The Great Debate UK
- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
The awful thing about lynch mobs is they so often hang an innocent man, leaving the guilty totally untouched. In the case of the banks, the danger is acute. As I have already argued, hedge funds and private equity are being unfairly targeted, especially in Europe. But there is another, even less popular class which is likely to end up in the firing line, for no good reason and with consequences which could be damaging for all of us.
Broadly speaking, the banks pay 6- and 7-figure bonuses to two quite different sorts of people. First, there is a layer of what we might call technocrats: the striped-shirted traders of legend, with their loud voices and even louder dress codes, along with the managers who try to control them, the quants who invent complex trading strategies and price exotic new instruments, and a variety of others with specialised skills. Since they are rewarded in proportion to the profit they generate for their employer, which can usually be measured with considerable accuracy, their bonuses are often very large indeed. The question is: should we treat these professionals who trade on their expertise and who heavily outnumber senior management in the same way as their bosses? Not as far as I can see.
However unpopular these market professionals might be, I can see no reason whatever for intervening to limit the rewards their expertise earns for them. Arguments about “justice”, “fairness” and “ethics” are irrelevant, especially when they rely on judgements about lifestyles.
from UK News:
City Minister Paul Myners is among a handful of people with first-hand experience managing the financial crisis over the past year.
On Dec. 16, at 9 a.m. British time, Myners will deliver a speech at an exclusive Thomson Reuters event in London on a proposal the government says will strengthen the City's role as a global investment banking hub. He will also announce a series of policy measures designed to enable an effective resolution for failing firms.
from UK News:
Shadow Chancellor George Osborne says British retail banks should be stopped from paying big cash bonuses and use the money instead to support new lending.
"I am today calling on the Treasury and the FSA to combine forces and stop retail banks -- in other words the banks that lend directly to business and families -- paying out profits in significant cash bonuses," Osborne said during a Reuters newsmaker event.