to think that bankers who sue take legal action to protect their bonuses should ...

[MmeReindor]

be made to live in a grotty mouldy B&B for a month, so they can see the consequences of their actions. There are people who have lost their jobs because of the recession, who have lost their home, lost everything.

And the bankers still insist on a bonus. On top of their already well paid job?

I am speechless.

The Guardian reports today that this may happen.

Already in Germany, the Commerzbank is facing a legal challenge from its subsiduary, DresdenKleinwort

The bankers claim that Commerzbank, which bought Dresdner Kleinwort, should have honoured an agreement to provide a ?400m bonus pool for 2008. Dresdner Kleinwort reported a ?6.3bn loss for 2008, which Commerzbank believes changed its commitment to the bankers

What really gets my goat is the comment about taxes, from a think tank.

City bonuses are expected to total £4.2bn in 2011, down 38% on the £6.7bn paid out last year, ... will generate about £2.5bn for the Treasury, ... this is still some distance ...from the £6.8bn collected in the peak of 2007-08, clearly illustrating how the taxpayer also misses out when the City pays lower bonuses,"

How in the name of all that is holy, does that even make a bit of sense?

We bail the banks out with taxpayers' money, but should be grateful that we are getting £2.5bn back - if we even get it back, as no doubt some of it will vanish in an off-shore bank account, or via shady tax avoidance.

oh, and if anyone (morebeta?) would like to write a blog post for Frothers, even - or especially - from a different viewpoint, then you would be more than welcome.

'It is also true that many senior managers in large City banks do not understand what is going on down on the trading desks. Some 15 - 20 years ago I was both a trader and then a consultant to investment banks telling them how to manage risks and it is clear the mistakes that were happening back then happened again in recent years. Nothing has been learned. The entire financial crisis was down to very poor management, ego and greed and nothing else.'

YYY Morebeta, my DH works in Risk and he said exactly the same thing in the run-up to the big financial crisis. The banks all started employing Quants and rocekt scientists who knew all about mathematical theory and fuck all about banking, but no-one wanted to be the little boy who shouted that he couldn't see the Emperor's new clothes!

Fellatio - exactly. Worse still, if anyone had shouted they would have been sacked. I've seen it happen - especially where you have a hard charging CEO who used to be a trader. The most important person sitting on any bank Board after the CEO and CFO should be the Director of Risk and the CEO and CFO should put that person in charge of all trading operations.

It will never happen.

Who are the frothers?

here, Beta

We are apolitical (but left leaning) and would love to have guest blog posts written by those with insight into the financial crisis.

Basically we oppose the cuts as they are being carried out, targeting the most vulnerable in our society.

My personal opinion is that our "benefit" culture has arisen out of the abuse of the Welfare State, combined with the disconnect between earnings and cost of living.

If you have something to add to the debate, we would love to hear from you.

Check out this thread

Mmm..... I agree with the need for cuts and want a lot more but I hate how the banks got bailed out. We seem to have a benefits culture among the very rich too.

I'll read more.

"benefits culture among the rich"

Interesting point.

The "sense of entitlement" from the well off. Would make an interesting blog post.

Hahaha - yes MoreBeta we know that from bitter experience! My DH was sacked (well, it wasn't called that, obviously - he decided to 'resign due to fundamental differences' after being told he was seen as 'obstructive and challenging' by some of the prima donnas in the trading room, and for being 'arrogant' when pointing out to the Deputy CEO that she didn't appear to understand the fundamentals of her own job, or of his. (OK, granted, that was a pretty arrogant thing to say to your immediate boss, but she was a JOKE, and he couldn't stand by and watch the car crash she was making of it.)

Who did he work for? Well, I cannot possibly say, but let's just say that if I told you, you'd go OMG! Luckily he was out of there in the nick of time, before the shit really hit the fan.

Why are people opposed to the banks being bailed out? If they hadn't been, anyone with a bank account / assets held with RBS, Lloyds, N.Rock etc would have been left with nothing - not a penny of your savings would have remained.

That would have subsequently caused a domino effect, with the remainder of banks failing and more people losing their life savings.

Is that the situation you think would have been the best result?

It's also worth noting that the tax payer is making considerably more money in the long term from the loan issued to shore up the banks that they would have garnered from the same amount of cash on the money markets (which is where much of it would have been maintained otherwise).

I'm also completely at a loss to understand why people seem to think that banks like losing money. As profit making organisations, they do not want you to default on mortgages. They end up with your property (or portion owed on it once sold), which is worth a lot less than they loaned you in the first place.

Garlic, the bank extended your mortgage and terms because they were trying to salvage some value out of your agreement, not because they were making some cunning faustian pact to somehow squeeze more out of you.

It does not sound likely to me, but if you think the bank in question acted unethically or mis-sold your mortgage to you, go to the FSA / Ombudsman and complain. Your complaint will be upheld if the bank sold you a product where conditions of bowwoing 125% loan to value was not explained clearly and in black and white.

MoreBeta, please can you give some exaples of what you mean by a benefits culture amongst the rich?

Garlic, the bank extended your mortgage and terms

Huh? No, they didn't.

Yes - unless you mis-posted earlier when you said "The guy came over and offered me a 125% mortgage at a lower interest rate than my existing 'normal' loan".

....and you didn't answer the question.

Pasta
Banks have failed before though. Ok, this would have been a biggie and it is generally thought that it was indeed necessary.

And why would you say that the government is making more from the loan?

According to this report the timescale for repayment could be as much as 20 years, and the costs for tax payers are huge.

It was a replacement mortgage, Pasta, you nutter. I thought that was clear enough. It offered me more cash and lower rates than my existing one. Don't know how young you are, but that was very common 9 years ago - banks were trampling over each other to lend more. I had so much credit available on cards I could have funded all the renovations that way, but of course it would have been expensive money. Kinda wish I had now - they couldn't have taken my home off me - but I wasn't to know how things would turn out.

I'm only bothering to reply out of respect to Mme Lindt, tbh. You don't seem to know much and you're quite rude.

Yabu for marrying a banker.

I think bankers' bonuses should only ever be a Percentage of the yoy increase of the share price. I'm not at ll upset bankers get bonuses. I'm a shareholder of various UK, US, Irish & European banks and I've been completely hammered. But the government do benefit from bankers bonuses to the tune of 40. - 50 %
so why the big complaint?

You do realise that the biggest shareholders in the banks prior to the govt bailout, were the pension funds? Quite apart from the concomitant chaos that would have ensued (all sorts of businesses going under because their lines of credit had been cut and a complete freezing of interbank lending) how is wiping out people's pensions a good outcome?

Yabu.

I dunno, my pensions were wiped out by one major fraudster, the lower-profile frauds that came after him, and random other funds taking everything in "fees". I reached my (private) pension age last year and, after 25 years of making maximum contributions, received the glorious sum of £2,900 and a £300 annuity. Didn't need a global crash to achieve that.

He is a banker in training only. By the time I married him he had gone into private business world.

The 50% income tax in NO way compensates for the billions that the bailout will cost the government. If they even pay these taxes and haven't got clever measures in place to save taxes.

Garlic, I work in a bank. I run one of Europe's largest balance sheets from an FA perspective, hence considerably more qualified than you to comment on financial inner workings. As a person who takes out 125% mortgages and cannot understand the simple ethic that tey are responsible when they cannot pay it back, your opinion is abhorrent to me. Where are your morals?

Given the spark you've shown in this thread I'm not suprised at your situation at all.

Good luck maxing out your next credit card. Perhaps you can start a thread blaming it on the shop that sold you the goods.

MrsjAlfred. Your response at saying Mme Lindor is being unreasonable for marrying a banker is disgraceful.

MmeLindor, I can only speak for the banks I have personal knowledge of, but the government is making a killing on the interest and share buyout price. I have no idea as to other banks as these details are not made public, only speculated upon by people guessing using npv cash flows.

oh, and the term for a replacement mortgage is the same as extending the loan, even if another bank took it on.

Pasta
Yes, I have read that before, that the government is making a lot of money from the loans, but isn't that self-defeating?

Why make a killing while waiting for 20 years for the payback? It doesn't make sense.

Yabu marrying a banker was said tongue in cheek.

Sorry for my comment then MrsJ!

The banking bailout had to happen. The chaos which would have happened if the government hadn't stepped in isn't worth thinking about.

Millions of people would have lost their life savings. Thousands of small businesses wouldn't be able to get loans and would go to the wall. Countless people would have been made redundant on the back of it.

Was it something the government wanted to do? No. But it was the least worst choice. A choice which Darling at the time did a fair job of. There were a few things with hindsight I think they should have insisted upon such as Fred the Shred give up his pension and stipulate maximum bonus levels whilst the bank is in state hands but this isn't something which happens everyday and hindsight is a wonderful thing.

Plus what most people don't understand is that only certain banks have been bailed out in the UK. RBS, HBOS, Northern Rock, B&B. Many more weathered the storm themselves. Eg. Barclays, HSBC.

And money wasn't simply thrown at them. We took over the shares and even the govt support for bad loans wasn't free. That's like an insurance scheme which is actually pretty expensive for banks which last time I read was making us a fair bit of money.