The bankers striptease

This week we’ve seen the Chairman and CEO of the state owned RBS both either wave their bonuses or be all but forced into doing so under threat of a labour party commons debate and motion. Meanwhile, Fred “SHIT” Goodwin (due to his super injunction I had to refer to him for awhile as “Scottish Holder of Indebted Titles”) was stripped of his Knighthood, awarded for (don’t laugh!) “services” to banking…which is sort of like making Hannibal Lector or that German cannibal guy a Lord of the Privy Seal for “services to cookery”.

Of course such punishments have made a great many people in the city very cross. They describe it terms of the government giving in to lynch mob “hysteria”. Oddly enough I agree with them. There are many more “unlordy lords” who should be stripped of their titles as well. Clearly the government is running scared on this issue, and burning a few of the well known supposed witches in public is seen as the best way of protecting the majority who happen to be big donors to the Tory party. With bonus season well under way they realise that with so many in the country hard up or unemployed it is not going to look good for the very people who caused the mess to be seen wallowing in pools of cash.

Although to be perfectly honest its stripping these guys of their hundreds of millions in ill gotten gains that I want to see happen. Or how about stripped instead of their liberty, with the queen putting them up at her pleasure in some nice pad in Devon. I’d actually prefer “sir” Fred to keep his title and get a 10 year stretch (question would the prison guards have to refer to him as “My Lord” while beating him up in the exercise yard?)

A dangerous trend built up in the boom years of the bubble. Traditionally a “bonus” was seen as an optional extra an employee got for good service when the company was doing well. But its morphed to the stage where even at times when a company is doing badly, many top executives still expect not just a bonus, but a big bonus purely for showing up to work and doing their job (well sort of!). For most of the rest of us the “bonus” we receive for doing our job is to still be employed…and even that’s becoming scarce these days!

There is of course a very simple solution. A change in the law forbidding a failing company (i.e. one that is posting losses or has not yet recovered from previous large losses) from awarding executives a bonus. Or alternatively a system that only allows such bonuses (plus at least half the CEO’s salary) to be awarded in the form of stock in the company, that cannot be sold. If the company does well in the long term, he will be rewarded handsomely. If it crashes and burns he looses big. Let’s see if any government will implement such policies?

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