile? We should be concerned about the UK's domestic deposit taking institutions, but that's only a slice of the City.

If an Australian working for a Japanese bank in London advises a South African company on an m&a deal in Turkey, what risk does that pose to the UK taxpayer? None.

The Japanese bank doesn't need to base its European advisory services in London. The Australian doesn't need to work in London. The South African company doesn't need to hire a London based adviser. And Turkey has plenty of local advisers.

Why on earth do we care how much the Japanese bank pays the Australian? How on earth do we benefit from him having his pay cut?

Advisers, asset managers, hedge funds, foreign banks... there are many entities in London that generate huge amounts of business and tax revenue without risking bailouts. These are the businesses that we risk losing to the politics of ignorant resentment.

Brian from Shepperton

David Cockerham expresses the old
idea that leaders of big public companies deserve their enormous compensations because if they are not deserved the shareholders ought to band together and defeat them. That idea does not really stand up. The chapter
"Why is Your Boss Overpaid?" is a very readable refutation of it.

daniel maris

Mr Danger 1,

That Asutralian needs to live somewhere in the capital...somewhere costing not less than £300,000 and taking up valuable property. He will need to travel on our rail, air and road networks. He may access our health services, or alternatively he may have private health cover and suck doctors out of the NHS.

No doubt you'll come back and telling me he's boosting the construction industry...er, yes, for Polish and Lithuanian construction workers he is.

Brian from Shepperton

The reason why people resent bankers is because they have done us so much damage. It is entirely understandable that people resent bankers. In fact, the surprising thing is that there is not even more anger towards bankers. The mood of antagonism is not something that needs to be whipped up artificially by the press or politicians. Surely the politicians are just reacting to the popular mood, not creating it.

What was Fred Goodwin's achievement really?
Was he truly exceptionally skilled? Or rather, didn't he expand the balance sheet of RBS enormously through reckless actions, that inflicted major harm on the nation as a whole?
Can he really be called an "entrepreneur"?
I doubt it.

Brian from Shepperton

Continuing my earlier post...

Likewise, the leaders of Network Rail, an organization that only survives by receiving state subsidy, are surely not
"entrepreneurs" either. They are functionaries. It is a perfectly respectable thing to be a functionary, but it does
not deserve gigantic rewards.

daniel maris

Tom Pride puts his finger on the fig leaf of owner-control over the bonuses. It's not there. What is there is a club of senior executive finance managers who have a cosy set up and who generally restrict entry into the club to their sons and daughters or those of other club members, including internationally, through unpaid internships and the like.

The whole set up stinks. It's like the way the Mafia operate casinos with the "skim" system. They are just skimming off their percentage at the top and sharing it around.
It should be prosecuted as fraud.

Brian from Shepperton

Continuing my earlier post...

Entrepreneurs are people who create and build up businesses through skill and energy and initiative. That is laudable. But so many of those people who enjoy enormous rewards do not really fit that description.

Tiberius

What about the duck, Fawlty?

Sorry, Fraser, I mean what about the politics?

You have chastized Cameron for failing to win a majority in 2010 when he had an "open goal" (the big mistake was to "lead" over cuts when Brown wouldn't talk about them), then criticize him for espousing a policy which is popular with voters.

Who'd be an oscillating journalist?

David Lindsay

"It was as wrong to silence the voice of the aristocratic social conscience by abolishing hereditary barons as to silence the voice of organised labour by abolishing trade union barons. One way or another, both of those voices must be heard again."

So says my next book, out by the end of this month.

But after Hester and Goodwin, might that already be happening? Between a Labour Party once again run by and for the public sector trade unions, and a Conservative Party once again run by and for hereditary landowners, three decades of triumphalism on the part of the private sector bourgeoisie have been brought to a thoroughly ignominious end.

I say this, not necessarily because it is good or bad (rescinding Goodwin's knighthood had absolutely nothing to do with wealth distribution, or with public service delivery, or with peace), but because it is important.

Craig Strachan

"After the South Sea Bubble burst in 1721, there were calls in the Lords for the bankers involved to be dumped in sacks filled with serpents and dropped in the Thames"

What had the serpents done to deserve that?

Mr Danger 1

"That Asutralian needs to live somewhere in the capital...somewhere costing not less than £300,000 and taking up valuable property. He will need to travel on our rail, air and road networks. He may access our health services, or alternatively he may have private health cover and suck doctors out of the NHS."

That is monumentally silly analysis. I highly skilled migrant who arrives in the country and starts paying into the top tax bracket from day one, without costing the schools or the NHS a penny to raise and educate, and you think they are a drain on the economy? Come on.

Don Benson

Dear libertarian

Were you really so confused by what I said? You seem to be living in a world where only people with dirty hands get up in the morning and go to factories or run farms – so out of touch! And why do you have to own a business (as I do) to create real wealth?

My point was that of the one percent who (we are told) pay vast amounts of tax probably only a small proportion actually contribute to a net increase in real wealth and that the tax we so gratefully receive from them is actually paid at the expense of someone else, possibly on the other side of the world.

Widmerpool

Good for you Fraser!
Even if you have provoked some of the usual suspects onto here!
The “English Disease” of Banker Bashing needs to be reviewed in a dispassionate way and your piece is a good start.
.
The “English Disease” with its underlying jealousy and envy is analysed by Boris in his piece in the Telegraph today.

Boris asks quite rightly IMHO why we cannot foster money makers like Mark Zuckerberg, the billionaire founder of Facebook The “English Disease “ is a clear suspect!

That's why I suggested in a previous post that Boris should become Chief Executive of a newly independent City State [the "Square Mile"] with borders extending to around the M25 to quarantine those afflicted by the “English Disease” I did make this suggestion somewhat tongue in cheekily at the time but having read Boris’ piece I wonder if it might be a cure for the epidemic of banking bashing now raging in the UK.

notlob_frank

Does the spectator not proof-read its headlines? "Don't let's be beatly to the bankers"? What a terrible sentence.

daniel maris

So the settled view of Fraser and his flock here is that bankers can, as a class, awards themselves any level of bonus they like be it a million, £50 million or £2 billion and neither the public nor pension fund contributors nor MPs nor newspapers must let fall even the softest of criticism - lest the bankers flee our once cosy nest for warmer climes.

AliC

Bankers are not the problem. It's crap regulation that is a problem.

The Abu Qatadas, the million non productive immigrants and their 'families', and the underclass who refuse to work are more of a problem than bankers.

Mr Danger 1

"neither the public nor pension fund contributors nor MPs nor newspapers must let fall even the softest of criticism"

troll defeats strawman! Whoopeee.