As the FT note:
The coalition government does not plan to legislate to rein in bankers’ bonuses, urging the industry instead to regulate its own pay to regain public trust and lend more to support the economy.
“If people see that lending has not picked up, they will say, how can they justify those bonuses,” Mark Hoban, the new financial secretary to the Treasury told the Financial Times ahead of a speech to the British Bankers’ Association. “People want to see that the banking sector is all in this together.”
Does he really need to be reminded that there is not one other person in the UK who believe that bankers will do as he asks?
Bankers don’t care what other people think. When will he realise that only legislation will break this tyranny?
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Great idea in theory to legislate against bankers bonuses, I’d even support it. While we are about it perhaps we could could also legislate against footballers pay too.
However, in practice it is not so easy. It is very easy to sit on the sidelines and scream “legislate” without having to be the person who has draft and sign off such laws. Hell, if it was so easy to just legislate for everything (and dfo it properly and effectively) we would not have people calling for the adherence to the spirit of tax laws insted of the letter.
What a load of tosh! Why should one profession suffer higher taxes than another? I imagine this would break a huge amount of Human Rights Laws, plus just make an overly complicated tax system even more complicated and open to abuse.
And why should an oil trader working for Shell pay a lower tax rate than an oil trader working for Barcap?
@Greg
Actually I’d make it universal
I support a universal pay cap – will explain how tomorrow
The following from Greg Pytel’s blog sums it all up quite succinctly:
http://gregpytel.blogspot.com/2010/07/what-strange-world.html
However it seems to me that taxing bonuses is concentrating on a symptom rather than the cause. In my opinion, more attention should be paid to the chaotic feedback loop created by banks being allowed to have a loan-to-deposit ratio of over 100%. This along with a transaction tax may go some way to restoring “public trust”. Do we not need to look at ways of influencing behaviour before the event rather than just taxing it afterwards?
Because the Barcap trader has an implicit government guarantee underwriting his business (although I would agree that taxing the trader rather than the bank is not appropriate)?
I think you will all benefit from reading a pretty good dissection of the current financial crisis, “The largest heist in history”
http://gregpytel.blogspot.com/2009/04/largest-heist-in-history.html
It is not really for faint-hearted 👿
That’s a fair comment, and highlights that the banks themselves should be paying for the governmental protection.
[…] commentator on this blog said yesterday: Great idea in theory to legislate against bankers bonuses, I’d even support it. […]
One of the reasons why bonuses were so big was due to the pushing of credit by the banks often with little regard to how loans would be repaid. I heard yesterday that self-certification mortgages still account for almost 50% of all new mortgages, down slightly on the 2007 peak. To the banks it’s business as usual in pumping up the property market.
Here’s a novel idea to address two problems at a stroke. Why not allow credit agencies access to tax records to verify income? If our ability to get credit was dependent on being honest to the tax man maybe tax revenues would rise and mortgage defaults would fall.
[…] commentator on this blog said yesterday: Great idea in theory to legislate against bankers bonuses, I’d even support it. […]