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Bankers: Do not Pass GO, Do Not Collect millions and Go Directly to Jail!

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A new banking report is published today in the UK.

There are jobs that nobody wants to do really, aren’t there? As your kids are growing up, you hope they don’t ask you one day to come and sit down as they have something serious to talk to you about. Dread! You know what’s coming: “Hey, mom, dad, I’m…I’m going to be a…a banker!”. Then, your whole life falls apart. It’s like being on a par with gutting social-unacceptable jobs like debt-collector and bailiff, isn’t it? The money might be there, but the morals aren’t?

Well, George Osborne, Chancellor of the Exchequer of the UK, has all eyes focused on him with the idea of the century, it seems. A banking commission headed by Conservative MP, Andrew Tyrie has made 80 recommendations to make the banking sector the place you want your kids to work in when they grow up. Morals will change and the banking will be a good job to have!

George Osborne is giving the Mansion-House (residence of the Lord Mayor of London) speech to the city tonight, an annual speech in which the Chancellor of the Exchequer traditionally gives his impression of the state of the British economy. It seems rather unlikely that he will announce some of the recommendations to the bankers that will be seated at the tables in front of him, however. Not unless he wants them to choke on the spicy ingredients that he have been concocted. These include making bankers wait up to ten years to receive bonuses and going to prison. Heard it all before? Thought it? Dreamt of it? The Report did it.

George Osborne, Mansion House Speech

George Osborne, Mansion House Speech

The report is a hefty two-volume reader’s digest of what to do and what not to do in the banking system, entitled “Changing Banking for Good”. Snazzy little tittle that can be read in two different ways as well. Well done Mr. Tyrie. Only a few pages into the report it states that past regulations and supervisory controls had:

  • “little realistic prospect of effective enforcement action, even in many of the most flagrant cases of failure”.

It goes on to state that:

  • “remuneration has incentivised misconduct and excessive risk-taking, reinforcing a culture where poor standards were often considered normal”.

To take out the excessive risk-taking from the lives of bankers in the workplace, the report puts forward the suggestion not only that the bankers should receive the bonuses after a period that could last up to ten years (now that’s time to forget what you have actually done to get the bonus, isn’t it?) but also that the remuneration be in bail-bonds. It also suggests that for wider cases of misconduct remuneration should be cancelled and that if the taxpayer has to foot the bill, then they should definitely not be made. We know from a recent report from the Chartered Institute of Personal Development also that the majority of bankers are in agreement. They think that they are paid excessive amounts and sometimes they don’t know why they get all the money they do. So, if we all agree, let’s cut the bonuses and improve regulation. What are we waiting for?

Bankers: Bonuses

Bankers: Bonuses

The report states that banks have failed the UK in ‘many respects’. £133 billion have had to be injected in bail-outs, amounting to £2, 000 per every person in the UK today. But, it seems that it is also the shareholders that have been let down too. They have had ‘poor long-term returns’.

Excessive risks that were taken in the period leading up to the financial crisis were not down to miscalculation of mathematical equations that boiled down to the bankers getting their sums wrong, but to the fact that the banks were and still are too big to fail. They are able to take greater risks because they are too complex and too enormous. We can’t let them fail and that they know only too well. It’s all very well saying ‘yes, let them fail and then they will see’. But, what will the average person be eating then? Bread and water will be more than just dietary supplements, they will become the staples. Banks today have access to cheaper credit. Their success is determined not so much by the careful and planned placing of financial equity, but the guarantee that lies steadfastly behind them.

The report clearly states that bankers should not flippantly refuse to accept that public anger at high salaries is purely jealousy-driven or petty ignorance. “Rewards have been paid for failure”. Bonuses may have fallen, although the report points out that this has been off-set by fixed-pay rises.

It has also been suggested that there needs to be greater equality in terms of employing women. Women take fewer risks traditionally on the trading floor and so the report asks for employment policy to be changed in banks.

Senior bankers have also come in for a belting from the report, accused of wearing blindfolds as to their responsibility. They are accused of being so far removed from the misconduct that they have ended up being admonished of all responsibility. The report suggests that a prison sentence would certainly make senior officials think about what is being done. The report states that it would “give pause for thought to the senior officers of UK banks”. However, to what extent would senior officials of any bank really consider their potential criminal liability? It also raises the question as to what extent it would be possible to actually see a conviction and criminal liability recognized in a court of law?  Hard to prove.

The reports can be found here.  Enjoy! If anything actually gets done. Previous suggestions were already ignored by the British government with regard to changes in the banking sector and the report states that it is “disappointed” that this has happened. Aren’t we all?

However, clearly the report states quite a few home truths; things that the average citizen has been feeling and voicing for many a year now. But, until now that has been largely left just as words from angry and jealous members of the public that also want to strike it rich and get paid for doing wrong. Now though, how long will the suggestions that have been made be ignored and how long will the Chancellor of the Exchequer be able to turn a deaf ear to what is being said? The report comes at a timely moment; Mr. Osborne looks like he may still have time to rectify his speech for tonight’s dinner!

The report states “An important lesson of history is that bankers, regulators and politicians alike repeatedly fail to learn the lessons of history”. This time it is (apparently) different. Bankers and everyone else have learned the lessons. Have they?

What do you think? Are bankers going to repeat history or have they learned from their mistakes?

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Wed, 06/19/2013 - 14:13 | 3672257 SILVERGEDDON
SILVERGEDDON's picture

Nope, been tried before.

Maybe frog marching them into airport snow blowers running at full throttle ?

Definitely more colorful, and you get a payback immediately in the form of useful cat food or garden fertilizer.

Wed, 06/19/2013 - 13:23 | 3672029 Sabibaby
Sabibaby's picture

Are bankers going to repeat history or have they learned from their mistakes?

Long gas chambers and crematorias.

Wed, 06/19/2013 - 13:12 | 3671978 shovelhead
shovelhead's picture

So, this was the comedy portion of the speech?

Wed, 06/19/2013 - 13:06 | 3671952 Joebloinvestor
Joebloinvestor's picture

Notice how NOTHING was said about the shitty UK regulators who can't see or find jack shit. They should be thrown in jail for malfeasance.

Wed, 06/19/2013 - 13:59 | 3672178 Midasking
Midasking's picture

Nobody is going to jail.. they run the world.  It is a big club and you ain't in it! http://tinyurl.com/mem7o7x

Wed, 06/19/2013 - 12:48 | 3671875 robnume
robnume's picture

As if I'm going to believe anything that comes out of an official mouthpiece of ANY western power! Particularly the Disunited Kingdom - kingdom - how medieval is that term - or the United Stasi of Amerika. Put your money where your mouth is, Mr. Osborne, and throw these banksters in gaol. WTF, he said NOTHING regarding the fact that the Channel Islands are the biggest tax havens in the world? JUMP, FUCKER, JUMP!!!!

Wed, 06/19/2013 - 12:27 | 3671774 Tombstone
Tombstone's picture

In the new centrally planned world, only victims go to jail.  The perps are rewarded with freedom and money.

Wed, 06/19/2013 - 12:13 | 3671712 DavidC
DavidC's picture

Osborne makes me feel ill, and I can't get the picture of him being booed at the Olympics out of my mind for some reason...

DavidC

Wed, 06/19/2013 - 12:06 | 3671676 PT
PT's picture

No risk should = no reward.  They got bailed out = no risk, therefore they get no reward.
TBTF should = too big to leave idiots in charge.  Sack the idiots.
TBTF = too big.  Split the Too Bigs.

Good news = I'll believe it after it happens.  The track record of "Good News" is way too unreliable to be treated any other way.

Wed, 06/19/2013 - 11:38 | 3671548 medium giraffe
medium giraffe's picture

tittle?

Wed, 06/19/2013 - 12:20 | 3671739 Uchtdorf
Uchtdorf's picture

As in: "jot and..."

Wed, 06/19/2013 - 10:28 | 3671248 eddiebe
eddiebe's picture

'

What do you think? Are bankers going to repeat history or have they learned from their mistakes?'

Just maybe they would learn by swinging from lamp posts.

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