As the FT notes this morning:
Barclays should lower warped pay levels, end the bank's “entitlement culture” and usher in a spirit of “transparency and candour” if it is to win back trust, according to a long-awaited review of the bank's flawed culture and values.
Anthony Salz, the City lawyer-turned-Rothschild investment banker who on Wednesday published a 244-page report on Barclays' business practices, said pay levels were one of the most pernicious cultural problems, particularly among a cohort at the helm of the bank that he calls “the top 70”.
Now let's reflect on that for a moment.
For some time some of us have argued that the world divides between the 0.1% and the rest. Barclays has 140,000 employees worldwide. 70 exploited them. That's the 0.05% at work.
And those who did exploit them were evidenced to do so because they paid themselves 35% more than their peers in other banks - a benchmark already hopelessly distorted.
The evidence is clear: major multinational corporations have been captured for the benefit of a few, with employees, shareholders (ordinary pensioners, after all) and government treated with scant regard. And all Salz really says is that you must not be out of line in doing this: so long as you're not abnormally exploiting that's fine.
Well the message is, no it isn't.
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No need to worry N Korea are going to bomb us apparently
The message is definitely NO but why don’t the shareholders think so! Are they all morons and cretins? Or is it the ones with preferanced shares that don’t object. I just don’t get it.
You’re into the realms of the impotence of smaller shareholders who can be easily outvoted by the large institutional shareholders that tend to dominate
Simon,
you’re also dealing with “groupthink”. We are assured that the most talented investment bankers must be suitably (i.e grossly unsuitably) remunerated as this alone ensures success. who tell us this, well, er, bankers.
Leaving aside the obvious conflict of interest, these are the same people who thought that weaving thousands of high-risk loans into a derivative & then using that as a collateral to raise further high-risk loans was a sensible strategy, suggesting they may not know as much as they think about real life.
To adapt Dr Johnson “Sir, you have highly experienced & intelligent bankers. Unfortunately the intelligent ones aren’t experienced & the experienced ones aren’t intelligent.”
We’ve missed a massive opportunity to say that since we, the UK, own a bank, its employees should all, without exception, be rewarded on public sector pay-levels & then to see if its performance actually dipped.
“Leaving aside the obvious conflict of interest, these are the same people who thought that weaving thousands of high-risk loans into a derivative & then using that as a collateral to raise further high-risk loans was a sensible strategy, suggesting they may not know as much as they think about real life.”
Actually bundling together thousands of loans into a derivative and then using that to raise more money for lending is an extremely old practice. German pfandbrief have been around since 1769. It was more the belief that high risk loans from many different regions would result in a lower risk product as house prices had not fallen nationwide in the US for something like 70 years. And it was not just idiot bankers that believed this sort of nonsense, go back to 2005 and the media was full of articles that house price in the UK only went up, there would be no more housing crashes. Even the government believed it had eliminated boom and bust cycles.
Would not argue with you. But what is the alternative? Are you denying that talent and leadership skills do not create wealth? I don’t mind what top bankers are paid as long as they have actually created wealth, and then are taxed accordingly. I appreciate those are two big ifs of course. That’s where a Courageous State comes in, in supplying a robust Accounting/Audit regime and a fit for purpose HM Revenue & Customs. But the “State” should not run banks,politicians can barely run anything.
I think you are too dismissive of politicians per se
I am dismissive of the ability of people to run some large organisations per se – hence a need for localisation in gov’t to some degree
But re rewards: of course reward is needed, but candidly, why does any banker need more than 265,000 – 10 times median pay?
Why does anyone actually need more than 100K a year? Or even 75K? Are you suggesting pay should be limited?
I firmly believe no tax relief should be given on pay exceeding ten times median level – and think that generous
Ok, thatnks for the clarification. But why be generous? Why not make it five times?
If you wish
It’s only a suggestion