BBC BLOGS - Peston's Picks
« Previous | Main | Next »

Lord Turner wants new punishments for failed bank bosses

Robert Peston | 09:21 UK time, Wednesday, 8 December 2010

Directors of banks responsible for catastrophically bad decisions, which put their respective banks in jeopardy, could face a new punishment of having two years' pay clawed back from them.

Lord Turner

 

Lord Turner, chairman of the FSA, told me that he was attracted to imposing such a sanction - which is part of the so-called Dodd-Frank financial reforms in the US - as a way of discouraging banks from taking excessive risks.

The clawback of bank bosses' pay would be punishment for misguided or stupid behaviour, rather than for illegal behaviour.

He was elaborating on an article he has written in today's Financial Times [registration required], which looks at the lessons of the FSA's investigation of how the Royal Bank of Scotland took itself to the brink of bankruptcy in the couple of years before it was rescued by taxpayers in October 2008.

The FSA has been widely criticised for saying that its review finds no grounds for punishing the senior directors of RBS at the time or the bank itself. Its decision not to publish the investigation has also been attacked - and yesterday the Business Secretary, Vince Cable, said he was disappointed that no report on the affair has been published by the FSA.

Lord Turner is open to the idea of publishing such reports in the future. However he says that this investigation was carried out according to normal FSA procedures, which makes it difficult to publish because the probe was broken down into separate parts.

Documents were prepared by the FSA's enforcement department on the events leading up to the disastrous purchase by Royal Bank of Scotland of the rump of the Dutch bank, ABN, in 2007, on the control mechanisms in RBS's global banking and markets division, and on whether RBS disclosed accurate information to investors in this period, especially when launching a jumbo rights issue in the spring of 2007.

In other words, a single seamless narrative of what happened at RBS wasn't prepared.

That said, Lord Turner sees the argument that publishing such a narrative could have been useful, in that it would allow future bank directors to learn the lessons of RBS's mistakes. So in future the FSA may organise its investigations in such a way that a report can be published at the close.

However, the big lesson for Lord Turner of the RBS debacle, and other banking disasters, is that there has to be a cultural revolution in banks, such that bank directors never think about taking the risks that may be appropriate to other kinds of business - not least because the economic damage from bank failures is so great, and because taxpayers are forced by governments to inject colossal sums into the likes of RBS, to prevent them going bankrupt, in a way that almost never happens in any other industry.

Although the kind of entrepreneurialism that leads to bankruptcy may be essential to wealth creation in the hi-tech industry or retailing, it is wholly inappropriate in banking, Lord Turner believes.

For him, RBS's directors should never have contemplated taking on the financial risks that were forced on RBS through the purchase of ABN - and the FSA should have prevented the deal going through.

It should have been palpably obvious to RBS's directors and to the regulators that the deal was leaving RBS with far too little capital for absorbing potential losses, relative to the combined assets of RBS and ABN - and that the deal made the bank far too dependent on unreliable wholesale funding.

That said, these were mistaken business decisions, albeit of catastrophic consequence, not illegal business decisions.

That is why Lord Turner believes there has to be a new, special regime of potential sanctions for directors of banks.

Apart from the US idea of demanding substantial refunds of top bankers' pay, if they make devastatingly bad business decision, Lord Turner also argues that senior bank directors should perhaps be automatically disqualified in those circumstances.

The burden would no longer be on the FSA to prove that the directors had broken laws or rules. Instead, the directors would have to demonstrate that they had taken steps to try to prevent the misguided takeovers, dodgy lending or ill-judged investments that sank their respective banks.

If the directors could prove neither that they had argued against those bad deals nor blown the whistle to the FSA, there would be no uncertainty about their fate, no long review of their behaviour by the FSA: they would face automatic eviction from the bank boardroom.

UPDATE 14:03: Just on this question of how and whether the FSA could publish a report on RBS, I am told - by a thoroughly reliable source - that the RBS file could only be turned into a publishable document if a team of four or five officials were put to work full time on the project for six months.

“It is the equivalent of a police file”, said a source. “It contains lots of different documents and simply isn’t a single coherent whole”.

Also, even if the FSA did set to work to produce a report out of the file, there might be serious impediments to its publication. It could be seen as prejudicing the civil proceedings for damages against the bank initiated by shareholders, who claim that the bank and its directors were negligent in their responsibilities.

That said, the FSA recognises there is a genuine need to learn the lessons of the RBS and other bank debacles. And it certainly understands the argument for a narrative of what happened and why it should be published.

The chief executive of the FSA, Hector Sants, has therefore told ministers that he thinks there is a case for writing into the forthcoming law, that will transfer prudential regulation to the Bank of England, a new formal requirement for reports to be written in this kind of circumstance.

Comments

Page 1 of 2

  • Comment number 1.

    "However, the big lesson for Lord Turner of the RBS debacle, and other banking disasters, is that there has to be a cultural revolution in banks"

    I think that about sums it up.
    Nothin to see here... Move along. Move along.

  • Comment number 2.

    Although Lord Turner is generally impressive, this falls short of his usually acute intelligence.

    It is an after-the-event sanction.

    IMHO, what is needed are measures that preclude the event.

    That means tighter controls on what the bank does with 'other peoples money'.

    It should be possible to devise such a system, i.e. banks can do whatever they want with their own money but when handling money from other sources, those sources should be able to mandate clearly the level of risk that is acceptable and from that flows the appropriate controls.

  • Comment number 3.

    Surely this should, if it ever happened, apply to all industries as there have been a number of companies mismanaged that have gone bankrupt and nothing has happened. Woolworths, Zavvi, MFI, Rover to name but a few

  • Comment number 4.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 5.

    3. At 09:57am on 08 Dec 2010, yam yzf wrote:

    > Surely this should, if it ever happened, apply to all industries as there have been
    > a number of companies mismanaged that have gone bankrupt and nothing
    > has happened. Woolworths, Zavvi, MFI, Rover to name but a few

    No. Only bankers need this treatment because they are bloated, too big to fail, and more prone to be greedy chancers than people in better industries.

    I'll help you to see the difference. When Woolies went broke, I couldn't buy toffees. Do you get it now?




  • Comment number 6.

    > That is why Lord Turner believes there has to be a new, special regime
    > of potential sanctions for directors of banks.

    Two years pay is way to lenient. Why not strip them of everything?

    Look, we've got to get serious if we want to stamp out greedy bankers once and for all. Pussyfooting around doesn't cut it.

  • Comment number 7.

    Although the kind of entrepreneurialism that leads to bankruptcy may be essential to wealth creation in the hi-tech industry or retailing, it is wholly inappropriate in banking, Lord Turner believes.

    Why? Given that the failure of a lot of companies is due directly to the attitude of the banks then surely the banks should not be immune from bankruptcy.

    If on the other hand it is thought by Govt to be wholly inappropriate for banks to go bankrupt then we should nationalise them 100%, ban bonuses and so on.

    "However, the big lesson for Lord Turner of the RBS debacle, and other banking disasters, is that there has to be a cultural revolution in banks"

    We can start by firing the current boards and putting in people that do actually understand what the role of the banks should be which is of course to support the rest of the economy.



  • Comment number 8.

    Whatever happened to fiduciary duty?

    I will explain this in simple terms so that the banking fraternity understand what I mean, namely you serve the interests of another party with no regard to your own interests. No doubt our learned friends can expand upon that, perhaps for a fee.

    The question in such an instance is why would a senior manager of a bank who has no doubt been subject to a rigourous selection process for the job, be motivated solely by the interests of the bank and its place within the broader economy make a catastrophically bad decision?

    The only cause for a catastrophically bad decision in such circumstances would be the pursuit of a personal pecuniary advantage also known as a bonus. This surely places said senior manager within the remit of the Theft Act.

    So it is not a case of losing two years money but rather an appearance at the Old Bailey, a term of imprisonment followed by bankruptcy proceedings. In the old days this was called `ruin'. I think it should be brought back.

  • Comment number 9.

    Scottish journalist Ian Fraser has written some great stuff on the FSA and PriceWaterhouseCoopers laughable 'investigation' into RBS. Links below.

    http://bit.ly/grxlyR
    http://bit.ly/fDSlWt

  • Comment number 10.

    5. At 10:17am on 08 Dec 2010, Jacques Cartier wrote:
    "I'll help you to see the difference. When Woolies went broke, I couldn't buy toffees. Do you get it now?"

    And the difference is what? If the banks failed, you would probably still not have been able to buy toffees. Same result isn't it ?

  • Comment number 11.

    Will Lord Turner's proposals re: claw back of pay also cover pension contributions?
    Bank Senior Exec's were lauded for foregoing bonuses last year . However , the banks still paid millions into their individual Executive pension pots. So , whilst tax payers , shareholders , employees , bank pensioners et al continue to bear the brunt of their disasterous foray into risky assets resulting in the credit crunch , Bank senior Execs will continue to retire on huge pensions e.g. Goodwin : pension pot £15m , pension £700k+ pa; Varley : pension pot said to be in excess of £20m = pension £1m pa. What other industry would reward failure ( and failure on a hugh scale ) in this way . Lord turner needs to look at bank bosses total pay including pension contributions to ensure that bonuses are not merely "diverted" into annual pension contributions .

  • Comment number 12.

    Big talk but let us see what action the Government (as sanctioned by Osborne) will actually take in the face of the inevitable threat from banks to take their corporate toys and prams elsewhere. There are issues around taking action post hoc that under a supervision regime do not arise. The control of banks would also be greater if the government retained ownership of those banks de facto in the public sector and not sell them of for a short term gain with a loss of strategic management.

  • Comment number 13.

    Having had to deal with the FSA (as an insurer, not a banker) I can confirm that they are populated by individuals unable to secure a decent job elsewhere. Regrettably it seems that their leader is no better. The UK enshrines Article 6 (right to a fair trial) and Protocol 1 (property rights) of the European Convention on Human Rights in its law. It is highly unlikely that the European Court would uphold any penalties of the sort described where the person concerned acted without criminal intent or gross negligence (the wording of Protocol 1 does allow some wriggle room). It is absolutely certain that the Court would not allow such penalties without a full and proper legal process preceding the penalty. Ergo, Turner and the FSA would not be able to control such a process but rather it would have to be court led. If anyone doubts this they should consider the case of Legal & General versus the FSA a few years ago where the FSA was shown to have acted unreasonably and beyond its powers. Would any court (never mind the European Court) accede to such an organisation being allowed to impose such penalties? I can see it now....."M'Lud; the FSA has form in such matters.....".

  • Comment number 14.

    11. At 11:07am on 08 Dec 2010, Russ wrote:
    " Goodwin : pension pot £15m , pension £700k+ pa; Varley : pension pot said to be in excess of £20m = pension £1m pa. What other industry would reward failure ( and failure on a hugh scale ) in this way "

    Whilst I understand the reference to Mr Goodwin, I do not see the relevance of Mr Varley as his bank has not taken any government money and is still independent

  • Comment number 15.

    basically its not against the law for a handfull of people to bankrupt the uk, force biblical cuts and throw maybe millions out of work.

    they have destroyed jobs and lives and wreaked generational damaged upon the uk as surely as an enemy bombing campaign yet they walk free and rich.

    'we are in it together'. not.

  • Comment number 16.

    Horse. Bolted. Stable door. Closing.

    Work it out.

    Pathetic and laughable

  • Comment number 17.

    As interesting as this all is -- whether to slap individual scapegoats on the wrist or not to punish them for their greed and imprudent decisions -- it's really just a diversion from the much bigger problem which is HOW DO WE STOP IT HAPPENING AGAIN?

    And that problem doesn't seem to be being addressed: giving banks massive loans to keep them afloat and then allowing them to hang on to the money instead of using it to benefit businesses and the wider economy... I still don't see how it helps.

    I'm still waiting to read a mainstream media assessment of why the government shouldn't issue its own cash instead of borrowing it from the banks. I still don't understand why our government cannot print its own cash (as has been done before) to avoid the need to borrow it (and pay interest on the borrowed cash) from the banks. As I understand it (and I am sure someone will correct me if I am wrong), the government has even borrowed the money used to plough into the banks and we're paying interest on that too!

    None of it makes sense. It's like a bad joke.

  • Comment number 18.

    Would Lord Turner also like to contemplate docking the salary and bonuses of former FSA executives for failures on their part? I would find that attractive.

  • Comment number 19.

    How come the US have managed to sell the shares in Citigroup at a profit and yet our leaders seem unable to do anything other than come out with "reports"

    Suggests that the problem is not the banks, but the country's leaders

  • Comment number 20.

    10. At 10:54am on 08 Dec 2010, yam yzf wrote:

    >> JC: "I'll help you to see the difference. When Woolies went broke,
    >> I couldn't buy toffees. Do you get it now?"

    > And the difference is what? If the banks failed, you would probably still not
    > have been able to buy toffees. Same result isn't it ?

    Ha! That must be a rare example of banking humour.

    Look, when the bankers screw up the money system, we can't buy anything. So we need the banking equivalent of being "struck off".

    But mere striking off is not sufficient, as some greedy bankers have made a bundle before getting struck off, like Sir Greedie.

    So we must both strike them off and impoverish them to reach them a lesson. It makes great sense to have moral hazard at play.

  • Comment number 21.

    "Stinky" Turner from The Cockney Rejects spoke more sense.

    "Oi, Oi, Oi"

  • Comment number 22.

    Taking directors pay etc. is ludicrous!

    In the real worold people are sacked for incompetance.

    Does the real world apply to bankers and the FSA?

  • Comment number 23.

    More thrilling sideline news from the heart-bypass club in the Republicj of Westminster.

    GC

  • Comment number 24.

    In a sense, bankers can be seen to be acting as agents for the taxpayer, since any losses incurred are socialized. Because of the potential damage that can be inflicted on society by instances of their incompetent behavior, I believe that the penalties should be far more robust. Two years salary clawback seems insufficient. They should be permanently banned from holding such positions.

    That action alone might encourage cultural change. Confiscate their 'gravy-train' tickets and the other passengers will learn to value their seats - instead of just going along for the ride.

  • Comment number 25.

    So the FSA couldn't provide a narrative explaining what exactly happened at RBS. Convenient that. Sounds like a cover up to me. Certain people are being protected. Probably people who have made a vast profit out of the process and want to avoid public pressure to pay back the money and get out of banking.

    Secondly. Refunding "remunerations" for bad performance by docking a couple of year's pay isn't enough. They shouldn't be given any bonuses until they retire. That way they don't get to keep most of their ill-gotten gains despite having let the public down so badly. It isn't good enough to walk off with a vast bank balance despite having failed completely. Everyone else wrecks their entire workplace and gets fired and thats it. This lot get to walk into another high paid job. Reward for failure. Only in the equally ludicrous and insulting football manager role do we see such promotion for failure. Once your on the gravy train you stay on it. Such utter stupidity is roundly punished for everyone else in this country. This needs to change.

  • Comment number 26.

    19. At 11:25am on 08 Dec 2010, yam yzf wrote:

    > the problem is not the banks, but the country's leaders

    So the bankrupt banks have nothing to do with the problem of bankrupt banks that we had to bail out - what rot! Pull the other one - it's got bells on it!

  • Comment number 27.

    Notwithstanding alb1on's comments about whether Turner's plan is enforceable the idea of punishing the senior bankers certainly appeals. As I have said on previous Peston blogs it was the senior management, many of whom are still in place, who were responsible for setting the targets, agreeing products to be sold, measurements and rewards, that caused the problem. They either didn't understand what was happening or were possibly concerned but chose to do nothing to keep their own income stream. Those Risk Managers who raised the alarm were buried by people who should have known better.

    We're not over this crisis yet but we do need to work out some way of avoiding this ever happening again.

  • Comment number 28.

    I wonder if the FSA asked the Press Office whether they had perpared responses on sub-prime lending before therights issue document was issued?

  • Comment number 29.

    #14

    But they took a lot of TARP money to keep them afloat in 08/09 according to the Fed information released just few days ago.

    Anna

  • Comment number 30.

    14. At 11:17am on 08 Dec 2010, yam yzf wrote:

    > Whilst I understand the reference to Mr Goodwin, I do not see the relevance
    > of Mr Varley as his bank has not taken any government money and is
    > still independent

    His bank has taken money from Arab governments. And Barclays would be broke if we hadn't saved the system with our money. It owes us a gigantic debt of gratitude, yet it has not shown humility yet, just truculence.

    Mr Varley has approached ministers without keeping the public fully informed. There is no room for this kind of behaviour in the new circumstances of banks.


  • Comment number 31.

    @9

    Two very interesting articles, i wonder why the mainstream journalists havent spotted this conflict of interests and lack of ability of the auditors in other cases before now.

    The loss of 2 years remuneration to the bank boards is laughable, they will just put up their own wages to compensate.

  • Comment number 32.

    @ 7. At 11:41am on 08 Dec 2010, Big B wrote:

    > Notwithstanding alb1on's comments about whether Turner's plan is
    > enforceable the idea of punishing the senior bankers certainly appeals.

    Stop making me drool!

  • Comment number 33.

    Performance linked pay. If you don't perform you don't get paid.

    If the banks can't be trusted to behave responsibly (protecting the public) then they shouldn't be given that respoonsibility.

    The government won't take resonsibility - too much risk of losing power if things go wrong.

    So we are stuck in a situation where people who behave disastrously at work, failing the public completely, walk away with a massive reward. How can anyone defend this farcical situation, let alone uphold it? Is the UK such a deeply stupid country that we are willing to tolerate this?

    It isn't good enough and everyone knows it isn't good enough.

    The banks are full of cronies who look after each other. They behave like the unions did in the 70's by holding the country to ransom and it can't go on.

    We are in an untenable situation where our defence of the status quo will be our own undoing. Sometimes things have to change. Drastically.
    So where does that leave us?

  • Comment number 34.

    I keep thinking about Demspter's idea that there may be some influence that can be exerted by holding physical cash. OK you only have a promise by the Bank Of England that it will exchange the value of the note for cash which sounds pretty meaningless but you do bypass the private banks and affect in a small way their ability to leverage your cash.

    If you believe in the myth that Government finances deficit spending by borrowing private bank issued cash then all other (electronic) money does not have this Bank Of England backing and must therefore hold less value (because there is a tiny, tiny tiny chance the private bank will become insolvent and so your electronic money gets wiped out)

    Of course everyone would need to take care to record any cash based transactions properly so that the correct amount of tax gets destroyed (Sorry, not destroyed I mean remitted to treasury to finance public spending)

  • Comment number 35.

    26. At 11:40am on 08 Dec 2010, Jacques Cartier wrote:
    19. At 11:25am on 08 Dec 2010, yam yzf wrote:

    > the problem is not the banks, but the country's leaders

    So the bankrupt banks have nothing to do with the problem of bankrupt banks that we had to bail out - what rot! Pull the other one - it's got bells on it!
    ===============================================================

    Well said Jacques - who is the greater fool though? The fools (in the banks) who bankrupted the country or the fools (successive goverments) who allowed this to happen.

    Shall we call it a draw?

  • Comment number 36.

    Perhaps this is a bit off-thread but could someone answer this question for me?

    If Sir Fred Goodwin was Knighted on the back of his (presumably good) services to Banking then, given his alleged contribution to the collapse of RBS, why can't he be stripped of his Knighthood on the back of his (alleged) disservice to Banking?

  • Comment number 37.

    "17. At 11:23am on 08 Dec 2010, Bob wrote:
    As interesting as this all is -- whether to slap individual scapegoats on the wrist or not to punish them for their greed and imprudent decisions -- it's really just a diversion from the much bigger problem which is HOW DO WE STOP IT HAPPENING AGAIN?"

    Yes. See Jacques Cartier, Guy Croft and most other posters here. The longer this charade goes on the worse the position becomes. We've effectively wasted the best part of 3 years thumb twiddling. Obviously without firm direct pressure these people have no intention of addressing the matter.

    Punishment appeals to those with simple "solutions" in mind, such as revenge. We really need a proper public debate, reflecting the views of those most directly affected, followed by wholesale reform.

  • Comment number 38.

    It is now well over 2 years since all of this Banking mess blew up and NOTHING has happened. Lots of hot air, lots of committees, lots of central bankers wringing their hands, even more bonuses and tax payer bailouts (though now to foreign banks we don't even own). Robert, stop reporting it, nothing will change, in 20 to 30 years time it will all happen again and the Circle will continue. Vince Cable, remember him, all his pontificating, he seems to have disappeared. All Western Governments want is to carry on as normal, devalue the currency, raise inflation, punish savers and reward borrowers.

  • Comment number 39.

    I'm interested to see how long it takes WOTW to get through his in-tray for the 3 weeks.

  • Comment number 40.

    33. At 11:52am on 08 Dec 2010, i wrote:

    We are in an untenable situation where our defence of the status quo will be our own undoing. Sometimes things have to change. Drastically.
    So where does that leave us?
    ================================================================

    Very simple my friend we put the theives in jail and seize their assets. Switzerland (where they all threaten to move) isn't big enough for all of them anyway. Besides it probably doesn't want to be bankrupted the way we have been by these cretins.
    Thereafter show me the next spiv in a flashy suit who tries to benefit at the expense of the whole country to the tune of 500bn - that's a lot of tax over the next 30 years we'll all have to pay

  • Comment number 41.

    "33. At 11:52am on 08 Dec 2010, i wrote:
    We are in an untenable situation where our defence of the status quo will be our own undoing. Sometimes things have to change. Drastically.
    So where does that leave us?"

    Direct and sustained pressure. On those with power (who have a job to do, of course). It's the only thing that has any effect and without a long term commitment (and even with one), it sometimes doesn't work. The best way is to introduce a measure of uncertainty into the cosy existence enjoyed by politicians and their cronies. Expose, harass and harangue them. Vote them out. Threaten their status, salary, pensions, bonuses etc. It's the only power most of us have got.

  • Comment number 42.

    Big JC (#38) sums it up nicely.
    But I would also like to add: and all of these well-off politicians also want to punish pensioners, and make the poor even poorer. If we all have to pay for these mistakes (and why should we?), the well-off miss out on some luxuries. Poorer people struggle to even survive.

  • Comment number 43.

    The war on bankers goes on. Hacktivists have taken down the mastercard site. Try it for yourselves (traffic just adds to thier chaos!): [Unsuitable/Broken URL removed by Moderator]

  • Comment number 44.

    How about allowing banks to take risks but making those risks have a price attached. If a bank is taking part in risky ventures (let's not ask who classifies them as risky) then they can do that but need to hold a higher capital ratio of higher quality assets. This then leaves those banks who want to do this to make that as a business decision but mitigates the chances of a catastrophic failure.

  • Comment number 45.

    35. At 11:56am on 08 Dec 2010, M_T_Wallet wrote:

    > Well said Jacques - who is the greater fool though? The fools (in the
    > banks) who bankrupted the country or the fools (successive goverments)
    > who allowed this to happen.


    Well, they are all cretins, that's the one thing we know for sure. But what will the world look like when we've flushed them out? Reassuringly, it can hardly get worse!

  • Comment number 46.

    26. At 11:40am on 08 Dec 2010, Jacques Cartier wrote:
    "So the bankrupt banks have nothing to do with the problem of bankrupt banks that we had to bail out - what rot! Pull the other one - it's got bells on it!"

    Selective quoting again JC :(

    I never said that and I have always advocated that failing banks should do just that - fail. Govt stepped in and stopped this; from Northern Rock onwards so is that not a leader failure by doing that?

    Likewise, the national debt has been built up by Govt, not banks.

    Even so, if banks shares are being sold by the Fed in the US and making a profit for tax payers, my question still holds - why have they not done the same here?

    Finally, successive MPs and Govts have failed the country more so than any bank, so why is their money not being clawed back?


  • Comment number 47.

    Have you noticed? - it's the same talking heads wringing their hands and muttering that nothing can be done.

    I'm afraid there is a new cabal running the show and the politicians are helpless.

    Do we really need another crisis to get someone - anyone - to stop this nonsense?

    Looks like it.

  • Comment number 48.

    Maybe if we had taken a leaf out of Iceland's book, we wouldn't be having these pointless conversations with the Bankers!?
    http://www.guardian.co.uk/business/2010/dec/07/iceland-exits-recession-third-quarter

    Bim

  • Comment number 49.

    The FSA was one of the co-culprits in causing the bubble and crash so even though Adiar Turner has left/is leaving I cannot forgive his past errors and omissions.

    I think I'll stick to my National Maximum Income argument as a totem to describe how we need to change society. (for the philosophy behind this see #50 in Stephanie Flanders current blog)

    I do not think that selective retribution against just the banks is a good thing. The bankers will just describe themselves as footballers and in one bound they are free.

  • Comment number 50.

    I honestly can't believe this man (Lord Turner). This is the man, the head of the FSA, who went on record as saying that the Worlds' Financial Regulators, including the FSA, didn't foresee the potential risks that brought about the World-wide banking crash. I'm an IFA if I don't foresee potential risks when advising clients I'd be deauthorised from trading and I could face jail. I'm not aware that Lord Turner has faced any such sanctions.

  • Comment number 51.

    "Lord Turner wants new punishment for failed bank bosses" is the title of Robert Peston's blog.

    Other reports mention a claw-back of two years of salary of these bank bosses?

    Most ordinary people feel impotent about incompetent and reckless bank behaviour that their taxes bailed out in UK - and across Europe and the United States too.

    With austerity measures and increased taxes imposed by governments in the wake of the banking bail-outs - it's impossible for ordinary people to find any haven in returns in banks or building societies for their savings.

    Lending rates are too high and availability of mortgages are cynically unavailable for anyone wanting to buy a home because traditional and ethical lending institutions are cash poor due to the ludicrous and unsustainable gap between savings and lending.

  • Comment number 52.

    There is already a law of 'obtaining money by deception' for example by allowing your shares to be bought without warning that there was a high risk that the bank would go bust.

  • Comment number 53.

    If you have a fire, then you have in place three things, oxygen, fuel and an ignition source. If bacteria are going to multiply on a discarded cream cake, you need warmth, moisture and time. Remove one of the factors and you don't have fire or bacteria growth.

    So, yes, removing the driving motivation of "... and I'll be personally gloriously rich" will probably help. But is it really enough?

    Isn't it time to admit we need a different way of doing banking?

    Shouldn't we be putting our hands up and acknowledging that our romanticised notions of banks were killed of years ago?

    I even note Gordon Brown making reference to the days when, in the City, the notion of "my word is my bond" was a true state of affairs. But it just isn't like that any more.

    Why really does the banking service offered to the public on the High Street HAVE to be run by the "stewards of people's money" who "were revealed to have been speculators with it."

    Are there really NO alternatives? Or is it just that putting in place any alternative would be just a tad administratively inconvenient?

  • Comment number 54.

    If the bank / company has been run to bankruptcy through the mis-representation of it's operations, i.e. (risk exposure, capital levels, asset valuations etc.) then it is conducting fraud.

    And fraud is a criminal act. Not resolved by slapping a "parking fine" on already wealthy people:

    http://www.bbc.co.uk/blogs/newsnight/paulmason/2010/11/the_first_law_of_twitter_every.html

  • Comment number 55.

    With all the banker bashing, let's not forget the greedy and imprudent borrowers who convinced themselves that house inflation was real wealth.

    The government first needs to recognise that the housing market is a major source of economic turbulence (and has been ever since the 70s) and needs some regulatory stabilisers.

    Second, it needs to ensure that the traditional last resort guarantee for boring old banking activity of the type Lord Turner refers to is not somehow extended to high risk gamblers, and at the same time ensure that conservative-minded retail depositors are not similarly tricked into allowing their assets to be used as collateral for the same gambles. The deception played on the market by CDO creators (mixing high risk debt with high grade debt and calling it premium quality) seemed extraordinary, but the truth is that a similar ruse has been played on us by the entire retail deposit taking industry in the West for many years and we're all a bit embarrassed we didn't see it.

    So, you deal with the first issue by making it illegal to grant a mortgage for UK residential property using anything but sterling cash deposits as collateral. This should ensure that asset prices do not accelerate away from the actual wealth of the nation.

    You deal with the second by requiring all banks to offer bank accounts which are only used for traditional banking activities, with high capital requirements, and a ring fencing from other liabilities in the event of insolvency. The interest on offer will be lousy, but that's the reality if you want low risk. And colour code the account type so that consumers recognise when they are putting their money into a real safe store (trad meaning of bank) and when they're putting it into a casino.

  • Comment number 56.

    Solicitors already have to keep client monies separate from working capital by law. Why not the same for banks, so that they can only gamble with their profits that are unattached to clients' monies? There could even be room for clients to allow them to use their monies, or parts thereof, for risky ventures if they felt the likely rewards were sufficient to balance against the risk - but at least they would be consulted and making an informed decision.

  • Comment number 57.

    40.

    At 12:01pm on 08 Dec 2010, M_T_Wallet wrote: "put the theives in jail and seize their assets"

    I agree with your sentiment entirely. Easier said than done though!

    41. At 12:13pm on 08 Dec 2010, Duxtungstu wrote:

    The best way is to introduce a measure of uncertainty into the cosy existence enjoyed by politicians and their cronies. Expose, harass and harangue them. Vote them out. Threaten their status, salary, pensions, bonuses etc. It's the only power most of us have got.

    Yes, I agree with that. My fear is that the ship may steady and all will be forgotten.
    There are encouraging signs. Eric Cantona's open call to engage in a run upon the banks may not have worked - but it worried a few people.
    The temerity with which the political and financial elites in this country disregard the will of the general population as they reinforce each others positions whilst trotting out a series of blatant lies and cover ups is shocking. I am astounded by the degree to which these issues are not addressed. They need to have that "cosy existence" threatened severely.

  • Comment number 58.

    Fine of two years pay now,
    followed by ... ....
    a bonus of four years pay for being clever enough to extract a rescue package from HMG!

    It's tough at the top.

  • Comment number 59.

    #55 "With all the banker bashing, let's not forget the greedy and imprudent borrowers who convinced themselves that house inflation was real wealth"

    For goodness sake let it drop. The Guvt used increasing house prices as an indicator of growth!!! When your Guvt is behind it one is tended to say fair enough.

    Of course in the future none of us will trust anything the Guvt says ever again, innit?

    And then I woke up.


    GC

  • Comment number 60.

    This is a nice idea but will never happen. Key issue what is definition of "failed" - RBS, Lloyds certainly fall into this group but is Stephen Hester CEO of RBS going to give up his generous salary for sorting it out or stop the bonusses of his key team never.

    Lord Turner misses the point Bankers are over paid and under performers as a group and like most other PLC boards lost touch with their owners - the shareholders. This is the true revolution that is needed end big pay for zero or negative performance.

  • Comment number 61.

    #55 "With all the banker bashing, let's not forget the greedy and imprudent borrowers who convinced themselves that house inflation was real wealth"

    59. At 13:31pm on 08 Dec 2010, Guy Croft wrote: "For goodness sake let it drop. The Guvt used increasing house prices as an indicator of growth!!!"

    So thats why they allowed the bubble to continue growing. Were still stuck with it and it appears that we are all paying. I suspect the Govt is intending to inflate this situation out of existence. Expect a long wait.

    The way mortgages are constructed needs to change. Banks appear to sell off houses were lenders have defaulted at a huge discount in order to reclaim their assets. This practice is odious - because people lose their homes, and makes mortgages more expensive. I still don't understand why if yo uhave a mortgage you end up paying back about 2 1/2 times more than the house originally cost. It strikes me as a monumental rip off which we all take for granted. I would like to see a thoroughly regulated mortgage system where you pay nearer the actual value of your house back, taking inflation into account. If banks showed more patience in reclaiming their assets then they wouldn't be able to excuse their incredibly high rates of interest charged to mortgage holders. I guess they resell houses quickly so they can lend out the money again and make a quick buck. Again its all about short term profit and no appreciation of the consequences. The very same people who lose their homes will then rent for about the same amount (or more) they paid on their mortgages. This time banks and lanlords both take a cut. This is exploitation using a vital societal need as bait to keep people strung along for their entire lives. Its disgusting.

    Its not just the investment arm of banks which need reform.

  • Comment number 62.

    This is a little off subject but would like to know Mr Peston your take on this. In the U.S. at least prior to there Mortgage failures, if you purchased a home with less than 20% down you had to pay PMI (positive Mortgage Insurance) In the late 90's I bought a house for $250,000 with 10% dowm I had to pay the insurance company $250 a month. It only stopped when my house was appraised and had a loan to value ration of 80%. When I purchased a small flat in London similar price I paid £999 Fee and that was it. Fortunatley I can more than afford my mortgage but I thought that was not right. Anyone have thoughts on this. By the way in The states there recent problem they dropped PMI The house prices feel by a little better then 20% with no insurance for the banks to fall back on so of course as they sell the houses they loose.

  • Comment number 63.

    51. At 12:59pm on 08 Dec 2010, corum-populo-2010 wrote:

    And yet they still pay out astrononimcal amounts on bonus, and if the DT is to be believed, huge % pay rises to keep/attract staff! http://www.telegraph.co.uk/finance/jobs/8184029/Financial-companies-offering-15pc-pay-rises-to-stop-workers-leaving.html

  • Comment number 64.


    It was a muddle, not a fiddle (apparently). And we promise we have changed, really.
    So from now on all will be well......

    Where have we heard that one before?

    Meanwhile, the handful of grey suited men responsible for this disaster have been receiving personal bonuses equal to the entire GDP of Jamaica (£7bn) every year, while the taxpayer is being forced to take out a loan to pay for it.

    I am sick to the back teeth of these so-called Masters of the Universe, NED's, Industry leaders, company directors, politicians and the like who really are all "In this together" telling us the taxpayer to move along there is nothing to see, whilst they are picking our back pockets.

    There certainly is something to see:

    THE BIGGEST MASS REDISTRIBUTION OF WEALTH FROM THE POOR TO THE RICH THE WORLD HAS EVER SEEN. And it's still happening right under our noses.

    Why not publish the FSA investigation report into RBS and let us all see what actually happened? Could it be that certain bankers and politicians might be embarrassed, or worse, corrupt? Surely not.

    As 84% owners of RBS, the taxpayers of this country have a right to see this report, even if the eminent "Lord" Turner says it would be "difficult to publish because the probe was broken down into separate parts". No doubt if they are forced to publish it, large sections will be omitted due to a "National Security" or "terrorism threat". In reality, all they want to do is protect their old friends in the city.

    Is this a job for Wikileaks?

    LET US DECIDE!

    Who is this little grey suited Turner man anyway? Let's see:

    "Until September 2008 Lord Turner was a non-executive Director at Standard Chartered Bank; from 2000-2006 he was a Senior Adviser, Vice-Chairman of Merrill Lynch Europe, and from 1995-99, Director General of the Confederation of British Industry."

    (From the FSA Website)

    Well surprise surprise, another banker!

  • Comment number 65.

    I think we need a new criminal offence along the lines of "reckless banking". The banking chaos have had serious effects on the Nation, so I think a criminal offence is appropriate. The threat of prison may focus a few minds. It needs to be appliable to all borad members, to encourage cross-checking of behavior.

    I'd also like to see the compulsary appointment of an independent observer on each board, paid for by the government but funded by a levvy on the institutions. Their job is to watch for any silliness and warn accordingly. They would have "weapons inspection" type access to all parts of a business both here and abroad.

    Neither, of course, is going to happen...in two years time it will be business as usual.

  • Comment number 66.

    This is the kind of woolly soft response expected when you employ a poodle for a watchdog.
    We will never live to see the day when a bank director receives any punishment from the FSA. If Fred the shred was not guilty of any criminal wrong doing, having caused the virtual collapse of the UK banking system, then surely only someone who actually managed to destroy it would be punished under Turners ideas.
    It might be a bit late by then.

  • Comment number 67.

    56. At 13:12pm on 08 Dec 2010, Tyto alba wrote:
    'Solicitors already have to keep client monies separate from working capital by law. Why not the same for banks, so that they can only gamble with their profits that are unattached to clients' monies? There could even be room for clients to allow them to use their monies, or parts thereof, for risky ventures if they felt the likely rewards were sufficient to balance against the risk - but at least they would be consulted and making an informed decision'

    That's pretty much a substantial part of what the positive money group are proposing.

    If I post the link to their site it may get moderated out, but if you search positivemoney, it explains along similar lines what you've put in your post.

  • Comment number 68.

    9. At 10:45am on 08 Dec 2010, Sumproduct wrote:
    Scottish journalist Ian Fraser has written some great stuff on the FSA and PriceWaterhouseCoopers laughable 'investigation' into RBS. Links below.

    http://bit.ly/grxlyR
    http://bit.ly/fDSlWt

    --------------------------------------------------------------------
    Thanks for posting that. I hope Faker Jacques reads it ...

  • Comment number 69.

    Yes, it is the thiefs fault for stealing.
    No, it isn't the policepersons fault for not educating the thief.
    Yes, it is the job of the ruler to stop stealing.
    In some countries they cut off your hand you know - Or would that be the hand that feeds them ?

  • Comment number 70.

    A criminal investigation would be a better alternative as this type of collusion of the banks surely breaks many laws. The structure of the instruments used that created the crisis were made legal by the governments and therefore they are complicit in the formation of this mess. The banks and financial services developed the bonus system during the massive fraud they implemented by the banks and this drove the bank employees to create this scheme whereby they benefited will millions in bonuses. Banks now work for the benefit of the employees and not the depositors. Force a salary schedule for bankers and financial services and the likelihood of this happening again is reduced. The bankers continue to prosper with no remorse or accountability for what they have done. The Medici are back in control.

  • Comment number 71.

    66. At 14:20pm on 08 Dec 2010, PoweringRamrod wrote:
    This is the kind of woolly soft response expected when you employ a poodle for a watchdog.
    We will never live to see the day when a bank director receives any punishment from the FSA. If Fred the shred was not guilty of any criminal wrong doing, having caused the virtual collapse of the UK banking system, then surely only someone who actually managed to destroy it would be punished under Turners ideas.
    It might be a bit late by then.

    --------------------------------------------------------------------------------
    Think you may have been reading too many of Faker Jacques' posts.

    The reason the UK banking system came under severe and renewed pressure in '09 was down to the dubious nature of the 'paper' they were holding. The so-called 'good' banks suffered along with the so-called 'bad' banks with one or two notable exceptions. The finger points rather more at the regulatory bodies and the auditors, their Institutions and the accounting standards and conventions that were in place at the time.

  • Comment number 72.

    43. At 12:23pm on 08 Dec 2010, Jacques Cartier wrote:
    The war on bankers goes on. Hacktivists have taken down the mastercard site.
    ---------------------------------------------------------

    It is amazing how the BBC have managed to have 7 versions of the article they have on this so far.
    http://www.newssniffer.co.uk/articles/372101/diff/6/7

  • Comment number 73.

    A better sanction would be to make the directors of banks fully liable for the losses of any bank that has government guarantees for depositor compensations.

    Any director includes any director who has been in the job for 6 months or more (time to bail out or report any problems if they accidentally end up at a crooked bank), or has left within 5 years, of such a bank failure.

    Make the directors fully liable for all losses, including any pension rights that they have accrued.

    Do that, and no bank under UK jurisdiction would fail.

    Obviously, it would also mean guaranteeing deposits on banks which have UK jurisdiction over them, none of this compensation for Icesave and Bank of Ireland customers, who should look to the nations in which those banks reside for their compensation.

  • Comment number 74.

    Lord Turner says.....

    LOL the guy is just a windbag - says plenty to try justify being in such a well paid job - but nothing ever comes of what he spouts.

    How about this for how completely and utterly useless the FSA is? Remember "Liar Loans" that have forced even people honest about their income to overpay for houses? Do you think that the FSA have stopped "Liar Loans" to prevent reckless lending? Think again, this is what the FSA "Mortgage Policy Manager" says:

    "Self-certification mortgages have been more or less withdrawn from the market by lenders, following the credit crunch. But non-income verified mortgages continue in the form of ‘fast track’. Even in Q1 this year, this accounted for 43% of mortgages sold."

    http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2010/1020_lb.shtml

    That would be the FSA asleep at the wheel us usual regarding reckless lending because the banks make more money out of higher house prices because larger mortgages mean more mortgage interest to pay.

    The FSA do anything anti-bankers? LOL!!

  • Comment number 75.

    43. At 12:23pm on 08 Dec 2010, Jacques Cartier wrote:
    "The war on bankers goes on. Hacktivists have taken down the mastercard site."
    Excellent. It still won't load, I've just tried the Worldwide home page.
    >
    49. At 12:51pm on 08 Dec 2010, John_from_Hendon wrote:
    "I think I'll stick to my National Maximum Income argument"
    Agreed. The top rate of income tax was over 95% for thirty years following WW2. It did not and does not stop innovators and leaders from creating wealth.

    "The bankers will just describe themselves as footballers and in one bound they are free."
    To quote Andy Haldane again "Large banks grew to comprise several thousand
    distinct legal entities." This makes them impossible to regulate. We need to see bankers as what they are - out of control - and reform the sector effectively.

  • Comment number 76.

    Can someone at the FSA please send what they have on the investigation to Wikileaks?

  • Comment number 77.

    74. At 14:38pm on 08 Dec 2010, Government Channel wrote:

    "But non-income verified mortgages continue in the form of ‘fast track’."

    Speaking from experience, 'fast track' is only available to those with an excellent credit score, low LTV requirements and more criteria. Try not to get sucked in to thinking they are the same as self-cert.

    But this also shows that if they are called "liar loans" then the liars were the people filling out the forms and so they are reckless borrowers of which some have said on here do not exist as a species....

  • Comment number 78.

    We desparately need an open Truth and Reconciliation investigation into the whole banking-government complex and that's exactly why it won't happen.
    So, where do we turn to for hope?
    Mass media journalists?
    They are part of the system and have expensive mortgages and school fees to pay.
    Wikileaks?
    Look what the system is doing to them.

  • Comment number 79.

    I’m not sure the bailout of banks has finished. I think it’s entirely possible that the bailouts will need to be extended in duration and possibly even increased in size.

    And my reasoning is based on my own experience in the Northwest:

    Buy to let flats have fallen value between 30% - 50% depending on their attractiveness to owner occupiers

    Owner occupied houses have dropped around 15%.

    Commercial property has fallen around 30% - 50% depending on what type of building it is.

    Owner occupied houses are the larger of the three categories, but still overall you’re currently looking at an average fall of somewhere between 20% - 30% in the value of assets which are the underlying security against property loans.

    But it doesn’t end there. For house prices to be affordable to owner occupiers they have likely to drop another 20%.

    Now with many mortgages having a loan to value ratio of 90% +, and austerity measures now starting to work through the system; I think you need a leap of faith to conclude the ‘bailing out’ has actually finished.

    And I think you need an even bigger leap of faith to believe the quantitative easing has finished.

    So if Mr King indulges in more QE particularly with inflation currently @ 4.5% and average wages increasing @ 2%, it doesn’t take the consummately wise to work out who is to pay the price for the folly that is our fractional reserve banking system, and the way that price is going to be extracted.

  • Comment number 80.

    I completely agree, bankers have been payed way too much over the past few years and have been getting sky high bonuses when they did something "right". I do not believe that they need to get those bonuses in order to show them they have worked well, it is their job and it is their job to do well. Secondly I also agree with the two year pay policy, this will most probably never happen because of obvious reasons and because these bankers have way too much say but it is a good start. Bankers have been taking too many risks they could not afford to take over the last couple of years and have been getting no punishment for it. I believe bankers saw their jobs as if they were playing in a Casino with someone elses money and the person whos money they were playing with was never going to know it was them anyways. It is always easier to take risks and make suppositions when you are dealing with other peoples money. Some people on this blog have posted that the bankers should be fully liable for the losses, and yes, you are making a good point but at the same time who would want to be a banker in that case? And if we start making bankers fully liable for losses where are we going to end up? It is after all a job, and a job has risks that come with it, you leave your money in a bank you know there is a risk, you go get surgery you know there is a risk. The bankers that have been risking too much and "playing" around with money should get their just punishment but we cannot put our anger and frustration on every single banker out there.

  • Comment number 81.

    I have made an error on post 79.

    Average weekly earnings (whole economy not seasonally adjusted) in Jan 2009 was £444. The Sept 2010 figure (provisional) is £443.

    Retail price index (all items) in Jan 2009 was 210.1
    The Sept 2010 figure was 225.3

    So wages have dropped (fractionally) but prices have risen by 7.2% from Jan 2009 to Sept 2010.

    So if you didn’t know who is paying the penalty and what the price is, now you do.

    And that’s why I keep posting the link to the positive money group.

  • Comment number 82.

    71. At 14:32pm on 08 Dec 2010, Up2snuff

    It is the system as a whole that is at fault. Trying to exempt banks in general seems a long way off the mark; apologistic even. Who did you have in mind as a 'good' bank? Will they still be a good bank if house prices drop 30%?

  • Comment number 83.

    80. At 15:00pm on 08 Dec 2010, juliat7867879 wrote:

    > Some people on this blog have posted that the bankers should be fully
    > liable for the losses, and yes, you are making a good point but at the
    > same time who would want to be a banker in that case?

    They can't do anything else, juliat7867879. I've offered some of them honourable work. I've hurt my knee and I can't do the floor tiles in my conservatory. I'd be glad if some bankers could do it, but they just don't have any skills, other than counting.

    And they can't do "areas" either, just addition, so they are basically useless to me.

  • Comment number 84.

    #75. PacketRat wrote:

    "To quote Andy Haldane again "Large banks grew to comprise several thousand
    distinct legal entities." This makes them impossible to regulate. We need to see bankers as what they are - out of control - and reform the sector effectively."

    Quite true. However it is not just us outsiders who can't follow what is happening - the proliferation of these special investment vehicles is also totally confusing to the banks themselves. This in itself represents the single greatest risk at present, as it did before the crash.

    What to do about it?

    Anyone any sensible ideas?

  • Comment number 85.

    At 14:55pm on 08 Dec 2010, yam yzf wrote:
    "But non-income verified mortgages continue in the form of ‘fast track’."

    Speaking from experience, 'fast track' is only available to those with an excellent credit score, low LTV requirements and more criteria. Try not to get sucked in to thinking they are the same as self-cert.

    Are you sure? A simple google finds a mortgage broker website stating:

    "We can arrange loans on an affordability basis rather than using traditional lender income multiples, so often require no income verification and minimum of other
    documentary requirements."

    Banks obviously make more money from higher house prices because people require larger mortgages and so have to pay more mortgage interest. If the FSA weren't pro-bankers in every way then brokers like that would not be allowed. I complained to the FSA about that broker and all they said was that until the FSA Mortgage Review was completed (now delayed another year), firms could offer various products i.e. anything goes and they don't care - obviously as long as bankers make more moeny from the public.



  • Comment number 86.

    71. At 14:32pm on 08 Dec 2010, Up2snuff wrote:

    > The finger points rather more at the regulatory bodies and
    > the auditors, their Institutions and the accounting standards
    > and conventions that were in place at the time.

    It would be mighty helpful if we could bear down on this culture gap. Bankers (and their toadies) just can’t except the guilt for their greedy activities. The public needs to see humility, not truculence.

    Get it sorted.

  • Comment number 87.

    Yeah, yeah, like that's really going to happen (clawback of salary).
    We might as well be quite clear - banks don't give a 4X about anyone or anything outside their circle. It's a case of "Give us your money, then push off"

  • Comment number 88.

    'Collective fear stimulates herd instinct, and tends to produce ferocity towards those who are not regarded as members of the herd.'

    - Bertrand Russell, An Outline of Intellectual Rubbish, 1943


    Perhaps that explains why bankers are defiantly taking bonuses whilst the rest of us look on!

  • Comment number 89.

    84. At 15:31pm on 08 Dec 2010, John_from_Hendon wrote:

    > Anyone any sensible ideas?

    I don't expect any from bankers.

    We need to apply our solutions to them, not thier solutions to ourselves. Basically, we need to say to bankers "get your business in order, as we like it, or shut down here".

    Banks that arrange themselves nicely can continue to do business with us. Thise that fail to get thier house in order stand outside in the cold and wet.

  • Comment number 90.

    84 John_from_Hendon:

    Maybe we just have to play the role of 'understanding parent' and insist that they come clean. Of course, we'll have to clear up the mess and impose a curfew on their behavior.

    A damn good clip should also be administered!

  • Comment number 91.

    I am heartily sick of "suggestions" for controlling the banks and bankers. Two to three years after the train crash and there appears to be nothing on the table except for "suggestions" of which Turner's is the latest. There has been no action and nobody brought to court, not even in Ireland where the abuses of the banks are writ far larger than the UK.

    Ian Fraser (thanks Sumproduct #9) summarises the likley reasons for inaction as well as I have seen, "A cosy cabal including auditors, bankers, regulators and the government has become so successful at defrauding the British public, shareholders, customers and taxpayers, at the same time trampling over truth and justice, they presumably think they can carry on ad inifinitum. They don’t seem to have realised that sooner or later the whole noxious charade is going to be blown apart."

    It is time for some action, my own preferred being; breaking the banks up, reform of fractional reserve lending and a few criminal prosecutions (I would have thought the words "gross negligence" were more than appropriate somewhere on a charge sheet).

  • Comment number 92.

    74. At 14:38pm on 08 Dec 2010, Government Channel wrote:

    > Lord Turner says..... LOL the guy is just a windbag

    He did call the bankers "socially useless".

    Even so, they still havn't shown humility over thier greed. So yes, he is a windbag. It's rather like having Terry Thomas in charge - it's all a bit of an English comedy.

    We need tough people to be harsh to bankers. They need to feel the stick and grow used to it.

  • Comment number 93.

    84. At 15:31pm on 08 Dec 2010, John_from_Hendon wrote:
    #75. PacketRat wrote:
    "... proliferation of these special investment vehicles ... the single greatest risk at present, as it did before the crash.
    "What to do about it?
    "Anyone any sensible ideas?"
    ---
    Yes. Institutions contrive complexity to avoid regulation and taxation. But ultimately in a democracy, the behaviour of institutions must be resolvable to the understanding and attitudes of the people. The people have spoken, and are speaking. The government has the full power of a sovereign nation within which to enact the will of the people. It will fail to act appropriately only if it is corrupt.

  • Comment number 94.

    Speaking of 'pay punishments' , I hear that Anonymous did a splendid job taking out Mastercard.

    I suppose if the spineless puppies in government continue to give taxpayer cash to the very puppet-masters that ruined the world in the first place, we should ask Anonymous to deal with the banks ourselves.

    No doubt, with access to every bank network on the planet funding will not be a problem.

    My mastercard card is going in the bin tomorrow and I shall block it immediately.

  • Comment number 95.

    86. At 15:39pm on 08 Dec 2010, Jacques Cartier wrote:
    71. At 14:32pm on 08 Dec 2010, Up2snuff wrote:
    > The finger points rather more at the regulatory bodies ...
    "Bankers (and their toadies) just can’t accept the guilt for their greedy activities."

    The perps have been caught with one hand in the till, the other gripped tightly round the victim's throat, and their pockets stuffed with loot.

    It's just too much for some people to work out, isn't it?

  • Comment number 96.

    The kernel of a great idea here. I think the head of the FSA should lose 2 year's pay every time a significant financial institution fails. Maybe that would keep them awake.

  • Comment number 97.

    Punishment needs to be based on the severity of the crime. Just what does Turner mean by jeopardy?

    Does he mean the risk manager breaks out into a bit of a tizz, everyone jumps to, sorts out the problem, like now, and all back to normal? Well maybe clawing back some pay would be a good idea. Two years is probably a bit weak though. Try 5 or 7 years.

    Does he mean jeopardy is like what has happened over the past 3 years?
    How many people have lost their jobs as a result?
    How many people have had their hours cut as a result?
    How many people are over-worked in struggling companies as a result?
    How many people have had their wages reduced as a result?
    How many people have lost their homes as a result?
    How many people have mortgage arrears as a result?
    How many people send their children to bed hungry as a result?
    How many adults are no longer feeding themselves adequately as a result?
    How many people are cold, can no longer pay their heating bills as a result?
    How many people have committed suicide as a result?
    How many marriages have fractured and smashed under stress as a result?
    How many people cry themselves to sleep as a result?
    How many people are frightened as a result?
    How many people have been driven into severe depression as a result?
    How many people no longer have a decent pension as a result?
    How many countries have been bankrupted as a result?
    How many protests have appeared, increasing the costs of policing as a result?

    Somehow, I fail to see how on earth two years claw-back is a suitable punishment for all of that?

    There are those who are now calling the results of bad banker-bosses, economic terrorism and those involved should be charged with crimes against humanity. I'm inclined to say that is a far more appropriate response to this nightmare.

  • Comment number 98.

    #85

    Remeber that the website is a marketing tool. the ad says:

    "We can arrange loans on an affordability basis rather than using traditional lender income multiples, so often require no income verification and minimum of other
    documentary requirements"

    which if you break it down actually says "we use affordability criteria" but does not state what the criteria is. "often require" which is different to "does not require". And like any offer, it is only when you go in to apply for it that you will find out just how difficult it is to get.

  • Comment number 99.

    '76. At 14:54pm on 08 Dec 2010, PacketRat wrote:
    Can someone at the FSA please send what they have on the investigation to Wikileaks?'

    You forget to include the address to send it along to.

    It's here:
    http://46.59.1.2/submissions.html

    BOX 4080
    Australia Post Office - University of Melbourne Branch
    Victoria 3052
    Australia

    Send it via rapid service though 'cos I heard the University Post Office branch was shutting down (surprisingly!).

    I've not got an address for Daniel Ellsberg, but I'm sure he along with Alan Rusbridger over at the Guardian would be able to help.

  • Comment number 100.

    Lovely piece of journalism Robert, if only you were governor of the BOE and/or chairman of the FSA.....
    I know, how about Angela Rippon and Jenny Bond ... at least they have integrity and brighten up viewer's lives with their impeccable dress sense.
    Adair Turner, Hector Sants, Mervyn King, all these tragicomic players starring in the past five years of the longrunning thriller "UK FINANCIAL DOOM"....people are not buying the tickets any more but the show can't close, so I suggest replacing the cast.
    The 20x rule of pay in both private and public sector is the way to go. Bonus in shares only, and a higher rate of CGT.

 

Page 1 of 2

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.