Fsa Fines Taxpayer

[leicestersq]

http://www.bbc.co.uk/news/business-12161181

A £2.8 million fine, which is paid for by the shareholders, which is the taxpayer.

I wonder how much it cost the taxpayer to do the investigation into RBS that led to this fine?

[Butthead]

OK, but let's be reasonable. If the headline said:

"FSA doesn't fine RBS over complaints" then many on this site would be quick to point out that "The Banksters" had put one over on the "sheeple" once again and the govt and toothless regulator are in cahoots and will the last person to leave the UK please turn out the lights etc.

We can't have it both ways.

[leicestersq]

OK, but let's be reasonable. If the headline said:

"FSA doesn't fine RBS over complaints" then many on this site would be quick to point out that "The Banksters" had put one over on the "sheeple" once again and the govt and toothless regulator are in cahoots and will the last person to leave the UK please turn out the lights etc.

We can't have it both ways.

How about "FSA fines Banksters individually and seizes their assets".

Do that and we would applaud and bank policy would become very different.

[gf3]

Well as long as the CEO get more than 5.6 million in pay and bonus we the tax payer will get the 2.8 million back with his 50% tax so don't worry.

[SomethingHasToGive]

Well as long as the CEO get more than 5.6 million in pay and bonus we the tax payer will get the 2.8 million back with his 50% tax so don't worry.

That's pretty cynical...

However to be more cynical, don't the CEOs of companies like that get much of his pay in shares and share options? If so that is all taxed at 24% so he needs to get 11.6 million for the taxpayer to get the money back.

[Democorruptcy]

It's been a bad day for us.

Our Licence fee tax has also suffered a £250k hit with the BBC being found guilty of age discrimination.

http://www.thisislondon.co.uk/standard/article-23912965-bbc-guilty-of-sacking-miriam-oreilly-because-of-her-age.do

[Bloo Loo]

http://www.bbc.co.uk...siness-12161181

A £2.8 million fine, which is paid for by the shareholders, which is the taxpayer.

I wonder how much it cost the taxpayer to do the investigation into RBS that led to this fine?

No, its paid for out of profits.

this should affect some peoples bonus accordingly.

it wont of course.

[libspero]

How about "FSA fines Banksters individually and seizes their assets".

Do that and we would applaud and bank policy would become very different.

This is not aimed at you specifically Leicestersq, but this individual banker thing being bandied around at the moment is wearing a bit thin.

Most bankers are just regular people doing a regular job for an employer who happens to be a bank.

For clarity, it was the retail banks and mortgage lenders who lent everyone too much money, they were the ones happy to throw standards out of the window because the risk was shifted to the trading arms who packaged it up. The FSA did Sweet FA.

Retail bankers will get about 10% of the bonuses handed out this year.. so for the people probably the most to blame they are not exactly getting the lions share.

The traders just buy and sell stuff.. they don't give a sh1t, but that is exactly what they are paid to do. Of the few that happened to be involved with MBS's most of them probably didn't understand the inner workings of what they were selling either.. and the pension funds and investors who hovered them up also didn't ask any questions. The people putting money into pensions and investing in these products didn't ask any questions again so pretty much everybody is responsible at some point down the line.. from the person who's pension fund bought the MBS, to the person who ultimately used the money to buy a house they couldn't afford.

My long and slightly rambling point is, that of all the people who are individually to blame.. probably only a very small handful were ever aware of the implications of what they were doing.

To say all bankers deserve to lose their bonuses is not really true. Probably about 1% of them do. That same 1% should probably be in gaol, but that's another story...

[Bloo Loo]

This is not aimed at you specifically Leicestersq, but this individual banker thing being bandied around at the moment is wearing a bit thin.

Most bankers are just regular people doing a regular job for an employer who happens to be a bank.

For clarity, it was the retail banks and mortgage lenders who lent everyone too much money, they were the ones happy to throw standards out of the window because the risk was shifted to the trading arms who packaged it up. The FSA did Sweet FA.

Retail bankers will get about 10% of the bonuses handed out this year.. so for the people probably the most to blame they are not exactly getting the lions share.

The traders just buy and sell stuff.. they don't give a sh1t, but that is exactly what they are paid to do. Of the few that happened to be involved with MBS's most of them probably didn't understand the inner workings of what they were selling either.. and the pension funds and investors who hovered them up also didn't ask any questions. The people putting money into pensions and investing in these products didn't ask any questions again so pretty much everybody is responsible at some point down the line.. from the person who's pension fund bought the MBS, to the person who ultimately used the money to buy a house they couldn't afford.

My long and slightly rambling point is, that of all the people who are individually to blame.. probably only a very small handful were ever aware of the implications of what they were doing.

To say all bankers deserve to lose their bonuses is not really true. Probably about 1% of them do. That same 1% should probably be in gaol, but that's another story...

cant see how bonuses can be paid when most banks are insolvent.

[libspero]

cant see how bonuses can be paid when most banks are insolvent.

Because instead of not letting them fail we have opted to prop them up and turn a blind eye to the fact that the assets owned by a lot of investment banks (or now, in some cases various tax payers) are actually worth pennies in the pound.

The side effect of this as you know, is that the banks are nicely propped up, and are contractually obliged to pay the traders whatever it is they get per billion of money they make for the bank. The only other option is to fire them all... but since the stock/commodities markets are all rising again they are all making paper gains and the banks will want them on side.

Until the next time they manage to cause systemic financial collapse. Then the loses will be socialised/inflated away again. Happy days.

Edited January 11, 2011 by libspero

[Prescience]

This is not aimed at you specifically Leicestersq, but this individual banker thing being bandied around at the moment is wearing a bit thin.

Most bankers are just regular people doing a regular job for an employer who happens to be a bank.

For clarity, it was the retail banks and mortgage lenders who lent everyone too much money, they were the ones happy to throw standards out of the window because the risk was shifted to the trading arms who packaged it up. The FSA did Sweet FA.

Retail bankers will get about 10% of the bonuses handed out this year.. so for the people probably the most to blame they are not exactly getting the lions share.

The traders just buy and sell stuff.. they don't give a sh1t, but that is exactly what they are paid to do. Of the few that happened to be involved with MBS's most of them probably didn't understand the inner workings of what they were selling either.. and the pension funds and investors who hovered them up also didn't ask any questions. The people putting money into pensions and investing in these products didn't ask any questions again so pretty much everybody is responsible at some point down the line.. from the person who's pension fund bought the MBS, to the person who ultimately used the money to buy a house they couldn't afford.

My long and slightly rambling point is, that of all the people who are individually to blame.. probably only a very small handful were ever aware of the implications of what they were doing.

To say all bankers deserve to lose their bonuses is not really true. Probably about 1% of them do. That same 1% should probably be in gaol, but that's another story...

Nice attempt at obfuscation.

Let's consider some reality.

The "Bank Bonus" thing is simply a cultural issue: and simply a symptom of a financial system gone terminally sick.

Plenty of working grunts (The majority) do their work, put their time in and hope to receive their salary each month and eventually, a derisory pension (After, naturally, the City's genius wheeler dealers have finished trading its assets and whittling core value down by 70%) when they pull their mythical gold watch.

Few receive a "bonus": or a bonus of any significance.

Retail banks started paying bonuses when they became besotted with greed, myopia and slavering ignorance: and demeaned both their staff and customers by force-selling a range of badly conceived, ill-thought out and over-priced financial products which the banks didn't actually understand and their customers didn't need.

The bonus was an incentive to screw customers.

Insurance on loans and credit cards being probably the prime example.

People used to join a "Clearing Bank" or what would now be called a "retail" bank (If one can find a branch much anywhere: most are the odd clerk and an amusement arcade like bank of ATMs) for stability of employment, a pension at the end and with luck, a preferential mortgage after a number of years of probationary service.

At the same time, "Managers" were simply cashiers with delusions of grandeur: as banks over-relied on credit profiling, call centres and unqualified ignorance in their staff: try gaining any sense from a call centre agent on anything much other than "Hello! Thank you for calling Dickhead Bank plc: how may I help you!"

Which invariably, they can't.

The constant whining mantra of banks on bonuses is "We have to pay top dollar to get the top staff!".

Could have fooled me.

With IT-based Risk Management systems and risk offset offered by arcane derivs, and "Top Staff" then what's the excuse?

Slavering incompetence: blind greed and lily-livered governments, themselves both under the spell and often at the eventual pay window for a venal system of malfeasance which has destroyed a nation state.

Just consider how many senior politicians retire from ruining the country and immediately find a job "Advising" banks!

Lying, cheating, thieving tossers the lot of 'em!

:angry:

[libspero]

Nice attempt at obfuscation.

Let's consider some reality.

The "Bank Bonus" thing is simply a cultural issue: and simply a symptom of a financial system gone terminally sick.

-SNIP-

Just consider how many senior politicians retire from ruining the country and immediately find a job "Advising" banks!

Lying, cheating, thieving tossers the lot of 'em!

:angry:

I am also upset that the banks have been propped up and that we now have business as normal. There are many of us here who believe they should have been left to fail and then fully nationalised back in 2008, however that is not where we are right now.

Unfortunately it is a matter of being rational. We are only the sixth largest country in terms of GDP yet we have, what, the second largest financial services industry in the world?

Unless we create a set of global regulations governing how banks pay their staff, why would these top dogs not tell everyone to up sticks and move to Hong Kong?

If they do that then we have bailed them out only to lose the subsequent benefit. Unfortunately as much as these shysters may steal our money, they also steal everybody else's.. then spend it here. The other point to consider is that shareholders will be international entities.. if the money is not given to bankers to spend from their bonuses, then the only other place it will go is into the pockets of international share holders. At least that's how I see it.

What can you do?

[Prescience]

I am also upset that the banks have been propped up and that we now have business as normal. There are many of us here who believe they should have been left to fail and then fully nationalised back in 2008, however that is not where we are right now.

Unfortunately it is a matter of being rational. We are only the sixth largest country in terms of GDP yet we have, what, the second largest financial services industry in the world?

Unless we create a set of global regulations governing how banks pay their staff, why would these top dogs not tell everyone to up sticks and move to Hong Kong?

If they do that then we have bailed them out only to lose the subsequent benefit. Unfortunately as much as these shysters may steal our money, they also steal everybody else's.. then spend it here. The other point to consider is that shareholders will be international entities.. if the money is not given to bankers to spend from their bonuses, then the only other place it will go is into the pockets of international share holders. At least that's how I see it.

What can you do?

In essence the solution is extremely simple: and once touched on then sidelined by Vince Cable: however dear Vince didn't really understand why that solution needed urgent implementation.

Circa 85% of the fresh, new funds inflow into institutions emanates from Joe Public: its our savings, life assurances, health insurances, house and motor insurances, pensions, investments, ISAs and the rest.

This ought to be sacrosanct and ring fenced from the manipulative depredations of the City's pin striped suited barrow boys.

NuLiebour had a golden opportunity to, instead of bailing out flawed banks on unconditional terms of reference (What else might one expect from a parochial country solicitor playing so far out of his league and competence it was frightening!), nationalise RBS and Northern Rock and create a state bank, concerned with taking the public's hard won money and carefully recycling it (Together with the awesome bail-out new capital), into small business loans, overdrafts and small, reliable personal loans and sensible condition mortgages, once the market had returned to some sane stability.

Prior to Big Bang (Or, as I describe it, The Big Shaft), Britain enjoyed two tiers of banking: the Joint Stock Banks -JSBs - (Members of the Clearing Houses Association: and thus "Clearers"): and the mercantile or "Merchant Banks". These were the boys who engaged in risk lending.

The JSBs enjoyed the special privilege of distribution of the money created by the Royal Mint, via what are called "Money Centres".

Such activities ought properly to be kept utterly separate from mindless speculation: otherwise, it threatens and succeeds in wholly destabilising monetary and financial credibility: as we now see.

Let the wheeler dealers play with their capital: not ours and the governments: which is ours once more.

Why is support of small business essential?

Simply because SMEs (Small and Medium Sized Enterprises) create nearly 50% of Britain's Private Sector GDP: and around 48% of Private Sector employment.

And furthermore, numerically, SMEs represent circa 99% of ALL British business activity: and a vast majority of SMEs are what are called Class Sized Zero (Sole Trader) and Micro Businesses: owner plus perhaps one or two employees.

Yet when it comes to government, SMEs are lacking in support; have huge difficulty in raising loans and overdrafts; and suffer mindless red tape and penalties which totally lack proportionality.

Banks have wanted to privatise profits: and nationlise debts!

I wish I could do the same with my businesses!

[libspero]

Circa 85% of the fresh, new funds inflow into institutions emanates from Joe Public: its our savings, life assurances, health insurances, house and motor insurances, pensions, investments, ISAs and the rest.

This ought to be sacrosanct and ring fenced from the manipulative depredations of the City's pin striped suited barrow boys.

NuLiebour had a golden opportunity to, instead of bailing out flawed banks on unconditional terms of reference (What else might one expect from a parochial country solicitor playing so far out of his league and competence it was frightening!), nationalise RBS and Northern Rock and create a state bank, concerned with taking the public's hard won money and carefully recycling it (Together with the awesome bail-out new capital), into small business loans, overdrafts and small, reliable personal loans and sensible condition mortgages, once the market had returned to some sane stability.

Prior to Big Bang (Or, as I describe it, The Big Shaft), Britain enjoyed two tiers of banking: the Joint Stock Banks -JSBs - (Members of the Clearing Houses Association: and thus "Clearers"): and the mercantile or "Merchant Banks". These were the boys who engaged in risk lending.

The JSBs enjoyed the special privilege of distribution of the money created by the Royal Mint, via what are called "Money Centres".

Such activities ought properly to be kept utterly separate from mindless speculation: otherwise, it threatens and succeeds in wholly destabilising monetary and financial credibility: as we now see.

Thank you. I have learned something about banks this evening.

It is still not clear to me what the consequence would be of (or NOT) paying the bonuses.. on one hand I have to remind myself that they are private companies (still) and as such it should be up to share holders to restrict the way monies are allocated or not. On the other hand, I desperately would like to remove any traces of moral hazard / non-accountability from the system and be assured that in future NOTHING is too big to fail. Although I'm probably dreaming.

[leicestersq]

Libspero,

I don't see this as anything that is wearing thin.

What makes me angry is that a bank like RBS, didn't make any money at all in aggregate from 2000 - 2010. It was a badly run bank, that appears to have made a profit solely as a result of at best second rate accounting. We were told it was a money making machine by the directors, one worthy of paying high amounts of money to it's workers.

We found out the truth. It was all lies. The bonuses that were paid were not a share of the profits, but instead money taken out of the banks capital, and when that ran out, from depositors and bondholders. The whole bonus culture encouraged bankers to lend money to poor risks to maximise their bonuses. Bonuses were not paid for extraordinary work leading to exceptional returns, but for large volume to poor credit risks, and the bonuses were paid before shareholders made their cut. It was this bonus culture that led to the bank morphing in to a machine to commit control fraud to the detriment if shareholders, depositors and bondholders, to say nothing of the victims of predatory lending.

With the UK government now holding a massive stake, you would have thought the politicians might have sorted out RBS. No bonuses, period. Instead a return to safe lending only. No need for bonuses in that sort of environment. Better than that, once one bank proves that you can do this, then all banks are forced to follow suit. They should have taken on the silly threats that bankers would leave en masse if bonuses weren't paid. The culture of excess that led to the near collapse of the UK economy should have been challenged, and RBS was the place to do it.

Instead, the UK government has given the green light to more of this madness. Sooner or later we will get the same result, though next time the UK won't have the cash to bail anyone out.

[erranta]

Thank you. I have learned something about banks this evening.

It is still not clear to me what the consequence would be of (or NOT) paying the bonuses.. on one hand I have to remind myself that they are private companies (still) and as such it should be up to share holders to restrict the way monies are allocated or not. On the other hand, I desperately would like to remove any traces of moral hazard / non-accountability from the system and be assured that in future NOTHING is too big to fail. Although I'm probably dreaming.

The major shareholders are the same sick tossa's who pull the strings of their Govt stooges it's in their interest to screw as much out of your pension etc in charges (unhindered) as they can get away with.

The BOE directors have stated the City/banks didn't produce any real wealth for over a decade, just skimmed commissions/fees off monies that they lent to each other and anything else that flowed thru their hands.

The main (hidden) reason why the banks were too big to fail = the Elite shareholders.

[Prescience]

Thank you. I have learned something about banks this evening.

It is still not clear to me what the consequence would be of (or NOT) paying the bonuses.. on one hand I have to remind myself that they are private companies (still) and as such it should be up to share holders to restrict the way monies are allocated or not. On the other hand, I desperately would like to remove any traces of moral hazard / non-accountability from the system and be assured that in future NOTHING is too big to fail. Although I'm probably dreaming.

Results of not paying bonuses?

Hopefully, the high flyers would all depart this land: the majority would simply continue to work, like everyone else, in order to eat and pay their bills.

Small correction: banks are not "Private" companies: they are PLCs: Public Limited Companies. As such the directors have far greater and more onerous duties, responsibilities and obligations: legally.

What is more as directors of a floated company (Public company whose shares are openly listed on the UK stock market and many other foreign bourses), the directors are further liable to regulation and supervision by both the Stock Exchange itself and the FSA.

I like the risible joke about shareholders!

Post the last major City debacle (Maxwell et al, 1990 on) what is called the FRC (Financial Reporting Committee) set up the Cadbury Committee tasked with examining and reporting and recommending on Corporate Governance.

Shortly thereafter, the Greenbury Committee were tasked with reporting and recommending on Executive Remuneration: since it was then getting out of hand.

And much good has it done!

See Here:

And Here:

www.ecgi.org/codes/documents/combined_code.pdf

(Cut N'Paste I'm afraid the link HTML refuses to work)

Problem is, with major PLCs, a quid pro quo exists: directors of other banks sit on each other's remuneration committees: and keep each other sweet.

Nothing has happened to the bank's Auditors either: they ought to have been raising deep concerns over risks and liquidity way back in 2005/6: were they?

Were they hell!

Auditors of PLCs have far greater levels of liability and exposure than on normal non-PLC audit.

Bankers and traders are not fresh new wealth creators: they simply buy and sell what already exists adding cost at every turn of the dice.

Neither do they create jobs: rather, they destroy them: as they destroy core capital value.

They are vultures on the one hand: pimps on another: and generally, leeches, sucking and living off the blood of others.

If I were to be in government I would solve the problem overnight: I'd bring back an old tax, Selective Employment Tax, for a while, which would specifically target financial services.

Those earning £500,000 would pay 75%: £1 million and above 90%: and above £1.5 million I would invoke the old Supertax and levy 110%.

All income streams too: share options, bonuses, principle salary. The lot.

Instead of distributing an estimated £7 billion this year, that cash ought to be used to re-build capital bases.

Or paid in Corporation Super Tax.

Or used to compensate those people whose lives have been ruined.

They are taking the piss out of all of us: and government meanwhile stands by and nods politely.

Then Dave tells us "We're all in this together!"

yeah: right.

Edited January 12, 2011 by Prescience