The Bankers Just Don't Get Bonuses

The problem is that the activities of "the money changers" do not reflect the time scales (and profit margins) of normal human endeavour in the real world, that they were originally created to finance. Unfortunately all solutions fly in the face of huge vested interests however come the revolution I would propose a large CGT on short term gains and any small remuneration to be in long term equity. The public stoning suggested above is also tempting if against my liberal tendencies. PS. the next time Justin Urqurt Stuart tells us that shares are a long term investment I would like to suggest that he tells that to the city insiders whilst at the same time stretching his red bracees to there fullest extent and letting go!

Maybe the fat cat bankers ought to be careful at just how much winging they do and how much bonuses they pay out to themselves. The socialising of losses and privitising of profits is making Joe Public an unhappy bunny. If public outcry were to really pressure parliament with demo's marches, lobbying etc etc, then perhaps they in turn will cave in and legislate to re-introduce the death penalty for corporate crimes.

The value of these bonuses is at a very basic level in terms of their value, because these bankers deal in trillions/billions of dollars/ pounds,(a number way beyond normal values of understanding), then the value they place on themselves for dealing with such volumes becomes commensurate with the value of the bonuses. It does not mean the basic skill they have in managing and making decisions about investments etc is not skill full at all, as most of the decisions, are undertaken by software programs and algorithms.
Many of these people would never be capable of holding a middle ranking management position in a manufacturing company, but because their working tools is money then that is how they derive value !! hope I got my point across !!

Probably 95% plus of non bankers support some sort penalty being applied to banking bonuses. As stated in the text what do the share holders get for carrying the risk and yes and now the tax payers. Is there not another way of dealing with the problem. For example why are profits of the banks not regulated in such a way that they are forced to redistribute profit amongst the involved parties i.e. Corp Bond Holders; Share Holders and the DEPOSITORS. As we hear profits are back up (for all the good reasons on government support) so why are the interest rates on deposit so miniscule when as stated on BBC today profit is over 100% on a pound invested. I would suggest a number of 60% of ALL profit is required by law to be redistributed after deduction of the minimum capitalisation money. Then we can all get a share of the action

I'm definitely with you! The admitedly fairly small sample of bankers I know shows a group of fairly thick and very selfish individuals who couldn't care less about those of us who actually had to EARN a living and whose pensions have all but disdappeared thanks to their recklessness.
Bonuses (if they have to be paid at all) should be restricted to no more than 10% of the national average salary - if that means some bankers leave, is that really any loss? If the banks can afford the extra billions that they will pay under the "bonus tax", then they can also afford to pay decent interest to those of us without whose money they wouldn't have a job in the first place.

They should base bankers bonuses on how much they outperform the index.

.....and the system legitmises the socialising of losses (that's YOU folks who pay the bill) and the privitising of profits ( Not always you :-) hehehe ) ...so, yeah, let's not bash the banksta's, the poor souls.

Im sorry, but Ive read some of the comments above and just cant believe the bashing that you are giving all bankers.

Talk about generic. Do you really believe that all bankers earn vast sums of money? What about the middle office and support roles?

Take an average banker middle office - salary approximately £30k - £40k, bonus of between 30/40% per annum (in an exceptional year) average hours worked 12 hours a day plus the odd weekend. Convert that into an hourly rate and you dont get much more than you would in any other profession after tax

Similarly, I dont know many middle office managers on a salary of more than £70k and again even with a bonus of 40% that is not extortionate if you consider the hours they work (at least 12 hour days in many cases and the stress/responsibility from that kind of role.)

I agree that they do have their part to play in the crisis, but it is about time that Joe Public also took some responsibility.

After all, not every banker has the power or influence to make risky decisions. Believe it or not, not all roles within a bank involve trading structured products!

Do you not think that someone with a mortgage of more than 3 times their salary should not be held accountable? Just because a bank is willing to lend such sums, should the public take advantage of this? Surely this is where the crisis really originated from. I have not bought a house for the simple two simple reasons:

i) they are ludicrously over-priced
ii) i could not afford to pay back a mortgage of 4/5 times my salary if interest rates rose to 14%

However, with these facts in mind, how many of the public have gone out and bought themselves houses? Motivation: somewhere to live, (for your first house maybe) but for a buy to let property? Surely its the hope that they will make a profit in the future?
And who do they expect to bail them out if interest rates do rise to 14% and they are faced with repossession?

I doubt everyone would take it on the chin, most people would be up in arms demanding that the government do something about it!

Similarly, if so many people have suffered from the recession, how can they afford to continue to spend? Retailers report results for their best Christmas in 3 years! I cant believe that all the money spent was hard cash – Credit would have to account for some of that spending!

In this respect, I believe the mentality of the public is very similar to that of a banker that you believe deserves to be bashed. Short-term with little consideration for how they will pay back the credit or the impact on other people if they fail to repay their debt. i.e. risk taking with little consequence!

Its human nature to be opportunistic. For instance, if your boss offered you a bonus of 50% and you knew that someone else would suffer from you taking that bonus, would you really turn it down? And offered an amazing job in one of these banks, would you honestly turn it down?

Ok, some people may, but given the opportunity and faced with that situation in reality I doubt everyone would be that moral.

So, before berating the bankers for doing their jobs, please consider that they are not the only ones to blame for this crisis.

Most investment companies charge annual 1-2% "management" fees on capital invested. Many of these companies control £Bs in assets. Management fees provide a very substantial income and sustain high salaries even in bad years when they lose clients' money. Why not make management fees illegal? This would force companies to think long term, keep a financial cushion against bad years and reduce bonuses. After all why should they be paid when they lose your money?

Basically bonuses are performance related pay i.e. if a individual makes money for the bank and shareholder's/investors he will be paid a fraction of what he makes as a bonus. This seems fine until one recognises that:
- he is gambling with investor's money, not his own
- bonuses are not usually averaged over long term performance, (10 years might be reasonable, effectively giving negative bonuses in bad years)
- individuals controlling large sums of investor's money can influence the market effectively making almost certain bets
- pay and bonuses are often sustained by high management and commission charges for doing very little.

There is nothing wrong with the idea of bonuses for performance. It is the scale and management that is the problem. Levels need to be cut by a factor of 10 to 100 and sustaining management/commission charges reduced or removed.