Daily View: Bankers' bonuses
The Chancellor George Osborne and the Business Secretary Vince Cable will meet the bosses of Britain's biggest banks today to urge them against paying out large bonuses. Commentators look at the ongoing row.
The Cass Business School's Peter Hahn explains on the Today Programme that the regulation, including Financial Services Authority's new rules on bankers' pay aim to change banking culture:
"The whole goal of this round of regulation focusing on remuneration was to get banks to focus primarily on their capital ratios and their reserves for bad times before they paid out bonuses. There was a generally accepted view that banks paid out their bonuses before they thought of financial safety. Will it succeed? I don't know if anyone can tell you that right now."
In the Independent Margareta Pagano agrees that workers are put first in banks:
"Most bankers would love to pay their staff less, but they are petrified that if they don't pay the market rate, their best traders and bankers - assets with feet - will be poached by rivals overseas who'll pay more.
"No one dares be the first mover. But the much bigger, still puzzling question is why bankers are paid so much in the first place. It's an inconvenient truth but those in the City, like Wall Street, really are the last outposts of Marxist control: the banks are one of the few businesses still run like partnerships or co-operatives where the workers come first, and shareholders last. Unlike other companies, banks have allowed the earnings of their top workers to be paid in bonuses often greater than the returns paid to shareholders."
Will Hutton says in the Guardian that the bonus culture is the first battle that has to be fought against "Big Finance" in the UK for the sake of the rest of the economy:
"The first rule of finance is that big banks work with big business and small banks look after small business. Britain has big banks which are geared up to provide loans to big companies and, for that matter, big hedge funds. Of course, creating small and medium-size banks is not the sole means to revive Britain's second-tier economy and wean it off its dependence on the public sector. But without them we cannot even make a start. That means taking on Big Finance, its values and bonuses."
The Daily Mail's editorial suggests an international solution to get debts called in:
"The financial sector will play an important part in Britain's recovery, and therefore must not be taxed and regulated to death. Chancellor George Osborne is already committed to a 'balance sheet tax' on the banks, which will yield £2.5billion a year by 2012, so further levies need to be carefully thought through.
"The Government should seek an international solution with other G20 countries and the International Monetary Fund to rein in excess, and also bring on board large shareholder groups - who are being deprived of billions in dividends by the rampant bonus culture."
The Telegraph's editorial argues that the City is vital to the long-term success of the UK economy:
"The political rationale for this anti-bank hostility is, it seems, that it allows the Lib-Dem element in the Coalition to burnish their 'radical' credentials after the pasting they took for abandoning the pre-election pledge on university tuition fees. If true, this is both immature and counterproductive. Confidence is everything in financial services, and the aggressive tone adopted by Mr Cable and other senior Liberal Democrats threatens to undermine it. Banks will simply base their operations elsewhere."
Links in full
• Peter Hahn | BBC Today | New bank bonus rules 'a big change'
• Margareta Pagano | Independent | The inconvenient truth about bankers
• Will Hutton | Guardian | If we don't rein in Big Finance, the economy will never recover
• Daily Mail | Mega-bonuses are an insult to the taxpayer
• Telegraph | The aim is to back our banks, not bash them