No bonuses for bankers at AIB - why doesn't our country have the balls to do this too???

I really like reading beenbeta's opinions on these type of threads - very interesting views (and frightening insight on how banks operate).

Switzerland is SO boring though.

Government and regulators in both the UK and US encouraged retail banks to give out mortgages on flimsier and flimsier grounds. Retail banks found themselves asked by shareholders why they weren't competing in this lucrative market. So they went off to wholesale markets and investment banks to find ways of getting the business done. House prices could only go up right? Its everybody's right to own a house even those with no stable income and no deposit!

MBS market got totally out of control definately but nobody in the public/govt/regulators cared until it was too late.

I suppose my point is "casino banking" is much more than MBS or CDS. The RBS FX spot and options trading desk, IR swap trading desk etc make a lot of money each year for RBS as franchise businesses. Without them I doubt the taxpayer will get back there money as easily.

Taxpayers bailed out the entire banking system as well as some individual banks - none of the banks would have survived were it not for the taxpayer guarantee and Bank of England printing money.

In any other industry, your company goes bust, you lose your job. Bankers not only get to keep their jobs, they stuff taxpayers' money into their back pockets while taxpayers also have to take the pain of cuts in their own income and in local and national government services. A triple whammy for Mr and Mrs ordinary citizen but vast rewards for the bankers.

It cannot be beyond the wit of man to correct this and ensure those responsible are held to account.

'casino banking'

siasl - I sort of agree with you on 'casino anking' except to say that it was the Mortgage Backed Security' industry that allowed so much of the uncontrolled lending on property and that was what brought the system down as you say.

However, the trading of MBS and related credit default swaps without regard to risk among investment banks was the linking factor that multiplied the risk enormously and took down the shadow banking system and caused money markets to dry unexpectedly.

Retail mortgage lending and commercial mortgage lending on property was ultimately linked to 'casino banking'. The true losses on this have not yet been PROPERLY realised or written off.

I think people tend to rewrite history with regard to "casino banking".

Northern Rock, Halifax, Bradford and Bingley etc all went down due to an overeliance on wholesale markets. These were retail banks not engaged in casino banking. Retail banks lent out too much on to poor mortgages (100%+, self certified liar loans etc) and didn't have a large enough deposit base to cover this.

Lloyds was fine until Gordon Brown strongarmed them into taking over Halifax.

RBS bought ABN Amro at the top (very poor decision) and got involved in US mortgages (which had no experience in).

Lehman and Bear Sterns have more to answer for. However, they were investment banks that got involved in retail mortgage market.

Most of the errors came from banks moving outside their area of expertise.

Let face it, the "casino banking" elements of RBS made a profit in 2007-2010. In fact if UK taxpayers want to get their money back, the govt should selloff the retail/commercial bits and keep the casino bit!

force for salaries down dramatically.

Aitch - "how would you say the salaries should be handled".

My view is that banks who are living on the public purse should be shut down and broken up and sold off.

In future, banks should be forced to hold a lot more capital against the risk they take. That would reduce their profits dramatically. That would for salaries down dramatically.

On top of that I would force a return to the old partnership system where senior managers had their own personal wealth at stake. It could be done if the Bank of England was given its old powers of regulation back.

Finally, force a separation of retail/commercial lending banking from 'casino banking'.

When I first left university I worked for a commodity trading company and the man who owned it risked his own personal capital along with the other senior managers every single day. I know how different that felt to the banks I later went to work for where managers had nothing at stake but their year end bonus.

Sure, there are bonuses in other jobs - but they are never anywhere on the scale of bankers' bonuses. More often its a token 'recognition award' type thing, £10s or £100s in value not 6/7 figure sums bigger than a normal persons salary.

well that's true, of course, on both counts. plenty of jobs, though, get bonuses, so i'm not sure it's such a great point.

i cheered too, btw, when i heard. i think it's great. good for us too, imo.

paid for simply doing your job?

paid extra, obv.

If your job is to make money, then why should you be paid for simply doing your job?

Scientists who come up with a patent which makes their company money (and really adds value to the world, not just redistributes existing dosh like bankers do!) do not typically get millions of pounds of bonuses. They might get a promotion or some extra share options.

I audibly cheered the Irish govt when I heard this news on the radio. Good for them!

None of us wish to be punished for the crimes of others, Aitch, but that's what's happening now to the Irish citizen. ?40M or no.

i know they are owned by ireland, that's what i'm saying, kerry. that's why they can just do this or remove state input.

and god knows the bankers i know aren't brighter than the doctors i know, but their motivation is money, that's why they chased that career.

how would you say the salaries should be handled, beenbeta. a friend of mine has made millions for his bank this year, running a very successful dept (of something or other, my eyes glaze). he will not wish to be punished for the crimes of others.

granted - I totally agree.

Me and DW worked in the City (DW as an investment banker) and we often say what you said.

People in the City are really not that talented. They just think they are and have very big egos and an exceptional thirst for money. People would be amazed how much very ordinary people get paid for doing their job not very well. The whole financial crisis was created by apalling management failures and greed. All should have lost their jobs if not been prosecuted for gross failure of fiduciary duties.

Capitalism is a good thing as long as it is allowed to work. What people in the City did was expoloit regulatory failure, walk off with huge bonuses, then turn round to politicians (who were clueless) and frightened them to death with stories of economic collapse if banks were not bailed out.

The UK economy has been distorted by the City and it really needs to be reigned in by stricter control over the risks being taken and how that risk taking is rewarded.

Let those who want to leave walk off to Switzerland and replace them with a new breed of manager and employee. London will still be a very important financial centre but it will do what is supposed to do. Provide services and lend money to real businesses - not punt billions on a giant casino of uncontrolled risk.

And granted - I'd say being 'very motivated by money' is as much a core competence for merchant bankers as 'not minding bad smells' is for refuse collectors .

"But afaik London is full of big offices of big banks from literally all over the world, & if the staff of the bailed-out UK banks didn't get their bonuses, they could chase the money & still stay in London, therefore the bailed-out UK banks can't risk not paying bonuses. (I'm assuming the big international banks also pay silly money in bonuses)"

Ironically I think the bailed out banks may need to pay a premium to attract the best staff. Why else would someone who's proved themselves in a 'non bailed out bank' move to RBS or Lloyds - not a great career move.

Ponders - yes I see what you mean, that people from Lloyds etc wouldn't have to move country, they could 'just' get another job, although that isn't quite so easy as it was a few years ago.

I've got no problem with governments imposing restrictions on bonus payouts for banks which were bailed out if it is deemed appropriate.

disclaimer - I have absolutely no knowledge of international banking!

But afaik London is full of big offices of big banks from literally all over the world, & if the staff of the bailed-out UK banks didn't get their bonuses, they could chase the money & still stay in London, therefore the bailed-out UK banks can't risk not paying bonuses. (I'm assuming the big international banks also pay silly money in bonuses)

(I think we're at cross-purposes actually Aitch )

oh you mean the ones that the govt doesn't own and therefore couldn't deny bonuses to in the irish style? see i'm not sure that's such a good thing.

the bankers i have known are absolutely obsessed with money, painfully so. they would chase it wherever it went. they have bills to pay, lifestyles to support.

no, I meant the staff of the UK banks in London would flee to other banks in London if they didn't get their bonuses.

No idea what the AIB staff in Ireland might do!