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.

Bonuses are down 65% vs the 2007 peak. Banks are telling their employees that because revenues are lower and costs are higher then compensation has to fall. Its also why 2011/12 may well be the worse year for layoffs in the banking sector for 20+ years.

However, some banks never made a loss during the crisis, never needed bailing out and are still making good profits so you can't expect bonuses to go to zero

oh, and as to the theory that bankers are sooooo clever.

They didn't see this coming, did they?

My DH worked in a bank in Germany about 15 years ago, while he was at Uni. He came home to tell me of the extremely dodgy loan deals that the bank was offering. I am not saying that he knew that the crash would happen, but when the first bank in Germany got into difficulties, it was the one that he worked in that summer. To say he was not surprised is an understatement.

I think peoples anger is misdirected here. These people have chose a career where they get paid silly amounts of money, that was the choice they made and i think a great deal of the 'disgust' people feel is jealousy.

If these banks were bailed out by the government and are now paying ridiculous bonuses it is the government that we should be cross with for not securing a better deal for the tax payer where our money is paid back before bonuses.

Mmereindor, you?re really lumping people together but at the same time saying your husband is different to them. There are hundreds of bankers/ brokers/ traders like your husband. I know a number of people who stayed in high risk areas whilst the going was good but KNEW what was coming and got out into safer environments before the shit hit the fan. Its not unusual, they just didn?t stop it from escalating, they used it as a route to success (not that they could?ve stopped it)

yes, but a comprehensive nationalisation would mean the public purse benefits when the gamblers have been succesful, and they go to the wall, personally, if they fail. I'd see the view of cutting off dodgy dealing from public liability as a good one, but I'd also like to see them paying back the money that was used to 'save' them in the first place.

CharShep - I suspect most of the ire expressed is at the brass neck of the people in 'demanding' their bonuses,( and some of the bleating going on on this thread) which as I had said is taking the piss rather.

I think peoples anger is misdirected here.

I agree. Most people who are blaming the bankers simply don't understand what's really gone on and just blaming the easy targets.

DeeP why would any trader/banker bother to work for such an organisation, when they could move to another country and get paid well when they do well?

Serenity
My husband is not in banking at all. He was trained as a banker, but moved into general business, in a financial role but not as a trader etc.

He left banking 20 years ago.

Yabu. If they contracted to receive it then they are legally entitled and have probably made plans to spend it, mortgage, school fees, whatever.

Also, banking is a high stress and high risk industry. People are being made redundant left right and centre and may only work a few years hence the 'over paying' of salaries and bonuses. I wouldn't want to be in that field but don't begrudge the people that are.

I also think it's an over simplification to blame bankers for everything that's gone wrong in the economy.

Moving country? Well that wouldn't be an issue - they can of course go off to another country. And be replaced by just as talented people who have no wish to live in Hong Kong/Switzerland/US. People with families and ties. And are happy to work for a very generous salary. It just blows the 'threats' of leaving out of the water and mens we are not held to ransome as a country.

Angel
I don't blame the banks alone for the crisis

I do think that taking bonuses when the banks have made a loss or were bailed out by the tax payer is not on.

As to the moving overseas. Give me a break.

The British bankers here in Switzerland are generally not that happy to be here. After living in London, Geneva is incredibly boring.

And the high cost of living here would make it unattractive for the banks to move here.

then why not educate us

it is not jealousy that i feel when someone is complaining about not getting £100k bonus this year it is disgust that someone feels entitled to earn that much when many are struggling at the moment when cutbacks are being made, when countries in eurpoe are on the verge of becoming bankrupt, when if it was not for the governments bailing out some of the banks (and that helped all banks) and that money was from us all. it is pure greed, ambition and drive does not or should not equal greed. yes i am angry at the governments to for allowing to be dictated too

DeePan, the problem is that the banks move their headquarters. That means the top people, the ones who get paid the big bucks are the ones who leave. They don't get replaced. We not only lose the income tax they pay, we lose the money they'd spend in the economy and the corporation tax the entire company pays since they are no longer UK companies.

It's a very very short sighted view when so much of our money comes from the financial services sector. The very banks which would be most likely to leave are the stronger ones whom didn't need to receive bailouts. For example HSBC which is the 'Hong Kong and Shanghai' banking corporation. Just what ties them to UK? Ditto with Deutsche bank which is the largest employer in the city. Why not move back to Germany?

no, it isn't jealousy for me either - I am very happy in my job, I'd sort of knew what I wanted to do from teenage years - and now lead a team of practitioners. Salary could be better but hey, there is far more to life.
no, it's a bit breath-takingness at the lack of self-awareness that big earners in hte banking sector that gets my goat more than a bit.

niceguy - nationalised banks wouldn't be able to move HQs - they would be state-owned, and the traders 'profits' are div'ed up between them and the national company. IF someone doesn't like that set up, off they go. IT's a market - it isn't about the ability of one or two.

eg RBS right now. They say "we're off to HK" - the govt indicates otherwise.

larrygrylls, I've PMd you.

MmeL, the very thought of your OP scenario happening gave me a chuckle!

nice guy, et al- it's not about easy targets or jealousy.

Of course the bankers (particularly the senior bankers) are not solely to blame for the crisis in which we find ourselves but they paid a part.

Greed has been at the root of this crisis and in my opinion this greed has come from the top (i.e. the richest people in society) thinking that they deserve more and more, dodging tax, etc (not talking about bankers specifically here obviously). The gap between the richest and poorest has dramatically increased and the percentage of wealth owned by the top 1% has also increased in the past 15 years or so. This is not good for any society.
We all need to take collective responsibility for this but those who take home hugely inflated salaries (and think that they deserve it which is only natural when you are told that you do) and those who are supposed to be responsible for running and organising society need to do this most of all.
Unfortunately, they seem to have to take less responsibility as they can make a mess of things and land another plum job because of their contacts whereas the poorest those on middle incomes are loosing their homes, etc, etc.

"You might want to look carefully at where you fall in the workforce demographic before you 'look forward' to that (specially if you are female). Viz."

amichrissima, you might want to look carefully at this

Besides, as swc carefully explains, T&C reliant on taxpayer funding in the public sector are completely different from T&C reliant on taxpayer funding in the banking sector, and cannot be compared.

Hang on.

You forgot to pat me on the head, swc.

it's an over simplification to blame bankers for everything that's gone wrong in the economy.

If you're talking about our current pickle (shared by many other countries), I don't think that at all. Banks are wholly responsible for it. Banks aren't naturally occurring phenomena, they are collections of bankers. So bankers are to blame.

Banks don't "move money around", they create it. Only 3% of this country's money supply is tied to real stuff (it's much the same in the US). The rest is money bankers made up - invented out of thin air - when people asked for loans.

Whether you're asking the bank for an advance on a house or a space station, the question is never "Have we got enough money to lend you that?" but rather, "How will you meet the repayments and what is our security should you default?"

This is because, as soon as you set out your repayments and security to the bank's satisfaction, it can create the money. There's no wad of notes; no selling of assets. The minute you agree to the loan, you guarantee an income stream for the bank. It then pushes a few buttons, magics the money for you and puts your loan on its books an an asset.

The asset of your future interest payments, and your property should you fail, is worth so much to the bank that it knows it can't fail. So it says "Here you go, happy purchasing and don't forget when your payments are due." Job done. Asset on books.

Banks are like the "house" in casinos. They can't lose.

As we know, bankers and their agents get humungous bonuses for lending a lot. Even at today's rates (and supposing the rates stay the same), a £300,000 mortgage at 3.9% will net the bank 175,000 profit during the life of your loan - more than 50% of what you borrowed. As the bank didn't actually have to do or sell anything to get it, it's literally money for nothing. And it's secure, because if you don't cough up the bank will sell your house. This makes it clear why bankers are were encouraged to lend as much as possible on resellable securities, like property.

The sub-prime mortgage explosion was simply a business exploiting all corners of the market. The folks who lent you your mortgage were on a winner wither way, bonus guaranteed, so they made it easy for people who didn't yet have mortgages to get one. Ker-ching! Many happy bankers.

OK, so when they all started defaulting - as everyone knew they would - the banks found themselves owning a huge amount of houses; more than they could sell in a hurry, especially as all the people who wanted to buy that kind of house had gone bust. The banks still hadn't lost anything - but, according to their own accounting system, they had. because banks count future income as a current asset.

Which is how it happened. It was the fault of bankers, and it did happen because they were greedy.

Can I pat someone on the head now?

I meant to add - there's more; of course there's more (none of it pleasant or even particularly sane) - but the above show very clearly why MACRO-ECONOMICS IS NOT LIKE A HOUSEHOLD BUDGET or a corner shop. Maggie knew this perfectly well, and she also knew most people would nod along with her when she lied about it.

You and I have to deal in money that does represent real stuff, because our money supply is limited to what others will let us have. Banks and governments don't have this problem. They can magic as much money as they like.

Every time somebody says "money isn't real" on this forum, loads of people go ballistic. I hope this has gone some way to explain what we mean when we say that?