Time to stop bashing the bankers, say bankers

There was a time when the labour force and unions held too much sway. Now it's the financiers. Banks need to be reined in and now is the time.

It amazes me the worry about "losing talent"! This sp called "talent" were the idiots that got us into this mess in the first place.............. so let 'em go abroad and mess up somewhere else!

Bankers are not that smart or as talented as they like to think they are. If they want to go elsewhere, let them go. There are people who can fill those jobs who are not from traditional banker backgrounds who will be able to perform just as well at a fraction of the cost. We all know that banking is a public school old boys club.

Here Here the banks have far to much say in things and far to much power - I agree reign them in and regulate them - some of these bonus's being paid are obsene.

Is it not time (or rather past time) that Bankers STOPPED rewarding themselves for bringing the world to it's knees and get on with a proper days work for a wage only.

They've had it too easy for far too long now its time to be held to account and they don't like it... Tough!

Apart from a bit of name calling can anyone tell me what we have done to them

Well this is fantastic, all above are on the right wave length.

What does he want? To go back to the good time, everything will be rosy for a few years, the bankers will make huge amounts of money and in when it turns bitter, the public will be presented with the bill and an other recession will hurt us, more painful than the first time?He is right about a global regulation, we shall ensure that the bankers are hurt all over the world, that there is no place left for them to restart a fraudulent business(subprimes)

Is it not time that the bank has stopped bashing us and gave us a fair shake for the money that we have in captivity in their banks?

They insist on taking their rewards, but at our expense whilst they are paying us nothing. Let them do fair dos, give us a fair return on our money. Besides which, their basic pay is well over the top.

And then there is talk about honesty. They are as honest as the MPs were with their fat snouts in the expenses trough. Interpretation, conmen and thieves.

it's convenient to find a scapegoat in bankers but the inconvenient truth is that the credit system had been socialized through manipulation by governments. The banks are guilty of two things:

(1) ignoring their own rules learned from history in order to please politicians - they should really have known better.

(2) blurring the lines between consumer credit (e.g. credit cards) and capital credit (e.g. mortgages).

Politicians have to decide between three possibilites:

(1) Stop socializing the credit system to an extreme and force borrowers to put some skin in the game - between 10% and 20% deposit is reasonable (ie LTV). Also cap on income ratios (ie LTI @3x). Then charge at a sensibly low interest rate given the lower risk.

(2) forget LTI and LTV - spray credit liberally everywhere and charge at extortionate interest rates. ie Effectively make the prudent pay for the incompetent.

(3) Make a mixture of (1) and (2).

This is not a new discussion for any country. Some countries have LTI/LTV caps (e.g. Switzerland/Canada) and some don't (USA).

What is not clear is whether the UK has the maturity to have this debate without whining on about class and fairness. If only the British could look at themselves from outside they would see that arguments about class and fairness have crippled the country for 50 years and the financial crisis has highlighted the problem yet again. Home ownership is unfortunately intertwined within this general problem. If home ownership is to reduce then radical reform of the rental laws needs to be introduced to make renting as stable and tenant friendly as in europe - else there will be serious social unrest.

@Alan ... If he only wanted a return to business as usual, that would be one thing. However, there's an explicit threat in the message. Touch us and we'll leave. That's after we've bailed them out, plunged the country into recession and printed hundreds of billions of new money. After all that, there'll be a slow creep away from the country. I refer to my orginal post and absolutely state that now is past time to rein in the banks. Their self interest has made them a threat to the security of the UK.

Would they really go? After all, we did bail them out when they needed it. We're a devil they know. It might be a good idea if they concentrated on coming up with their own ideas on how to compensate us, rather than getting huffy.

Get involved ...

http://robinhoodtax.org.uk/

http://betterbanking.org.uk/the-solution/

Why do people at the very top of the earnings league, refuse help their country with a little money, in its hour of need? And who were the people who got us in this situation and then went cap in hand to the government to get help from our taxes?

As for the threat of moving abroad, the joke is getting very stale by now.. So far, not a single one of them has done so and Santanter has paid good money to come in. But if any one of them wants to cut his own throat and leave, good bye and do write to us.. I hear Zimbabwee and Afghanistan have good cultural life and low taxes

It is time the naive populace realises that the directors of banks, investment funds and other finance companies run them primarily for their own benefit and then to a small extent for the shareholders. The country and society means no more to them than to pigs with their snouts in the trough.

As for the treat they will leave, not one has done so yet, unfortunately

Why is there no assisted passage for babkers and drones who want to emigrate?

Mr Chips.I agree with you.the bankers are blackmailing the politicians, it has worked in the past, so as far as they are concerned why not try again.London has its advantages.In London, English is spoken which helps when it comes to international finance,there are good English private schoosl in the surroundings( sons and daughters of bankers need the best) and bankers'wags likes london social life so it will take a lot for them to leave to Geneva or Francfurt.Anyway, it is not only our interest to call their bluff, it is everybody interest.The all world is concerned

To blame all banks for our woes is a total misconception as there have been good banks who have not taken any tax payers' money to bolster their reserves i.e. Barclays and HSBC. I think that we should be encouraging the banks to make us prosperous again as has been the case in Switzerland, which has had the highest standard of living in the world. This did not come from selling cuckoo clocks and watches!!!

I am sceptical, at best, that the threat is targeted at politicians. Two examples that spring to mind are Tony Blair taking an advisory position with JP Morgan and Ken Clarke's work for Centaurus. All too often, a minister's self interest gets in the way. Instead, I believe it's targeted at swaying the general public from demanding change. That afterall is Angela Knight's purpose in life. I was actually surprised to hear bank CEOs themselves fighting their own corner and not using the mouthpiece which is the BBA. When I listen to comments from bank CEOs and the BBA, I am left with the single impression that they are laying siege to this country and impeding our progress to a rebalanced economy. I agree that it's in the whole world's interests to stop these people poncing from the rest of society.

Banhers need to realise that what they do is not generate wealth but to circulate the wealth generated by others. This may be a necessary function but it is not the rocket science deserving of huge rewards that they want us to believe, rewards that come not from generating wealth themselves but from screwing money out of the rest of us. That other great banking activity, mergers and aquisitions is also a vastly overated activity deserving of much tighter regulation given that reportedly 80% of takovers fail to achieve improved profitability or better returns for shareholders, arguably actually destroying wealth and frequently damaging the national interest (eg Cadbury). It is time for the bankers and the banking industry to realise that they are not the Masters of the Universe nor should they be. At least part of the trouble is that too many bankers come from a social class which still believes that they were born to rule. Of course the rub of the matter is that if we don't get screwed by our own bankers then we will get screwed by someone else's. Global problems unfortunately require global responses and how long will that take?

@Mike ... Good to see a mention of Cadbury's. Shares were bought up en masse by hedge funds keen to see the sale go through and make some quick cash at the expense of UK economic interest. The deal was in part financed by our own bailed out bank, RBS.

WOW----almost total agreement in all comments.

FWIW one of the most pertinent comments made to me was along the lines that these "guys" are like the French aristos in 1789.

There were good one to their serfs (customers) and bad ones.

None of them (the aristos) comprehended what they had done wrong.

They ALL got their heads chopped off!!!!

Jeff, AMEN

First, you need to show to your customers, that they are important!

Please explain why as a saver, I am unable to re-invest savings with the same bank/BS for 6 months because the message is; "we only want new money"?

When the 'worm turns' your customers will take their pound of flesh!

A very political discussion. Reading the comments above it seems that some think a Robin Hood tax is the answer. I couldn't disagree more. Capitalism WAS the answer until Brown got stuck into it. RBS, HBOS and Northern Rock should have been made bankrupt. The savings should have been ringfenced and put to the post-office while their operations should have been completely shut down firing all the staff as the price of failure. That would have been very creative destruction. Brown inflated the "risk to the wider economy" for political expediency where it's closer to the truth that these three banks were based around core Labour areas. Brown effectively bailed out banks based in labour constituencies in the North East and Scotland to save Labour's skin. And then repeated his conjuring trick with the Dunfermline. Brown was skilled at creating non-arguments when it suited him - RPI to CPI anyone?

Wealth creation is mentioned above, but the party in power over the last 13 years was allegedly promoting the redistribution of wealth and rebalancing the economy. It's an absolute disgrace that redistribution of wealth could be interpreted as a massive expansion of credit whereby the young have been turned in to debt slaves while the only redistribution has been from young to old. This party was never interested in wealth creation, merely the destruction of wealth for everyone except the political class - You mention Cadbury - that was under Labour. You don't mention Marconi (2003) or Rover (2005) - that was just shameful. Both companies had dedicated and skilled staff (unlike RBS and the like). But it's OK to give money to Nissan - I mean WTF?

By allowing RBS et al to continue Brown has done this country a disservice. History shows that wealth creating endeavours get no support but finance will be bailed out at all costs. It should have been the other way around. But there were no votes in it. There should be laws against this. If a man on the street tried this he would be banged up for fraud and deception.

The biggest joke of all is that as soon as there is a recession the politicians harp on about "we need more scientists and engineers to create wealth" and then go on to screw them so the only place many can work is the finance sector. You talk about rebalancing the economy. Heard that one before too. The only thing you are doing now with the "we need more STEM" is propping up the educational establishment.

In summary - creative destruction only applies to non-finance industries based outside of labour constituencies. What a great way to run a country.

Politicians talk about rebalancing the economy and wealth creation when it suits them. But they don't mean it. And that is proved every month that goes by with the balance of trade deficit in the red to the tune of 4billion GBP.

@MrFiat ... The answer lies in reining in British banks in a way which serves and protects national interest and not damages it. Rebalancing the economy away from banking and speculation is needed for the same reason. The robinhoodtax movement is more important to me as a hook to get people interested in the subject. As for whether one party or another is to blame, I don't think anybody cares. Will things change? Yes. If enough of us want it.

@Mr Chips: Indeed we agree that the topic is in need of discussion. We will have to agree to disagree on the tax issue. I just cannot agree to more taxation as the solution to everything. Having said that I suspect we would agree that the government needs to find a way to encourage sensible, long-term, non-speculative capital allocation not available for either consumer credit or mortgages. Regulation is desperately needed here. The tax system does need to be changed although I prefer the ideas of Ted Harrison about land value tax.

You would think that the name of the "Investment Bank" would imply they would be involved in some sort of long-term activity but they don't seem to do anything long-term at all. The most sensible thing that could be done would be to make bonuses very long term that vest over a (say) 5 year period. This would put a cap on the short termism that seems to be chronic in the banking sector. It would also stop them moving between competitor firms to ramp their salaries (this must be how the salaries get so big, right?)

So what the do investment banks actually do?

The problem is and continues to be the now explicit state guarantee of all banking activities including high risk, speculative activities. These speculative activities are highly profitable when things go well. We're learning the hard way what happens when they go the wrong way. We've heard it described as contagion. One bank fails, that impacts on several others that up until that point were solvent, they fail and so on and so on. It didn't get that far because respective governments intervened early. This did not prevent the subsequent credit crunch leading to recession. I'm sure I don't need to say this but the public don't want to be placed in that position ever again. Until we arrive at a time when individual banks can be allowed to fail then the public will remain at risk because at the end of the day, the banks know we'll be forced to bail them out every time. They don't want to change though. Why should they. While the rest of the economy was still in recession, bailed out banks were handing out multi-billion bonuses. It was an embarrassment for the same governments. Banks want to return to business as usual which includes enjoying the same state guarantee. Given the need to rebalance the economy and the devestating effects banks have had on the economy, I'm always amazed that as well as the BBA, some ordinary people alike run to their defence.

ok, so why not regulate (LTI 3x, LTV 10-20%),regulate bonuses to make them long term and remove the state backed guarantee and say the next bank to get in trouble will be left to go bust?

It seems simple to me, but regulation remains unchanged - so I must be missing something????

Until retail banks are separated from high risk, speculative activities then we'll always be at risk due to the very nature of speculation.

Mr C, we'll have to agree to disagree on that one too :)

I am no expert on these matters, but this comment is an oxymoron.

The lending of money is risky no matter what type of bank lends the money.

The financial crisis was caused by banks underpricing risk and throwing caution to the wind. I'm not against separating banks for a good reason, but so far I have not heard a good reason. From what I have read this was more to do with Fannie/Freddie than Glass-Steagal.

Why does no one simply want to return to sensible lending practices? House prices would come down, the kids would be able to afford houses at sensible prices, and the money lenders would not be able to force people in to loans they cannot afford....

Independent of whether banks are split up, if the regulations about lending multiples are not corrected the same will happen again.

The press has talked about securitization rather a lot, and failures within this, err, not too sure what to call it, procedure/process seem to be the problem because risk was not properly accounted for. (sorry for the armchair amateur description).

Has the securitization process been banned or fixed?

What I would personally like to see is the establishment of industrial banks (I guess to replace investment banks).

These banks would have to support the development of high tech, manufacturing, energy and utility industries. The goal would be to make the UK energy independent and a net exporter.

I can only dream :(

You should follow up on securatisation some more. It's an investment bank activity. Check out the Khan Academy for a vey good series of videos on the subject. Along the way, you'll want to familiarise yourself with the Goldman Sachs and John Paulson hedge fund investigation. The latter will probably make you question whether risk was truly misunderstood. I just found this link which might help.

http://www.bbc.co.uk/news/business-10656699

Here's a quick description of how Goldman's Abacus product effected RBS.

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/04/goldman_may_owe_british_taxpay.html

Thanks for these links.

Why are investment banks allowed to dabble in the domestic housing market? What has this got to do with investment?

And why are investment banks allowed to sell insurance against credit contracts?

Why do governments and politicians allow all this complexity for what is essentially quite a simple idea - ie deposit money in bank, bank applies multiplier, banks lends money out and keeps a minimum reserve.

This just doesn't make sense to me. It looks like its over complicated for no benefit at all except to build in as much abstraction as possible.

All this waffle about 'talented' Bankers.

It is a complete MYTH we have talented personnel in banks and if we are too harsh we may loose them to overseas ...........well fine ..........let them go aboad then !!

As per other comments, they obviously are NOT TALENTED at their work, otherwise we would not be in this mess now. However, their 'talents' DO lie in manipulating the overall situation for their own ends, but at the expense of the general public .............pity they do not focus on doing good for us all !

I agree with pretty much everything you wrote. The original article states "ensuring we have 'smart' regulations". As you've already pointed out, the activities are complicated at best, deliberately opaque at worst. Given what I've read and understood, I do not believe it's remotely feasible to regulate against the greed and stupidity of individuals in the banking sector and their imaginative use of derivatives. Our first priority has to be to protect the public and the real economy from the excessive risk taking found in investment banking.

Mr.C. We'll have to agree to disagree again ;)

While there are no credit regulations the banks will always try to take advantage of a largely financially illiterate and aspirational general public.

Without regulation the capital gets blown on triviality when it should be directed towards building industry and infrastructure.

Thus credit desperately needs to be regulated.

Investment banks need to be forced to make investments in useful industries and have nothing to do with homes/real-estate/credit.

Splitting them off from retail banks will not stop them from investing in the wrong areas. They need guidance. I am worried that this argument will be looked over if people conitnue to insist splitting them up is the silver bullet (when it clearly isn't).

But as I am far too stupid, ignorant and untalented I couldn't possibly comment on the strange world that is banking.

An4: I live abroad and have done for over 10 years. Every country has its problems and fwiw I miss the UK very much while appreciating its good and bad points. I left the UK not by first choice, but because the work was abroad. At the time I thought the tech based industrial sector would pick up in a couple of years, and I am still waiting.

Also, please note it's not the workers who will move, it's the companies. I see this all the time, in tech and telecoms it has been happening since the crash. Some people will move, most will get laid off. This really does happen. It's done with ruthless efficiency.

As far as I can tell all countries have their banks and they all do similar things. And they all have their bankers.

This problem was caused as much by politicians and economists as it was by banks. Yes, banks are greedy and self-serving, but so are economists and politicians. Looking from the outside at the UK news my wife and I did not understand why month after month in the early 2000s the HPI figures would be very high yet rates stayed low and every public figure refused to concede there was a bubble. It was a joke. They were all at it. People were flipping homes like burgers. Can you really say these same people weren't in on the scam. They are as guilty as the bankers because they know its tax free profits. So sorry, it's not just bankers. It's everyone who partook and profited from this whole sorry business.

Personally I blame Gordon Brown. Not because I am Labour or Conservative (not a great choice really is it - they are all b&strds). But because he said bizarrely that there would be "no more boom and bust". This was a nudge-nudge wink-wink to those in the know (economists and bankers) that a state backed expansion of the money supply was available should it be required. This is what "growth" means. fact is he over-cooked it.

At every turn Brown would talk about how prudent he was while his actions were of someone on a mission to spend every pound he could.

The countries where I work haven't had the same depth of recession as the UK, but that's because they still have indsutries. So no matter how hard you try, you cannot blame the banks for the fact that the UK no longer has an industrial base nor is willing to rebuild one. The french, germans and americans own the entire economy of the UK. Forget cadbury. Who do you think e-on and edf are? The only company that I can now think is British is BT - won't be long before someone cashes in those chips then will it?

On a personal note I believe people have the right to have the satisfaction and pride of making a worthwhile contribution to the wealth-creating economy. I find it very sad that many people in the UK will never have that satisfaction - it's all services and no production. And the banks aren't to blame for that either.

Make it a priority to sort out the balance of trade deficit, live within the country's means and everything else will faill in to place. until then you can continue these childish playground arguments about fairness and try to apportion blame but it won't make any difference even once you get your retribution.

All the money, along with the jobs and wealth, is flowing out of the country and has been for over two decades.

You are all getting poorer as a result of it, and now you are just fighting over the scraps.

Rant over.

With all due respect MrFiat, the only person aportioning blame is yourself. Underwriting investment banking and making hedge funds whole is not a good use of taxpayer money. Not one person in this thread has advocated a panacea. Rebalancing the economy away from an over reliance on banking and speculation is vital for the real economy. Sensible lending limits are also vital. Getting capital to SMEs and start-ups, equally vital. Only, this thread is about banking. As for starting history with Brown, you could go further back to the deregulation of financial markets commenced by Regan and Thatcher. Only, that doesn't chnage where we are.

sod the bankers.They should lock a few up for fraud. I do remember the banks telling us they were fully funded. This is illegal and fraudulent behaviour and they have been rewarded for it. So next time they have the chance of a big bonus will they take the risk - of course they will.

I avoid all performance fee based funds and go for low costs trackers, investment trusts or direct share ownership.

The bankers are the football players of the business world - overpaid and useless.

Have the BBA come up with solutions to avoid the same thing happening again or just trying to save their own skins.

The government needs to focus on the indiviual choice and not on the institutions

RBS should have been lending to small businesses not selling out cadbury's to a plastic cheese company. This sums this country up for me. The bonuses the bankers would have got for that deal going through would be obscene and so the Americans can move our production to Poland like they did with Terry's chocolate. It wouldnt happen the other way round. the US, Germany and France are all protectionist but not us we are stupid and poor. If you want to encourage manufacturing you have first got encourage it to stop leaving the idea we are a free market economy means we will sell our grannies given half a chance which means only London will prosper at the expense of the nation.

Rant over