So what happened to all the free market arguments about competition, rewarding ability etc etc.

Those were and are there to make the little man THINK he has a chance of making something for him/herself.

Now that that idea is shot out of the water we see bankers (and free marketeers) reverting to type – like they had ever changed in the first place.

Vote Tory at your peril.

Desirable?

If bonuses are going to be restricted or abolished, basic salaries will go up. You seem to be working on the principle that every single person working in banking is evil and has fucked up.

Palpably not the case.

Giving people performance related pay deals meant cuts in basic salaries (or foregone payrises) in exchange for larger potential bonuses. If you’re going to get rid of perfomance related pay (which is currently happening in my local council, to the chagrin of the award winning gardeners) then basic salaries go up again.

It’s not rocket science.

That a large number of people seem to have had guaranteed bonuses regardless of performance, or bonuses that rewarded stupid behaviour, isn’t actually the fault of the recipient of the bonus, it’s of the idiot giving them the contract.

That a large number of people seem to have had guaranteed bonuses regardless of performance, or bonuses that rewarded stupid behaviour, isn’t actually the fault of the recipient of the bonus, it’s of the idiot giving them the contract.

This is true. But then why wouldn’t bankers give themselves massive bonuses and then justify it on the basis that the market desires for their talent to be rewarded. The problem is more that shareholders in these companies cannot say much about the massive bonuses that get awarded, nor question the wisdom (that you also seem to have accepted) that their basic salaries don’t already pay adequately. The bonuses never really awarded exceptional ability, as the crash showed. They were just a by-product of a system that believed it was untouchable and that no one else could come near them.

nor question the wisdom (that you also seem to have accepted) that their basic salaries don’t already pay adequately.

Being paid a million or half a million a year isn’t adequate?

question the wisdom (that you also seem to have accepted) that their basic salaries don’t already pay adequately.

It’s not for me to decide what adequate pay is for a banker.

Seriously, a lot of staff working in merchant banks are maths geniuses, and recruiting the fastest, most accurate maths geeks is a significant task for most banks. Basic salaries were high, but lower than they would have been without PRP. That’s a statement of fact. Just as MPs salaries are lower than they would have been if expenses allowances hadn’t risen stupidly instead under Thatcher.

The bonuses never really awarded exceptional ability

True, that’s what the salaries are supposed to be for. The bonuses were supposed to reward performance on key indicators and metrics.

The indicators and metrics were encouraging bad long term investments. That’s not the fault of the people making those investments, it’s the fault of the (more) senior people who set the targets and terms of the PRP.

The problem is more that shareholders in these companies cannot say much about the massive bonuses that get awarded,

If the shareholders had no say over the pay structure of senior executives, then they should have sold their shares. If they continued to own their shares, they were happy enough with the structure under which their investment was being managed.

I have ZERO sympathy with bank shareholders complaining about their losses. I have zero sympathy for the idiots at the top who designed the ludicrous structure that some of our banks became. But the staff in the middle doing their jobs to the best of their ability under pre-agreed terms and conditions?

It’s not their fault the conditions were stupid, they were doing the best they could under the prevailing conditions. Bonuses arrayed stupidly caused a faulty system.

Removing the bonuses is going to mean that the most talented maths geeks and analysts will instead want higher basic salaries. If the banks want to keep them, they’ll have to pay that. If they don’t, they won’t.

Bitching about the bonuses then being surprised when abolishing them puts basic salaries up is something I can’t understand.

Of course we should be aware that banking isn’t nuclear physics – and indeed, if market systems are in good shape, the influx of sacked ones should reduce demand. ;o)

Also, shareholder activism is so poor because most shares are held by pension funds, not by sentient investors with their own money at stake,

At the exact moment when City boys & the economic “model” they represent has been discredited, Brown & those around him totally fail to realise this & show the sort of resolute action Obama has taken against banker scum.

The sooner we realise the good days weren’t good, they were rotten, & however much you want them back it’s not possible to bring them back anyway, the happier we’ll all be.

I actually don’t blame them for mocking taxpayers & demanding our hard-earned cash in such a way, it’s what you would do faced with a fucking contemptible government & an opposition which still hasn’t woken up, as shown by its failure to admit that its policies from 2007-08 have now got to be torn up.

You may well drive them away by giving them less of my money. But if they went to another occupation, such as teaching or self-employment or pretty much any profession, it would be more useful. They held us to ransom & refused to pay any taxes threatening to take their “talent” elsewhere? Let them try, they’d be laughed at.

“Now what would they say of that was the public sector?”

It pretty much is now. Will certainly make the TPA public sector pay stats look different this year.

Seriously, a lot of staff working in merchant banks are maths geniuses, and recruiting the fastest, most accurate maths geeks is a significant task for most banks. Basic salaries were high, but lower than they would have been without PRP. That’s a statement of fact. Just as MPs salaries are lower than they would have been if expenses allowances hadn’t risen stupidly instead under Thatcher

That is true but then these “Maths genii ” got it all wrong , at best .They were all employed in such things as swaps and various derivatives which began life as mechanisms to spread risk but ended up as means of developing commission from swills of fantasy money secured ultimately against wooden shacks in municipal dumps . These maths idiot /criminals were also a species without which banks managed for practically all of their history . The bit that worked .
Given that their genius was supposed to be setting a Premium based on risk it is pretty clear they were either stupid or knowingly involved in what was really a huge pyramid gamble.
Usually the latter, as anyone working in these environments will tell you the extent to which everyone was just” Doing their job “,is vastly exaggerated . They knew, they all knew. I believe what we are seeing there is something akin to the working members scandal of the 70s which lead to the reform of Lloyds except a vastly larger scale
What we are seeing now is a desperate scramble to take cash at hard market rates when we are well into a soft market relying on the same time difference between reward and result as before . Few will have jobs a year or two from now . That at least is quite right

In effect the survivors are all in the Public sector whether or not Public money has actually been provided .As you might expect the greed and venality has fitted in well
Meanwhile at least these people face considerable personal risks what about the real Brown Empire of sleaze ….
Clive Briault, managing director of retail at the Financial Services Authority resigned last April after Northern Wreck with £356,452 of compensation for lost salary and bonuses, £36,000 of pension contributions and a £202,500 bonus. Rose Gibb, left her £150,000-a-year job as chief executive of the Maidstone and Tunbridge Wells NHS Trust just before the publication of a critical report by the Healthcare Commission into an outbreak of Clostridium difficile in which 345 patients died. She got a £250,000 severance package. £174,573 of which was, as with Mr Briault, ‘compensation for loss of office’. Ian Coucher, top exec of Railtrack, was paid £1.244 million in 2007-08 , a 51 per cent increase on the year before in spite of a poor performance notably havoc on the West Coast Mainline.
At least 88 Public Sector Pigs scoffed over £250,000 a year. At least six councils pay their chief execs more than £200,000 a year and the trough is not confined to the top. An ‘occupational physician’ £105,725 a year, an ‘executive director of neighbourhood delivery’ who snuffles up £120,780 a year , a ‘director of customers and strategy’ £145,000 ( See Tax Payers Alliance ).. Wandsworth has 18 staff on salaries of over £100,000,.The joke is that these unemployable layabouts blagged their swag by comparison to the bloated banking sector . Meanwhile in the real world of SMEs which I and the tax payers you lot wish to torture work a CEO of a small company ., up to 50 makes on average £65000.
Face it there is now no way for New Labour to win and they are facing the possibility of melt down. Sunny Hundal can incamnt as much voodoo as he likes Brown is blame as much as any politician can be and Brown can only invent jobs like Thurrock’s director of sustainable communities on £113,812 a year…..

If they are maths geniuses & other forms of expert, which I have no doubt many of them are, shouldn’t we be glad that more of them are shifting to more useful occupations like teaching & research?

Don’t try to prop up the City, let our top brains work in truly innovative jobs rather than getting a fast buch & letting the country fall to pieces around them through short-termism. The dominance of finance over industry & research has been this country’s downfall.

I’d have thought that ‘stroppybird’ couldn’t do any worse than the idiots that have fucked up our banking system. So, lets pay her a million a year and see how she does. It is impossible to imagine she’d do any worse, so it’s as cheap as chips.

All she has to do is say:

‘I don’t understand that’

And veto it.

Then we’d all be laughing.

Newmania @ 9,

You are the Taxpayers Alliance spokesperson aren’t you? What a lot of shit.

Councils spend your money. Much of which is unavoidable. Think education, policing, stuff like that. The point about paying senior council officials a reasonable salary, rather than the insane money available in The City, is so that they can try to reduce waste in the public sector.

Would you take on responsibility for – frequently – a near billion pound business without reasonable compensation?

No, you wouldn’t.

Else you are a wee sweetheart that would get flattened in your first day in office.

The private sector pays folk like Dean Godson. ‘Nough said?

I want a 10% pay rise. Doesn’t mean I’m going to get it.

“I’d have thought that ’stroppybird’ couldn’t do any worse than the idiots that have fucked up our banking system. So, lets pay her a million a year and see how she does. ”

A few small areas of our banking system have been fucked up, by a tiny proportion of the people active in that industry.

A tiny proportion which dealt with ridiculous amounts of capital – but ultimately, *even out of high-paid City types, nevermind branch workers*, the people engaging in crazy fun with CDOs were maybe a couple of % of the total.

Commercial bankers, retail bankers, the people in investment banks who traded commodities, stocks, even conventional corporate bonds, pension funds, hedge funds, insurers, reinsurers: these people all had absolutely no impact on the collapse, but did a hell of a lot to get us rich.

The CEOs, chairmen, boards, and heads of investment banking who allowed the quants and their insane risk models to build up positions that sank the whole bank, and cancelled out the productive efforts of all of the above, should be sacked, and possibly jailed.

But the 95%+ of City workers who weren’t involved in toxic slicing-and-dicing, and who weren’t in said slice-and-dicers’ reporting lines, continue to provide a massive positive contribution to the economy and to the tax pot. The public’s inability to distinguish different braying besuited types from each other shouldn’t be allowed to affect that…

“I want a 10% pay rise. Doesn’t mean I’m going to get it.”

Aye, but I imagine if your employer thinks you’re worth it then you can have it, and a bunch of old Trots who think a short downturn is the End of Capitalism and Actually They Were Right are unlikely to suggest that instead you should be shot.

But the 95%+ of City workers who weren’t involved in toxic slicing-and-dicing, and who weren’t in said slice-and-dicers’ reporting lines,

Nor was I , can I have a bonus ?