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.

I am in that sort of job...your contact is your contract. If your employer fails to honour it you have the right to sue for breach. Regardless of whether the guardian readers agree with the morality of it or not.

im not sure convenience is much of a defence, you dont have to live there, you could move somewhere cheaper you just like like livng there as its convenient.

You could move out altogether and have cheaper rent and commute or have the banker rent a room in london for most of the week so less comuting is needed. there are options, school fees are no excuse.

there are schools you dont need to pay 4k a term for.... (that wasnt to ihatebabyjake)

i also hate baby jake (tv program), urgh

I was one of tge first to lose my job for a bank. Friends who are still there have lost lots of bonuses plus what they do still get is now on a time delay of x years, so if they are still there they will get paid the money. Of course there are exceptions and they are the people who caused tge problems to begin with!

im not disagreeing contract should be held, more that the contract should not have been written in such a vulgar manner anyway

ihatebabyjake
Sorry, but I will reserve my sympathy for those who are poor rather than someone who might have to move somewhere where you don't pay £3.5k a month for a house.

Jeez. Some people don't earn that.

There are two sides to this one.

A contractual payment is a contractual payment and no company/person should be able to avoid their contractual obligations unless they are physically unable to meet them. A "guaranteed bonus", although popular parlance, is actually a contradiction in terms. If it is guaranteed, it is perfectly reasonable to assume it is a part of one's salary, and make one's spending plans based on it being paid.

On the other hand, TroisGarcons' outrageous comments about how it should not "only" be the shareholders who benefit from a banker's individual contribution can only be laughed at. Have a look at bank share prices and show me these shareholders who have benefited from these "talented" people?! Bank employees have systematically looted their shareholders over 10-20 years, leaving the owners of their companies with semi solvent zombie husks, relying on government and central bank contributions to stay alive (and continue to overpay employees).

I think that to blame bankers generically is also ridiculous. I am an ex banker who did very well out of the bonus system in my time. On the other hand, I always traded and managed "ethically" in the sense that I tried to keep clean books, stayed clear of anything that stank, made sure that any bonuses that I was paid were based on real and not phoney money etc. I cannot deny that given my abilities I was grossly overpaid. In my best years I made hundreds of thousands of pounds (not millions). Was/am I greedy? I don't think so. I could have made a lot more by cheating (as a lot do) or playing political games. When I joined the City in the 80s, I did not do so for the bonuses (they were a lot smaller then and I did not even know about them), I did it because it seemed a really interesting, progressive, environment where I would get to use my mathematical skills in interesting work. Of course, I could have returned or refused my bonuses. But, how many posters can put their hands on their hearts and say that if their employers offered them 500k for a years work they would say "no thanks, I'm not worth it"?

I do think that the game changed in 2008 (luckily I left the City at that point) when it became apparent to all that the banks' historical profits had been a chimera and they were based on overinflated valuations of long term assets, and everyone was asked to share the pain in bailing them out. At that point, I think it was hard to justify paying a bonus and clearly pushed bankers (those in control of the bonus pool, not the more junior employees) beyond the moral pail. People can call me a hypocrit for denouncing bonuses post 2008 but justifying them ahead of them, when I benefited. But, I do think that shareholders should be able to pay what they like to their employees, but once government money is involved, companies have to be held to a tighter governance standard.

You know what?

I don't get this propping up of the banks at all.

I understand why it had to be done, to prevent total melt down of the markets but if a company is losing money, then sad as it is, it goes bankrupt.

I feel the same way about subsidizing any company, btw. If the company is not economically viable, then it has to stop trading. As hard as that is for the workers.

Why do people find money so vulgar?! You do know we pay a lot in tax, and rightly so, we employ people, we give to charity, we pay stamp duty as a percentage on the value of our house purchase...so potentiallyquite a chunk in total if you think of banker homes...we tend to use private education and healthcare, we tend to pay higher council tax as that is on size of home... The govt make a handsome wage out of us. I isn't just take take take.

I make my money honestly and work hard for it. I don't see why that is vulgar. The amounts a bank makes in a year is astronomical. Only a small portion of those profits go into a bonus pool.

Larry
Excellent post.

Do you think that the pressure to make extraordinary sums of money pushed some traders into shady deals?

And were we all to blame for that, for expecting the markets to rise and rise?

Fwiw I am not employed by a bank...but a trading house. I just don't see why the bankers get such a thrashing when in reality the politicians and regulators seem to have go off Scott free from blame.

I wouldn't be tempted by many salaries to go into banking...as a teacher and former marketing person my forte is words (crappy phone posts not withstanding!) so working with figures all day would be hell. And v stressful as I'd be crap at it.

DH designs planes, and crucial systems for them for less than £75k, so I am by no means saying I think it is fair...just that nowadays it isn't a fortune.

Coraltoes
Yes, the banks make money. But they have recently been bailed out to the sum of one trillion pounds.

One trillion pounds.

You cannot ever put that money back into the state, in form from taxes, house payments, school fees...

That is what is making people angry.

And that people with disabled children are being told that their benefits will be cut by up to 50%, while the bankers keep their bonuses.

Coral,

See my post above.

Nothing vulgar about money per se but employees work for their shareholders, and for many banks this now includes the government, either directly or indirectly. Which banks' shares have soared in the last year due to these "huge" profits? Oh dear, they have actually collapsed. And profits? A lot are loss making and those that are posting profits are generally being dishonest about the value of their assets.

"Only a small portion of those profits go into a bonus pool."

Really? Which bank are you talking about? The relevant number is renumeration as a percentage of revenue and all banks publish that. Due to depressed revenues, most banks are well over 50% and I believe the worst this year is closer to 80%. What other companies pay their employees that kind of money?

let them all throw they dummies out of their prams they are over indulged there are younger and more ambitious bankers willing to take their jobs and i would not worry too much about them they will be looked after, a few years back we were all told that our bonus would be cut yet those in management and who made the company money suddenly received a substantial pay rise

and hard work, well yes it is long hours and stressful but so are many many jobs without not only the fantastic wage but all the other perks and then on top of that the belief that they are that important to be able to make demands in such a way when times are hard

YABU. Not every single person working in a bank was personally responsible for the financial mess.

If their employer has stipulated that a bonus will be paid, that is the Companies issue.

You'd be screaming blue murder if a company you worked for posted profits and then rescinded on their legal obligations.

And bonuses aren't just applicable to traders, they are paid to people that work in regular back office functions too - and they ceratinly didn't cause the financial apocolypse.

Ok point taken, I guess I was thinking more of trading houses than banks. However the blame is not all to be shouldereed by the banks. Surely you can see the government at the time, the bank of England, and the FSA were all meant to be on top of the situation, but instead they all made hay while the sun shone, then pointed their own fingers at the bankers deflecting the shit off their own shoulders. Every industry relies on a regulator to ensure it operates within acceptable boundaries. Where was the regulator whilst this was happening! Baffled by the bullshit? Struggling to understand the deals?! I don't get it.

Mme I think everyone who enjoyed easy credit has to take some responsibility. Obviously not directl to blame but they helped drive the machine.

So they want to protest again changes to their contracts. For any who supported the public sector strikes how is this different?

The FSA were made toothless by the very Government that was subsequently required to bail them out.

Not every bank received a bail out incidentally.

larry, you are human and would take it.

My argument is that you should never have been paid it, never been aloowed to be paid it.

Many people only enjoyed 'easy credit' to keep up with sky high house prices etc, many weren't just off buying big tvs.

Plus they were outclassed. Banks are sophisticated businesses that employ PHD's to devise the kind of products that brought the system down.

Unless the FSA has the budget to recruit the same level of brain power they will not be able to unpick these deals.

"Do you think that the pressure to make extraordinary sums of money pushed some traders into shady deals?"

There is no single answer to that. Sometime over the 90s, banking changed from being about satisfying a client's financial needs to selling products. At that point an investment bank's trading floor became more like Harvey Nichols, with each desk almost acting like an independent concession. It was very easy for a lazy, greedy culture to emerge. Very few people knew what other desks really did and those at the top who were often older and less technical and did not question desks that ostensibly were making a huge amount of money, as they also personally gained from it.

I think the best book about the financial crisis is Gillian Tett's "fools' gold". I am really amazed how much she found out and how she put it all together into a coherent narrative.

From my much narrower perspective of running another less controversial area within banks, people did tend to do trades which benefited the apparent value of the book in order to be paid, rather than trades which actually benefited the bank. The term within the business is "system arbitrage".

How you get back to the old days when JP Morgan et al ran finance with a moral angle to benefit society, I am not sure. I don't think bankers are a breed apart. I think they (we) merely reflect a shallow greedy society.

Usury used to be regarded as a sin.