February 9th, 2009

In Defence of Some Banker’s Bonuses

Brokers and Traders have contracts like everyone else, they usually have performance related pay. When Guido was a trader he was recompensed with a share of the profits. There was no basic salary, no pension plan, no company car, no expense account, medical plan, per diem allowance, subsidised bar, subsidised restaurant, mileage allowance, staffing allowance, additional costs allowance, John Lewis list, nothing but a share of the profits and losses. No complaints, Guido ate what he killed and mostly ate well.

If the mortgage traders and derivatives traders have lost billions for an investment bank and the stock brokers and commodity traders have made millions, than why should the winning traders be punished for the losses of the losing traders? Are politicians now in favour of some form of collective punishment?

Do any of the politicians currently bashing the bankers really think banks can break contracts with traders just because politicians says so? The banks would be sued in court and lose. Cameron says “it is insulting to take money from taxpayers to use for their bonuses” – the taxpayer would be worse off if the profitable traders left and reduced the banks future profitability or, worse still, sued. He should know better, he probably does, yet he is just reflecting populist rage. Not his finest moment of leadership.

UPDATE : Given the state of the economy for which they are responible, presumably Hector Sants of the FSA, Mervyn King of the Bank of England and the numerous Treasury mandarins who monitor our economic well being will forgo the millions in bonuses due to be to be paid to them this year? Go on set an example, Gordon has it in his power to order it so.



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