Bankers’ bonuses were back on the agenda in Brussels today, as the UK’s chancellor George Osborne told his European “colleagues” he would not support the EU’s plans for a cap on payments.
To his detractors, of which he has many, Osborne’s stance will be seen as yet another attempt by the Conservative-led government to protect it’s friends in London’s banking center, which happens to be the biggest in Europe.
The EU’s plan is a threat to the sector, according to Osborne. The idea is to cap bonuses at 100 percent of annual salary, or if bank shareholders agree, up to 200 percent. Most member states are behind the scheme as they see it as a sensible way of firming up the sector against any future problems. The chancellor is concerned about talent going elsewhere. Well, no, he’s really concerned about tax money going elsewhere. That’s the tax money that had to be used to prop up RBS and the like after they started to crumble under the weight of excessive trading, due in no small part to bonuses on offer at the time.
Ever since the financial meltdown, banks, bankers and bankers’ bonuses have been a bone of contention in the UK, and this continues to be the case five years on. There is no question that the culture within certain institutions was, and probably still is, rotten to the core. But my own frustration is the lack of a sensible discussion on the subject. Try to have one and you’re shouted down by the majority of “normal, every-day folk”. You know the ones. They are the people that have never taken advantage of lax credit checks to overspend on things they knew they couldn’t afford, only to suddenly discover their credit being squeezed, so they desperately scratch around for anybody but themselves to blame.
When it comes to the meltdown, I blame everyone. Sure some people are to blame more than others. The higher up the financial food chain, the more responsibility you bear. But everyone got used to the (relative) good life, it’s just some people are able to continue with it regardless.
Whether the EU proposals are put through or not, it won’t change the worldwide culture or human behavior. Loopholes will be found and in 20 years time the same discussions will be had again. The culture of greed is everywhere, not just in the banking sector. No doubt it will continue to be everywhere, as proper changes (and changes to human behavior) don’t materialize. Governments have always been addicted to money, and as long as the banking sector generates large sums of cash, expect certain establishments to play along regardless.