Thanks for all the comments providing the balance to my promotion of the idea that bankers deserve their bonuses yesterday. Here’s the contrarian view I could have put forward, but left out:
How could you possibly agree with the idea that bankers deserve their bonuses, you schmuck?
That’s just darned foolish, as bankers just do not deserve their bonuses.
In fact, President Obama is ridiculous for even allowing bankers to have any payout at all, let alone $500,000 worth. If a bank is bankrupt, has had billions from the government taken from the taxpayer's pocket, then any idea of paying a banker a bonus is just mad.
Even if a bank makes money and has had no governmental support, there should be limits.
For example, yesterday there was mention of an investment banker who gets a £20 million payout for making millions for the bank.
But where’s the clause that says he has to pay that £20 million back the year after, particularly if he or she loses the bank millions.
Where is it?
There is no clause to get the cash back and there’s the rub: bankers make silly money in the good times but, in the bad times, they just run away with it.
How foolish is that?
And then you talk about breaking a job contract, but where in the employment contract does it say that when the firm is bust you still get a payout?
When I worked for a firm that went into Chapter 11, where was my bonus that year?
There wasn’t one of course, you dolt, because the company was bankrupt.
If the firm is bankrupt of course you don’t get a payout, because there’s no money to payout.
So why should anyone in a bank that’s losing money and going bankrupt get a payout?
No way fool!
If there’s no profit, there’s no bonus.
Equally, you make the comparison with a waiter in a restaurant or a housekeeper in a hotel but that’s pure distraction. A banker, teller or call centre worker has nothing in common with a waiter or housekeeper, because the former have a salary whilst the latter live on their tips.
You cannot even relate the two together.
Similarly, you say it’s just a matter of scale, but a call centre worker or teller is typically getting a few percentage points on their salary for meeting targets that include company performance, not a thousand times salary for getting lucky in having their bets payoff.
Bottom line: bankers don’t deserve bonuses. If the firm is losing money, then there should be zero bonus and, even if it’s making money, bonuses should be limited to some salary related multiple, not millions for just being lucky.
That's better and glad to get that off me chest.
Meanwhile, some interesting commentary from the Independent's Jeremy Warner on the subject.
Also of note was the announcement from Credit Suisse that they would be paying bonuses in the form of toxic debt, whilst UBS have implemented 'clawbacks' on bonus payments and deferred last year's bonuses which, according to the Wall Street Journal, raises questions about the long-term viability of their investment banking operations.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...