Why is Bob Diamond being grilled over his bonus?

scorza · 11 Jan 2011 at 20:36

[TW]Fox;18203596 said:
What private industry does with it's management is of no concern to you.

No banking is a state backed industry across the world right now and until that stops they will have to justify why they should be paid so much, which they have thus far not done satisfactorily.

OldCoals said:
Barclays took foreign private investment and it can stand on its own two feet.

You are wrong.

Fine lets withdraw all state support* for the banking industry and see how long Barclays lasts. Not long I imagine, I don't imagine many banks would last long in such a situation.

*In the UK this means forcing RBS and Lloyds into administration, and no bailout for any company that fails as a result.

cymatty · 11 Jan 2011 at 20:37

Superewza said:
Of course. There is no problem. Everything is okay. The bankers are working for your benefit, not their own and their already massive salary is most certainly not enough, never mind these tiny sums, even those of us who are struggling to afford food and shelter should dig deep and pay them out of our own pockets. All money to the kind hearted bankers!

cymatty said:
Do you pay a monthly account fee for your current account?

Superewza said:
No.

So these bad bankers provide everyone with a free current account, with all the benefits of a current account.

Internet/telephone banking
ATM withdrawals
DD and SO
Customer service personnel.

How do you propose that they pay for this, maybe they should stop their current activities and charge people for this service like they do around the world. No doubt you would moan at that as well.

But carry on bashing the evil banks they never do any good or provide useful services for free.

cymatty · 11 Jan 2011 at 20:41

dowie said:
They didn't receive govt assistance directly but they still benefited from the fact their counter parties essentially got underwritten by the govt.

How, if banks had gone bust there would have been less competition for similar number of clients, profits may have arguably gone up in the long term.

shine · 11 Jan 2011 at 20:43

scorza said:
*In the UK this means forcing RBS and Lloyds into administration, and no bailout for any company that fails as a result.

What about the people? Does everybody lose their life savings? The knock on affect would be huge and the poorest would get hit the hardest.

dowie · 11 Jan 2011 at 20:44

cymatty said:
So these bad bankers that provide everyone with a free current account, with all the benefits of a current account.

Internet/telephone banking
ATM withdrawals
DD and SO
Customer service personnel.

How do you propose that they pay for this, maybe they should stop their current activities and charge people for this service like they do around the world. No doubt you would moan at that as well.

But carry on bashing the evil banks they never do any good or provide useful services for free.

Current accounts have got naff all to do with anything in the context of this thread.

PermaBanned · 11 Jan 2011 at 20:46

cymatty said:
So these bad bankers provide everyone with a free current account, with all the benefits of a current account.

Internet/telephone banking
ATM withdrawals
DD and SO
Customer service personnel.

How do you propose that they pay for this, maybe they should stop their current activities and charge people for this service like they do around the world. No doubt you would moan at that as well.

But carry on bashing the evil banks they never do any good or provide useful services for free.

I don't have a current account

cymatty · 11 Jan 2011 at 20:51

dowie said:
Current accounts have got naff all to do with anything in the context of this thread.

My argument is that they provide a service to the country for free, try living without a current account. To do this they need to make profits from other areas to keep the shareholders happy. The point is,, everyone loves bashing banks without realising how much they get from them, for free and how they would be screwed without them.

With regards bonuses, to make profits they need good staff members, to do this they need to pay market rate including bonuses. If they don't pay this, then people will go to places where they will.

If the Government starts trampling on the industry too much they will just pack up and leave, with all the jobs and tax income with them, I am sure many countries would welcome the industry with open arms.

cymatty · 11 Jan 2011 at 20:51

Superewza said:
I don't have a current account

That must be fun.

Danthus · 11 Jan 2011 at 20:52

scorza said:
No banking is a state backed industry across the world right now and until that stops they will have to justify why they should be paid so much, which they have thus far not done satisfactorily.

Fine lets withdraw all state support* for the banking industry and see how long Barclays lasts. Not long I imagine, I don't imagine many banks would last long in such a situation.

*In the UK this means forcing RBS and Lloyds into administration, and no bailout for any company that fails as a result.

Where is your evidence for this?

dowie · 11 Jan 2011 at 20:52

cymatty said:
How, if banks had gone bust there would have been less competition for similar number of clients, profits may have arguably gone up in the long term.

Banks don't exist as isolated entities that just provide joe public with a debit card and savings account.

They have huge exposure to each other - to put it simply if Bank A loans Bank B 10 million GBP and bank B goes bust then Bank A suddenly doesn't have the 10 million + interest it thought it had as an asset - given that banks do thousands of these deals every day a few big counter parties failing will wipe out a whole load of assets, if no one had been bailed out the entire financial sector would have collapsed.

[FnG]magnolia · 11 Jan 2011 at 20:56

Have we blamed Islam or the gays yet?

dowie · 11 Jan 2011 at 20:58

cymatty said:
With regards bonuses, to make profits they need good staff members, to do this they need to pay market rate including bonuses. If they don't pay this, then people will go to places where they will.

If the Government starts trampling on the industry too much they will just pack up and leave, with all the jobs and tax income with them, I am sure many countries would welcome the industry with open arms.

We're talking about very senior management - they don't tend to pack up an leave. If the govt were to make it impossible for any front office staff to earn a decent bonus then yeas you'd probably see a mass exodus but criticising a very senior guy in a strategic/big picture position is fair enough imo - he's going to be made CEO this year he's not about to jet off to Singapore because someone has said reign in the bonus in 2011 as its still politically sensitive.

Things change I've changed · 11 Jan 2011 at 21:03

Dolph said:
Too many people like to bash bankers instead of the people actually at fault for the public spending crisis...

I notice they aren't campaigning for Gordon brown to have his pension removed and be forced to give his salary back for the sheer destruction he managed on our economy...

I'm no expert on this but I thought largely it was the banks fault though?, every programme on this topic that I listen to (on NPR stations) all seem to say it was primarily the banks that were to blame for the subprime mortgage crisis in the states which created a cascade effect across the global economy effecting all of us, do you think Gordon Brown could have stopped that?, subprime mortgages was undoubtedly a big contributor to the economic crisis that we are now in, and obviously not just in the states, here also, banks were lending to practically anyone increasing home ownership rates and overall demand for housing which drove prices higher, banks got over confident lending too much money to high-risk borrowers.

zpos · 11 Jan 2011 at 21:05

The only reason Barclays went to the middle east was due to the sudden government requirement for banks to increase their % capitalisation.

shine · 11 Jan 2011 at 21:11

lowrider007 said:
Sub prime

Yet no one asks why people were borrowing beyond their means. It is easy to blame the banks for having lax lending criteria but the people weren't held at gunpoint and forced to take on huge mortgages.

When I was looking for my first mortgage in 2003 I didn't think - wow interest rates are low I can afford to borrow enough to buy a mansion. I worked out what I could afford to repay if interest rates hit 7/8% (more than double the rate at the time) and decided that buying a reasonable sized flat would allow me to take on a mortgage I could afford long term.

[TW]Fox · 11 Jan 2011 at 21:12

shine said:
Yet no one asks why people were borrowing beyond their means. It is easy to blame the banks for having lax lending criteria but the people weren't held at gunpoint and forced to take on huge mortgages.

Because unlike most other European country in this countries we are socially conditioned to the idea that if you dont own your own house, you are some sort of failiure. Therefore people went to extraordinary lengths to stich themselves up with mortgages they could never really afford just so they 'owned a house' when in reality the bank owned a house and they just sucked away more than they earned every month on mortgage and living expenses.

singist · 11 Jan 2011 at 21:17

All this **** about ...... "they will all go abroad if we don't pay 'em huge bonuses" ..... **** em!, let 'em go abroad and give some of the young up and coming people a chance.

I'm all for rewarding good performance provided failure is balanced against it, which is what most people do not see happening: They earn a fantastic wage anyway and if they meet/exceed their targets etc they get more in bonuses than most people earn in a year ..... BUT if they **** up, like a few years ago when all this **** hit the fan ..... they still get paid a fortune, but don't get the megga bonuses .... talk about win win.

Xordium · 11 Jan 2011 at 21:19

[TW]Fox;18204306 said:
Because unlike most other European country in this countries we are socially conditioned to the idea that if you dont own your own house, you are some sort of failiure. Therefore people went to extraordinary lengths to stich themselves up with mortgages they could never really afford just so they 'owned a house' when in reality the bank owned a house and they just sucked away more than they earned every month on mortgage and living expenses.

Whilst I agree with you it is worth noting that those people in Europe are in the main far more protected if they do not own property and therefore rent with a greater degree of confidence. Not only did people get stupid mortgages on their own homes they then got stupid mortgages on buy to lets they should never have had and kept the housing bubble going and penalised first-time buyers by diminishing available stock.

[TW]Fox · 11 Jan 2011 at 21:22

singist said:
All this **** about ...... "they will all go abroad if we don't pay 'em huge bonuses" ..... **** em!, let 'em go abroad and give some of the young up and coming people a chance.

If only business were that simple.

I'm all for rewarding good performance provided failure is balanced against it, which is what most people do not see happening: They earn a fantastic wage anyway and if they meet/exceed their targets etc they get more in bonuses than most people earn in a year ..... BUT if they **** up, like a few years ago when all this **** hit the fan ..... they still get paid a fortune, but don't get the megga bonuses .... talk about win win.

Welcome to private industry.

We don't tell you how to run your life, why do we think we can tell other private entities the same?

scorza · 11 Jan 2011 at 21:24

shine said:
What about the people? Does everybody lose their life savings? The knock on affect would be huge and the poorest would get hit the hardest.

Look I'm not seriously advocating this as a way out of the financial crisis - it would be a disaster no question about it. The banking industry bailout had to happen, even Barclays and HSBC who didn't receive direct government aid were in favour of it. When you think about it that's very telling about the state of the market, imagine Boeing and Airbus being happy about the state aid they both receive.