Wednesday, Dec 09, 2009

De-gnoming

The Independent: Exodus of the bankers

The president of Britain's second largest bank has issued a veiled threat that the country's elite financiers could join a mass exodus from the City of London if the Government pushes ahead with a bonus supertax today

Posted by devo @ 06:34 AM (4614 views)
Add Comment
Report Article

58 Comments

1. brickormortis said...

F@@k off then!

Wednesday, December 9, 2009 07:18AM Report Comment
 

2. krustyatemyhamster said...

Parasites threaten to leave dead host.

Wednesday, December 9, 2009 07:45AM Report Comment
 

3. techieman said...

nice to see the grown ups wake up early! :-)

Wednesday, December 9, 2009 07:51AM Report Comment
 

4. krustyatemyhamster said...

Yes, I'm one of the 95% that lack maturity (please see all the comments at the end of the article) and don't understand how special and talented are those that work in the City and have brought such wealth to this nation.

Wednesday, December 9, 2009 08:12AM Report Comment
 

5. Uncle Fargas said...

Bye then. Thanks for all your help - its been great.

Wednesday, December 9, 2009 08:15AM Report Comment
 

6. crunchy said...

They will all run off to queue for the IMF bonus of a lifetime. You boys need to do some 'deep' Copenhagen homework to even believe this is a possibility.

Morning tech!

Wednesday, December 9, 2009 08:28AM Report Comment
 

7. techieman said...

kamh - how we got here was not because the bankers (being human) took advantage of the lax regulation - it was because of the regulators that allowed lax regulation. I dont say you are wrong - i just think the venom is directed toward the wrong place.

Either you dont regulate at all and let the market decide or you regulate completely. i will give a quick general point - the fact that there is the FCSC is not a good thing - because the punters duty to assess the suitability of the deposit takers and therefore the deposit takers duty to ensure above all else they are safe - is effectively put in the hands of the depositors via the tax system! Once you go down that road you then have to regulate the deposit takers to ensure they dont have too much concentrated exposure in certain areas. If that is done and then positions are closed out that make profits then why shouldnt the people that create such profits be (handsomely) rewarded?

They cant "bet the farm" where there are controls in place to stop em. There werent. So now the gov penalises the individuals because they (the gov) didnt do enough to stop the banks INEVITABLY one day (and nobody knew exactly when) producing the situation we are in?

i dont blame any particular colour of government - since probably they would have all done the same, and you cant really blame our government in isolation. Its those damn yankees !! :-)

Wednesday, December 9, 2009 08:29AM Report Comment
 

8. techieman said...

fscs even! - morning crunch!! :-),

Wednesday, December 9, 2009 08:30AM Report Comment
 

9. paul said...

Oh dear I hear this daft argument a lot. The FSCS separates the *equity* holders from the *customers*. Without it, no-one would deposit money in banks and they'd cease to exist.

Wednesday, December 9, 2009 08:51AM Report Comment
 

10. mountain goat said...

At the end of the day you and I are now owners of these banks. So what is in our best interests? Seems we have at least 3 options.

1. Pay for the best bankster talent and keep our banks as global players.
2. Let the clever bankers leave and let less clever ones carry on.
3. Let the clever bankers leave and stop new lending, hoping the loans made so far will be worth something if we hold onto them till maturity, our bank industry shrinks.

Option 2 seems the worst, and so probably the one we will get unless someone intelligent gets voted in soon.

Wednesday, December 9, 2009 09:15AM Report Comment
 

11. tom101 said...

Can't legislate for human greed. Don't remember many people protesting against low interest rates around 2001. It was more like more, more, more!!

Governments will go with public consensus, and in this case that was 'everyone should have the right to own a home...'. They are only guily of allowing the people to get what they wanted.

Wednesday, December 9, 2009 09:20AM Report Comment
 

12. Rick62 said...

Option 4; let the spolit overpaid proven incompetant bankers all leave and allow some of the hundreds of thousands of junior bankers have a go, they'll probably work harder for a fraction the money and could hardly do worsse!

Wednesday, December 9, 2009 09:22AM Report Comment
 

13. letthemfall said...

techieman: "If that is done and then positions are closed out that make profits then why shouldnt the people that create such profits be (handsomely) rewarded?"

Because of the economic rent idea, expressed well in yesterday's FT - the market power that has enabled bankers to extract great wealth from the economy, to its overall detriment. It is not about profit-making, but wealth transfer.

Wednesday, December 9, 2009 09:33AM Report Comment
 

14. charlie brooker said...

They should be barred for life for re-entering the country.

These people are infinitely worse than illegal immgrants who kill innocents while driving uninsured.

Wednesday, December 9, 2009 09:34AM Report Comment
 

15. letthemfall said...

mountain goat

Who are the "clever" bankers, and how do you assess their cleverness? Seems to me that these clever bankers bankrupted their employers. There will be plenty to fill their places. The notion that only a small number of individuals who are capable of performing these jobs is absurd.

Wednesday, December 9, 2009 09:37AM Report Comment
 

16. mountain goat said...

letthemfall - by "clever" I meant bankers skilled at making profitable investments and loans.

Wednesday, December 9, 2009 09:41AM Report Comment
 

17. techieman said...

Paul @ 8 - yes agreed but thats where we are NOW, if there was never an insurance scheme then the question wouldnt arise. There were banks before the deposit schemes and they seemed to be able to lend, but not without limit.

The reason you hear it alot is because it isnt daft. The point is you EIther have no deposit scheme and rely completely on Mr. Market or you do have a scheme AND regulate PROPERLY. You cant unwind an insurance scheme so the only thing left is the regulation. Stables and horses bolting springs to mind.

LTF - its the same point the market power is because of a combination of the insurance and lack of regulation. You can reward people for risk taking - but the risk taking and the rewards associated with it would both be limited by the regulatory requirements. In other words a "handsome" reward is relative.

This has happened before moral hazard is quashed by deposit insurance - look at the S&P crises of the late 80s. That was a forerunner where nobody learnt. The dash for growth eclipsed sound management - if one country does that then that country eventually comes unstuck when a few do it, then capital flows (wrongly in my view) dictate that we should all compete.

Wednesday, December 9, 2009 09:44AM Report Comment
 

18. letthemfall said...

mountain goat
There's the rub. These investment and loans brought the banks down. If they'd been collectively a bit more skilled perhaps that wouldn't have happened.

Wednesday, December 9, 2009 09:45AM Report Comment
 

19. letthemfall said...

techieman
I certainly agree with you about proper regulation. In the meantime we should all look forward to bonus tax - a temporary form of regulation.

Wednesday, December 9, 2009 09:50AM Report Comment
 

20. Bogstandardbill said...

Clever as in intelligent and smart or clever as in being able to cream off massive bonuses at the expense of the rest of us mere mortals whilst virtually bankrupting their employers?

Wednesday, December 9, 2009 09:54AM Report Comment
 

21. techieman said...

LTF - sadly those amounts wont be going to our pockets though - or i suppose they may by reducing the overall amount we have to pay back. But lets be honest at the end of the day this is a political stunt by the people who i think are pretty responsible in the first place - a smokescreen, and one that i find full of hypocrishy.

The government let them play with the toys and never took them away to put them in the cupboard and surprise surprise... they broke 'em! So now we all have to buy new toys for the nursery!!

Wednesday, December 9, 2009 10:07AM Report Comment
 

22. crunchy said...

6. techieman said.... Its those damn yankees !! :-)

The damed yankees of Jekyll Island and the tamed yankees of congress.

I think it's called holiday shopping or is it a setting up of the inevitable clause (not as in the irony of Santa) that eventually would pay out

on the double bubble (unregulated) derivative bets. Mr Summers your limo is here, Rubins is your driver! Poor Brooksley Born watches

them speed off whilst engulfed in a puff of smoke. A true JFK fan indeed. Congress may win on the rematch, so have your wiener on hold.

Yankees indeed!

Wednesday, December 9, 2009 10:09AM Report Comment
 

23. letthemfall said...

techieman
Yes, it's true that this Govt - and all govts since 1979 - have allowed the destructive behaviour of the banks to go uncontrolled. However, the bankers have shown great irresponsibility and selfishness, and deserve to be condemned. I personally do not accept the argument that it is solely the Govt's fault - they are grown-ups who should know better than to break their own toys.

Therefore taxing them heavily is not a stunt but a belated attempt to control their contemptible (and indeed contemptuous) behaviour as the tax payer keeps them afloat. A well functioning economy has to be a fair economy; taxing unearned wealth (and it really is unearned now) is an essential step towards this.

Wednesday, December 9, 2009 10:20AM Report Comment
 

24. crunchy said...

20. My daughter broke a toy once, so I replaced it. She seemed much happier with the new one. The throw away society that can never

quiet keep pace with new technology. : (

Wednesday, December 9, 2009 10:29AM Report Comment
 

25. mountain goat said...

letthemfall - Chasing skilled people away is not in our best interests. Anyone can make investments and loans that lose money. I would rather pay a banker £1 million for making us involuntary bank owners £10 million than pay some inferior banker £50,000 to lose us another £billion. We can be angry about the past but why let this anger undermine us going forward?

One solution I remember reading about (for example http://tutor2u.net/business/people/motivation_financial_sharesoptions.asp) is paying bonuses as future share options, the idea being that bankers have an incentive to act in the long term interest of the company.

Wednesday, December 9, 2009 10:40AM Report Comment
 

26. timmy t said...

Techie "Either you dont regulate at all and let the market decide or you regulate completely." I think this is what people have the problem with. Everyone was happy to let the market decide while times were good, but as soon as the wheels came off, the taxpayer was expected to come to the rescue. Personally I'd be in favour of the free market, but splitting the utility bit of banks from the casino. I'd be happy for bankers to earn their bonuses, but on the condition that if it all goes t1ts up then they suffer the consequences as any other industry would be expected to do. If that had been the case, these "talented" bankers would be having to expain how their talents bankrupted their previous employers whilst interviewing for new jobs and claiming benefits.

Wednesday, December 9, 2009 10:44AM Report Comment
 

27. charlie brooker said...

I wonder if the Independent meant to make their headline sound so suitably biblical?

I used to work as an actuary (nothing to do with banking whatsoever) - two of the applicatons I used to use were called Prophet and Moses!!

A thousand plagues on Switzerland.

Wednesday, December 9, 2009 10:49AM Report Comment
 

28. doomwatch said...

Under "the coach's" stewardship, that noddy bank has outsourced pretty much all non spiv jobs to "off shore providers" in whichever
country is offering the latest cheapest labour. So, thanks to the coach, the HMRC has actually lost quite a considerable amout
of NICs and PAYE. Think he should be more worried with marking his MBS and CDS books.

Wednesday, December 9, 2009 10:52AM Report Comment
 

29. the number cruncher said...

Techieman

The problem with your thesis is our politicians do not have the power to regulate the banks, because they would be edged out of Government if they ever tried. It is a chicken and egg problem about who is to blame. The failings of our political systems are that people with money have too much influence through the media and lobbying and at the moment the CIA/American corporate system controls British politics to a great extent.

The rise of the Tory Euro-sceptic movement is being funded by American interests.

Wednesday, December 9, 2009 10:55AM Report Comment
 

30. rumble said...

We could make more bankers available for national banks by running on private banks. Anyone for terminating Barclays?

Wednesday, December 9, 2009 11:12AM Report Comment
 

31. letthemfall said...

mountain goat: "Chasing skilled people away is not in our best interests."

That is the crux of the matter? Are these people genuninely skilled. Given that they bankrupt themselves, I cannot see how they can be called skilled by any sensible definition. One also should question what value the "investments" add to society. Even before it all went bad I suspect the majority did little more than funnel cash the way of the bankers, a natural consequence of taking a percentage of huge cash flows.

I don't accept that financial services are generators of great wealth; that is largely an illusion. I would argue that teachers and scientists are more signficant in that respect. But their effects are long term and less easy to quantify, and cannot be manipulated. No one is suggesting paying them enormous bonuses in return for wealth-generation.

Yes, society is angry about all this, but putting stop to iniquity is not about anger. The banks have wrecked the economy. Profound changes must therefore be made.

Wednesday, December 9, 2009 11:15AM Report Comment
 

32. crunchy said...

Tory Euro-sceptic movement. Give me a break! Cameron loves the foundation of this deep pit.

Wednesday, December 9, 2009 11:15AM Report Comment
 

33. crunchy said...

26.

It's all happening at Copenhagen now. Wind and flapping springs to mind. This blog should be full of it, as the outcome could change

everything. EVERYTHING. Don't expect too many independent reports though. Not allowed mate!

Wednesday, December 9, 2009 11:28AM Report Comment
 

34. 51ck-6-51x said...

Trying to tax the result is no way to tackle such a problem; firstly it wont affect those taking huge bonuses and second it will only act to distort any causal link between actual skill and bonus received ( whilst making some lawyers and accountants richer ).

If we are to regulate it should be down the road of deferred and retractable, not taxed.

Personally I don't think such a tax will actually get through the commons ( let alone the lords ) anyway.

Wednesday, December 9, 2009 11:36AM Report Comment
 

35. letthemfall said...

51ck
I'm not sure there is any causal link between skills and money, is there? Or if there is it is badly distorted. That may well be true in other areas too.

Taxation is probably one of the better ways to regulate distribution of money - no arguments about who has really earned it. I see no reason why it should not get through Parliament: plenty of previous examples of windfall taxes.

Wednesday, December 9, 2009 11:47AM Report Comment
 

36. mountain goat said...

Letthemfall - surely you must recognize that for a business to expand it often needs to get a loan or rights issue (sell new shares). This can mean the difference between competing successfully or failing? This can only be meaningfully done through investments and loans part of our economy. So there is a need for a healthy banking system and skilled people to assess risk and profit relationships accurately.

Moral hazard and possibly poor regulation have contributed to the problems we have now. This needs addressing. Personally I think failed banks should have been nationalised and dismantled by people skilled in bankruptcy to minimise collateral damage to the economy. This would have cleared the way for new banks because there is a clear need for them in the economy.

Wednesday, December 9, 2009 12:08PM Report Comment
 

37. inbreda said...

mountain goat - have you got some really warped definition of talented? Do you need to borrow my dictionary?

Yes we can realign bonuses to avoid speculation and encourage longer term thinking, or the other thing to do would be to line up all the bankers in public along with the war criminal blair, and put a bullet in the back of their heads. I think it would have quite an effect on other people wanting to show similar behaviour.

Wednesday, December 9, 2009 12:09PM Report Comment
 

38. mr g said...

The more I read about bankers, the more I believe in stricter birth control.

Wednesday, December 9, 2009 12:21PM Report Comment
 

39. mountain goat said...

Inbreda - I grew up in a country under marshal law, you should try it sometime. No thanks to your solution.

Wednesday, December 9, 2009 12:28PM Report Comment
 

40. Steve Townsend said...

Have 2 types of banks.

Type 1 - Simple, safe bank. They take customer and corporate deposits, make mortgage loans (no subprime, ensure affordable), company loans (capped loan / company capital ratio), relatively safe UK investments (i.e. no currency risk), UK gilts, top tier UK corporate bonds. Civil service renumeration structure. Stringent regulation. In return, the government guarentees 100% customer and corporate deposits.

Type 2 - Investment banks, hedgefunds etc. Anything goes. Anybody can invest (except type 1 banks). Pay bankers what they want. Do so at your own risk. No regulation. No government guarentee for customer and corporate deposits. No bail outs. No whinging when it all goes tits up.

Social function of bank preserved (type 1). London as financial services exporter preserved (i.e. type 2). Best of both words.

Any problems.

Wednesday, December 9, 2009 12:28PM Report Comment
 

41. Earth said...

IMO Barclays have handled themselves very well so far. They can pay themselves bonuses from the profits that they have made.

RBS, Northern Rock etc. are a F**K UP and they should be paying the general public a bonus.

Wednesday, December 9, 2009 12:30PM Report Comment
 

42. letthemfall said...

mountain goat
Indeed I do recognise that, and of course I realise the importance of a functioning banking system - one reason we didn't allow the lot of them to go to the wall. The problem, as I think we all know, is that investments were made in the wrong place - principally subprime mortgages - and the errors were compounded through the reckless use of derivatives of several kinds.

Perhaps one reason I am highly dubious about the so-called skills of the people who got us into this mess - apart from the fact that they got us into this mess - is that most of my working life I've been surrounded by individuals with the same qualifications as the superclever (ie the quants), and have them myself. The kinds we like to call clever may be so in a fairly narrow sense, but can make howling mistakes as well as the next man, but may have too high an opinion of their own abilities to acknowledge this.

I think I agree with you on nationalisation.

Wednesday, December 9, 2009 12:46PM Report Comment
 

43. Paolo said...

I'd love them to leave.
First, there is no industry where all employee are talent/stars, and the city is no different, so those bankers are just as replaceable as dull accountants and lawyers.
Second, entry barriers are low, I'd love to see new entrants with the line, bring your account/business with us, as contrary to our competitors we have not left the country.
Third, if cash-rich bankers leave property prices will finally fall also in London at affordable levels!!

Let them go, let them go!!

Wednesday, December 9, 2009 01:12PM Report Comment
 

44. krustyatemyhamster said...

Didn't know what a quant was - just looked at a few adverts and I don't think I've ever seen ads that fit my qualifications so closely. Something to fall back on if the real economy continues to implode I suppose.

Wednesday, December 9, 2009 01:15PM Report Comment
 

45. crunchy said...

37. letthemfall said...Perhaps one reason I am highly dubious about the so-called skills of the people who got us into this mess

"apart from the fact that they got us into this mess"

Oh how you missed the vital point. Who won and who lost? $50trillion worldwide so far and still counting. The incumbents who now sit

within the power structure. Don't believe me? Write to Paulson and cronies. It's so painful!!!!!

Wednesday, December 9, 2009 01:17PM Report Comment
 

46. crunchy said...

letthemfall Read my ditty on 22. Then have a little think.

Wednesday, December 9, 2009 01:20PM Report Comment
 

47. cat and canary said...

Agree with LTF @ 28,

Its not banker's skill, nor lack of it, its simply there desire to make a quick buck at the expense of all our futures. The system has to change completely, but it wont :(

LTF "I'm not sure there is any causal link between skills and money, is there? Or if there is it is badly distorted" - skills vs salary no, but there is some evidence (trying to find it)...that salary rises in accordance with IQ up to a point, then starts dropping!

Wednesday, December 9, 2009 01:26PM Report Comment
 

48. Boudicca said...

Anyone seen the movie trading places, the guy on the street is more in tune, goodbye

Wednesday, December 9, 2009 01:40PM Report Comment
 

49. crunchy said...

47. cat and canary

There 'is' a difference between clever and immoral. However, a combination of the two is deadly, as you should know by now.

Wednesday, December 9, 2009 01:56PM Report Comment
 

50. mountain goat said...

C&C "salary rises in accordance with IQ up to a point, then starts dropping!"

Yes the big money comes in being able to handle risk and stress. Arguably what banksters should be doing, before moral hazard made it a risk free job.

Wednesday, December 9, 2009 02:01PM Report Comment
 

51. rumble said...

@Earth, but Barclays are in competition with your tax money (RBS). Perversely we have to kill off the fittest for returns on our tax.

Wednesday, December 9, 2009 02:10PM Report Comment
 

52. peter_2008 said...

Aristocrats, communists and religions all said that the world could not live without them. They all said they are fundamental to the society. Civilisation would be lost without them.

Guess what, life waived fingers at those and pretty much just went on.

The banking industry’s necessity to this country and the world is a complete myth. This country will survive.

Once up on a time, witches, shamans and fortune-tellers were considered highly respectable professionals. How do we know that the bankers are not just some modern day clueless voodoo magicians cons who promise us some imaginary great wealth?

Wednesday, December 9, 2009 02:55PM Report Comment
 

53. timmy t said...

Why don't we all take all our money out of the better known banks and stick it all in the Co-op Bank? Isn't their ethical investment policy akin to a voluntary Glass-Steagall act? I think a full-blown revolution is beyond us but we could vote with our feet...

Wednesday, December 9, 2009 03:01PM Report Comment
 

54. rumble said...

I'm with Timmy T. The rest of you talk too much. I want to see a public vs bank. Too big to fail?

Wednesday, December 9, 2009 03:05PM Report Comment
 

55. charlie brooker said...

Exodus of the bankers : Kind of reminds of the ending of Team America World Police - where Kim Jung Il as his true cockroach-self makes his escape back to his home planet in spaceship.

Wednesday, December 9, 2009 03:19PM Report Comment
 

56. kruador said...

666@34: It will get through Parliament, because it will just be part of the overall Budget, which makes it a Supply Bill. A failure to pass a Supply Bill is called a 'loss of supply' and is usually taken as a vote of no confidence, leading to a dissolution. In practice, the Commons will always pass a supply bill.

Further, the convention is that the Lords don't debate supply bills, the Parliament Act 1911 says they may not delay one more than a month anyway, and that Act also supplies the rule where the Lords can only bounce a Bill twice. If it passes in the Commons on the Third Reading, it goes straight to Her Majesty who, on the advice of the PM (hah), grants Royal Assent making it law. The Lords normally let past manifesto pledges without serious debate, to avoid amendments to the Parliament Act that would remove more of their power.

Wednesday, December 9, 2009 05:16PM Report Comment
 

57. Dave Hpc Reader said...

Shipman was probably a good GP, however he was pathologically floored, thats why the CPS took an interest in him!
may be some bankers are very clever, however they are not always acting in the Banks best interest, may be some should look at them?

Wednesday, December 9, 2009 06:14PM Report Comment
 

58. 51ck-6-51x said...

Thanks kruador I was oblivious. Mind you I stand with my opinion that it wont help much and it probably wont raise much.

Thursday, December 10, 2009 09:08AM Report Comment
 

Add comment

  • If you do not have an admin password leave the password field blank.
  • If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines
Username  
Admin Password
Email Address
Comments

Main Blog | Archive | Add Article | Blog Policies