See this from Robert Peston on BoE estimates of the value to the big British banks of state guarantees for their debts:
http://www.bbc.co.uk/news/mobile/business-12022260

“The Bank of England estimates that in 2009 alone, the big British banks collectively received a subsidy from taxpayers of around £100bn. And the subsidy in 2008 was around £50bn. . . As currently constructed, our four big banks would not have much of a business without that taxpayer subsidy. . . So if the chancellor and business secretary were to say, in this way, that taxpayers were no longer standing behind all the debts of banks, the price of borrowing for banks would rise very sharply, in the best case for banks. And in a worst case, the big banks would not be able to refinance all that debt maturing in the coming year and they would be kaput.”

In a way the bonuses furore is a smokescreen. (Having said that I cannot see why windfall taxes can’t be levied given the public contribution to the bankers’ bonanza.)

I think the Left needs to be asking why, in a supposedly competitive market, banks are making the kinds of profits that allow them to pay such bonuses. Perhaps more importantly we need to ask what has been done to prevent any recurrence of the kind of bubble that caused our troubles? Not much so far, if I’m not mistaken.

However you wish to describe Mr Diamond’s performance, “outburst” is not the right word.

In contrast to his inquisitors, he was ice-cold.

@2: “I think the Left needs to be asking why, in a supposedly competitive market, banks are making the kinds of profits that allow them to pay such bonuses.”

By the account posted last June on the HM Treasury website, one of the issues on the remit of the new “Indpendent Commission on Banking”, under the Chairmanship of Sir John Vickers, is:

Promoting competition in both retail and investment banking with a view to ensuring that the needs of banks’ customers and clients are efficiently served, and in particular considering the extent to which large banks gain competitive advantage from being perceived as too big to fail.
http://www.hm-treasury.gov.uk/press_11_10.htm

Dave,

I wonder whether these people deserve our outrage as much as our pity.

They are obviously not properly functioning in any moral or psychological sense.

It is sociopathic to place one’s own enrichment and self engrandisement, and the right to it, above any social or economic consequences.

@5 – Why, everyone in the west does to some extent.

Do you think its a natural state of affairs that half the world starves whilst the other half has so much food they develops pills that stops their bodies from absorbing the fats/carbs from the vast amounts of food they consume.

@5: “It is sociopathic to place one’s own enrichment and self engrandisement, and the right to it, above any social or economic consequences.”

More than half of MPs have been found guilty of over-claiming on their parliamentary expenses.
http://www.telegraph.co.uk/news/newstopics/mps-expenses/7161198/More-than-half-of-MPs-guilty-of-over-claiming-expenses.html

bobB

Your point being ?

I’m not an MP, and certainly think that those who claimed ridiculous expenses got away lightly. I’d like to see all those who claimed for manure, rabbit proof fencing, wisteria cutting, porn viewing prosecuted.

But where is the MP who expected the sort of level of renumeration this group of repellent human beings think is their divine right ?

What sort of person ‘needs’ millions, in some case nearer a billion pounds a year ?

@8: “But where is the MP who expected the sort of level of renumeration this group of repellent human beings think is their divine right ?”

I’m no defender of of the scale of bankers bonuses – as should be clear @1 and many previous postings – and rather go along with this popular assessment:

Estate agents and politicians among least trusted professions
http://www.telegraph.co.uk/news/newstopics/howaboutthat/5085369/Estate-agents-and-politicians-among-least-trusted-professions.html

Besides the hot political issue of bank bonuses, the Bank of England and the government are also greatly and properly concerned about the scale of bank lending to business for good reasons:

Record fall in bank lending to business triggers new concern over UK recovery
http://business.timesonline.co.uk/tol/business/economics/article7032968.ece

Chancellor George Osborne has warned that banks need to start increasing their lending to businesses, stressing its importance to the UK’s economic recovery.
http://www.bbc.co.uk/news/business-10841243

Sandy what you think you need is relative to what you already have. You always need more.

If you have a roof over your head, food in the fridge, a bank account and spare chnage lying around somewhere you are already an elite member of the worlds richest 8%.

You may as well rail at some scruff who shops at Primark, off the back of child labour thats the equivalent of what you describe the bankers of doing

I think there should be a tax on bank bonuses each year equal to the percentage cut to public spending in the same year. It would give us the revenue to protect more services and might even encourage the banking sector to take an interest in helping sort out our economy instead of taking it and us for granted.

“Sandy what you think you need is relative to what you already have. You always need more.”

Really? The latest disturbing news about Denmark, it that along with New Zealand and Singapore, it came out top on Transparency International’s Preceived Corruption Index (PCI) for 2010 – meaning that the three countries were perceived as being the least corrupt among the 178 countries assessed: http://transparency.org/news_room/latest_news/press_releases/2010/2010_10_26_cpi2010_en

Britain’s rank had slipped to 20 on this latest assessment by Transparency International.

Readers may recall a previous post of mine worrying about the state of Denmark:

Denmark was confirmed as the OECD’s highest-tax country, followed by Sweden.

By reports, Denmark’s Gini co-efficient shows the least inequality of post-tax income distribution among countries for which income distribution data are available :
http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

Curiously, according to Eurostat data, Denmark is not impoverished, indeed it comes out as one of the most affluent countries in the EU. By other assessments, it also appears that Denmark is the ‘happiest place on earth’:
http://news.bbc.co.uk/1/hi/5224306.stm

IIRC, wasn’t Diamond only a couple of weeks out on taking over ABM-Amro when he was marginally outbid by RBS – which would have taken Barclays down the sink instead of RBS.

Mr Lucky or what … metamorphoses now into Mr Cheeky.

Government policy on bankers’ bonuses, before and after Diamond’s Treasury Committee performance, is to plead for ‘restraint’ – ie ‘for Pete’s sake use your common, do us and yourselves a favour, box clever, take a little bit less, give us a happy headline, and we’ll do nothing. We can all get back to filling our boots when the fuss dies down’.
Makes you weep. So you look and listen to the studio pontificators for something more to the point, something that addresses the actual problems, the likelihood of the whole disaster repeating itself, something that looks for the bottom of it. I hear: ‘all Brown’s fault’, and I know there’s truth in that. I hear: ‘shareholders must rebel’, and I think about pigs flying. I hear: ‘we need better regulation’, and I think about hell freezing over. I hear: ‘they’ll all go abroad’, and I think that might do it – lots of countries seem to do OK without them.
Then at last a pontificator mentions the real problem, what we have to face if we ever want to get out of this place. Pontificator says that not only are these buggers too big to fail, their taxes provide 20% of national income (alleged with confidence, is it so?). That’s our social democratic problem, has been all along, that’s why they always dictate their terms – they have us over a barrel. We’re their junkies. We’re screwed for as long as it takes for an electable left of centre party to run on a realisable programme for kicking our habit, and convince us to go with it.

@13 – indeed!

@15 cjcjc

You might wonder why he wasn’t asked about this by the select committee – or by Osborne. I couldn’t possibly comment.

@16

Because the select committee are more interested in their own soundbites ‘are you grateful’ etc and people like Diamond can deal with that no problem.

Osborne may well have asked him – more worrying perhaps is that that the BofE approved his appointment as I think they still have to do.

Yes the committee seems either woefully underbriefed, or willfully ignorant, or both.

And I am not inclined to be a banker basher but, really, someone needs to do a better job of it!

NB Diamond was not CEO at the time of the ABN bid, but I’m sure he supported it

@ 1 Bob B

The BoE’s figures in Peston’s article are somewhat plucked out of thin air. I woudn’t take any real stock in them – a couple of rating agencies *estimated* what the change in credit rating of a bank would be if it couldn’t access the BoE short term lending window (which all banks did mid crisis when the money markets froze up).

This isn’t the same as saying they were bankrupt and couldn’t function without the government though. If nothing else, if the banks needed a 50-100bn subsidy every year there wouldn’t be an industry there.

@ 14 James

Read Jeremy Warner in the Telegraph today. It’s a very good article.

As you (and he) says though, finance pays about 20% of all UK tax. That said, hell will freeze over before a left of centre manages to kick a tax/spend habit, and manufacturing isn’t going to replace finance when it’s cheaper to import most things.

@20 Tyler

Thanks. There does seem to be a case that elimination of tax avoidance, evasion, and inefficient collection would go a long way, and that can only come from left of centre. There are impressive figures about. We would also need to know how much of the avoidance and evasion is down to the financial sector before saying how far it would reduce the dependency on it. No doubt though that it would help.