Governments threatening to cap the pay of bank bosses in the wake of the financial market crisis might be better off linking their earnings to the more humble salaries of the central bankers now cleaning up the mess.
Politicians from Berlin to Canberra are up in arms about the multi-million dollar bonuses and lavish perks earned by bank executives now that the high-risk debt they allowed to proliferate has brought the global financial system to its knees and forced taxpayers to pledge an estimated $3.2 trillion to fix the mess.
U.S. Federal Reserve chief Ben Bernanke’s $191,300 a year looks like loose change when compared with $22 million bonus pocketed by Lehman’s fallen head Dick Fuld in March or the 14 million euros earned by Deutsche Bank CEO Josef Ackermann last year, even if he and the rest of the Deutsche Bank management team are foregoing their bonuses this time around as a mark of respect.
European Central Bank chief Jean-Claude Trichet is only slightly better off with 345,252 euros a year. Bank of England governor Mervyn King earns a mere 275,340 pounds a year or roughly 355,000 euros, while the 35.78 million yen salary of Bank of Japan Governor Masaaki Shirakawa is worth about 265,400 euros.
Trackback
6 comments so far
I agree, and as a banker I also feel the same. In point of fact bank executives are accountable for this meltdown as their mismanagement solely account for what is going on now with most of this crisis and as a matter of fact the idea of capping their salaries is a good decision and of course I subscribe to the idea.
- Posted by Haribol AcharyaIf the bankers are even worth Bernanke’s $191,000, then allow that as their base pay. Escrow (with an independent firm) all bonuses, incentives, stock options, etc. for a predetermined period (I am thinking 5 to 10 years) and pay from the escrow based on earnings and additional metrics. If they leave before the 5-10 years are up—-hold it for another 10-20 years—then let it be paid out according to the same metrics.
- Posted by Jim MyersGovernments worldwide should confiscate all the personal assets/ properties of these bank/brokerage executives that caused this credit crises as a small restitution payment for the damage they have caused and return these monies to respective governments.
- Posted by Albert PioliSome of the money’s can be used to maintained said executives in there “JAIL CELLS” for there remaining lifetime!
Absolutely jail not bail thees SO B’s…
Really ,this would be one of the Good decesion as proactive approach to save the market to face the same crisis in future.
They just took away the huge amount of money and don’t take care other assets , finally its gone but not higly paid employees it is of general customer.
Better to take away all the personal properties of the Executive ,it will help to cut down the financial crisis to a great extent
- Posted by Dilip YadavIn the case of the Federal Reserve,this is a private bank run by private darlings and using public money, INSULTING ! to put it mildly , so one solution is to bring the Federal Reserve into the Treasury and under total Congress control, just remember a series of articles in the old Wall Street Journal ( before Murdoch take-over) about the 24 - 72 hour advance notice that some financial institutions in the USA and the Middle East had about Fed moves, it was a scandal…and then Murdoch took over and the series went dead…so if we want fairness, transparency and Rule of Law, we need the Federal Reserve in the Treasury and in Congress, where the Public Money of the Fed belongs.
The fact is that the Oil and Gas Lobby is the real paymaster,they control the central banks and that’s why we are going into a deep recession, but if we apply solar, wind turbines and fuel-cells to the 18 trillion dollar Housing Industry in the USA ( and the same for Europa) we will avoid recession, because it’s the energy jobs and the Energy Independence.
- Posted by financialtoolsThe present financial dilemma we find ourselves in is due to the creative genius of a few wall street MBAs, whom we are told, are essential if the US is to maintain its status within the world financial markets. Their creative genius has given us such financial instruments as derivatives, hedge funds and credit default swaps, to name a few. When broken down their creative genius is nothing more than an attempt to circumvent the rules created to maintain a stable financial system. By inventing financial instruments, which were beyond the understanding of the regulators whom were responsible for the system’s stability; these creative geniuses have managed to bring the entire financial system of the world to the edge of the abyss.
- Posted by EmileThe solution to our present dilemma is very simple. It lies in our definition of capitalism. Capitalism is a market driven system. Capitalism rewards investors who take risks and also punishes investors who take risks. The end result lies in the amount of risk taken or avoided. In playing the game “king of the hill” our creative geniuses were willing to risk all to win the game and become billionaires. The only problem is that they were trying to create wealth out of electrons. The entire world financial system is computer based and ergo wealth is created and destroyed via the flow of electrons. The basic idea behind the creation of their new money was to bet heavily that certain stocks would go down in value. By purchasing insurance against the drop in value of these stocks they would rake in the dollars when the stocks fell. Unfortunately the idiots who sold them the insurance did not understand the risk behind what they had agreed to. Firms like AIG bet that the value of the insured stocks would not fall. They were wrong because they did not know that the game was rigged. Rumors were spread about the fragility of Leman Bros. and that is where the dominos started to fall.
Now for the solution! The Federal Government is the only entity with the legal right to print money and since electronic money is not really legal tender then it is not real money. The Federal Government is not responsible for the actions of a few creative geniuses trying to create electronic money, which by the way is counterfeit and illegal and which could get you 20 years in a federal pen. It is the obligation of the federal government to bring all of these creative geniuses to justice for counterfeiting and disrupting the financial system of the entire world. What they did is no different than what some kids in high school did a few years back with a high end color printer, color scanner and a little creativity. The difference is that the high school kids did not cause the entire financial system of the world to crash.
In the end the capitalist system we have been operating under should be allowed to cycle through its highs as well as its lows with no interruptions from the federal government. Those who invested in the system should take the pain it dishes out just as they would have enjoyed the pleasures it might have given. There is no guarantee that the value of a stock will go up just as there is no guarantee that tomorrow will come. History teaches us that everything is cyclic which brings us back to the wall street bailout. The $700 billion is now being used by the banks to buy other banks and as a backstop for other banks that will be in trouble very soon. We will be better off if we allow the house of cards to collapse so that we can build a more robust system with severe penalties for those who abuse it. Let us go back to legal tender backed by precious metals and or commodities, which have real value. Leave the electrons to the physicist.