Greedy p*gs

[Ferru]

With respect, what qualifies you to generalise about senior managers in banking?

As for greed, you can't really blame banks for wanting to maximise their profits. The mess we're in was caused by short-sightedness, rather than greed.

Jeff

Of course not all bankers are being condemned, Im sure there are some great people in banking...what we're talking about is senior management and systemic incompetence and greed right across the banking sector right from the sub-prime / liars loans debacle in the states to Europe where banks complelely overexposed / over leverged themselves and moved away from any semblence of proper corporate governance and good practice..

 

[Prawnsandwich]

With respect, what qualifies you to generalise about senior managers in banking?

As for greed, you can't really blame banks for wanting to maximise their profits. The mess we're in was caused by short-sightedness, rather than greed.

Jeff

I'm not sure you need any special qualifications to give an opinion on banking managment, it should be fairly self evident given whats happened in the last 18 months unless your head is the stuck in the sand..

The root of it all was bankers gving loans to people who could not pay them, in full knowledge that this was the case, in order to maximise their own personal bonus, which resulted in huges losses for the bank and for society in the medium term...the only thing that got maximised was managements bonus, not the companys profit..

 

[Ferru]

At the risk of repeating myself, we are talking about a small percentage of managers, not the managers as a whole.

And it's quite possible that the bankers concerned simply thought 'OK, a certain percentage of these loans won't be repaid. But that's mitigated by the fact that we're charging high interest rates on the loans, and they're often secured against properties'. And maybe they didn't realise that many people obtained loans by lying about their circumstances, and that branch level banking staff were turning a blind eye to this fraud in order to maximise their commission.

Jeff

I'm not sure you need any special qualifications to give an opinion on banking managment, it should be fairly self evident given whats happened in the last 18 months unless your head is the stuck in the sand..

The root of it all was bankers gving loans to people who could not pay them, in full knowledge that this was the case, in order to maximise their own personal bonus, which resulted in huges losses for the bank and for society in the medium term...the only thing that got maximised was managements bonus, not the companys profit..

 

[Prawnsandwich]

At the risk of repeating myself, we are talking about a small percentage of managers, not the managers as a whole.

And it's quite possible that the bankers concerned simply thought 'OK, a certain percentage of these loans won't be repaid. But that's mitigated by the fact that we're charging high interest rates on the loans, and they're often secured against properties'. And maybe they didn't realise that many people obtained loans by lying about their circumstances, and that branch level banking staff were turning a blind eye to this fraud in order to maximise their commission.

Jeff

Not wanting to sound rude, but maybe you should research a bit into what actually happened....the loans were actually called liars loans in the states by the people who gave them out ....applicants were only requested to fill in a form certifying their own income with no cross checking or due diligence etc....banks / brokers knew full well that there was no way these loans would be repaid - there was an entire industry built around it including investmnet banks who used the mortgages created around these sub-prime loans to create various financial instrumnets / derivatives, insurance companies who certified these financial instrumnets as triple A rated.....allowing these derivatives to be sold off around the world as blue chip products

 

[Prawnsandwich]

Not wanting to sound rude, but maybe you should research a bit into what actually happened....the loans were actually called liars loans in the states by the people who gave them out ....applicants were only requested to fill in a form certifying their own income with no cross checking or due diligence etc....banks / brokers knew full well that there was no way these loans would be repaid - there was an entire industry built around it including investmnet banks who used the mortgages created around these sub-prime loans to create various financial instrumnets / derivatives, insurance companies who certified these financial instrumnets as triple A rated.....allowing these derivatives to be sold off around the world as blue chip products

Problem was that prices dont always go up for ever ...

All those genuises didnt pay attention to the usual disclaimer - prices can fall as well as rise

 

[gooseman]

please can somebody define "bankers" for me?

there seems to be plenty of mud throwing going on here and not a great deal of facts.

 

[Pat494]

please can somebody define "bankers" for me?

there seems to be plenty of mud throwing going on here and not a great deal of facts.

An easy one

He is the guy that owns you, your family and anything you think you own. In fact completely indistinguishable from the local crooks who want a weekly payout.

 

[gooseman]

repeat: define banker.

 

[gooseman]

thought as much

 

[Pat494]

Surely the bottom line for any business is to be overall profitable. This is where Labour/Socialism falls down. They are so focused on their own problems of health, safety and wages that they rarely consider the company’s health and welfare. Forgetting No company = No wages.
This is partly the fault of decades of inept management. Greedy fatcats at the top filling their own bank accounts just ruins the morale and the finances of any business. There should by law be a reasonable ratio of pay between the management and the workers. Somewhere between 3-5 times seems reasonable so that effort, length of service etc. can be rewarded. Huge differences cause great jealousy and indifference to doing that bit extra.
Without the company being prosperous then it will quite quickly go bankrupt.

Obvious really. Happy workers with a stake in the business will give that business much better chances of success. Other factors, like poor political leadership will also contribute to the success/failure of the business world. The old idea of them and us, management and workers is very corrosive and should be thrown into the dustbin of history. John Lewis, Make and others have made great strides in this area.

The argument is that the Fatcats will go elsewhere. I say great, good riddance why don’t they try Zimbabwe - should suit them nicely. A marriage made in hell

 

[Prawnsandwich]

please can somebody define "bankers" for me?

there seems to be plenty of mud throwing going on here and not a great deal of facts.

Post 60 - "Of course not all bankers are being condemned, Im sure there are some great people in banking...what we're talking about is senior management and systemic incompetence and greed right across the banking sector "

 

[gooseman]

right good start. so now if RBS don't pay out to the guys on the coal face who have made the money this year, they all down tools and go to GS/MS/JP/CSFB/Barcap etc who will pay. result-RBS shares plummet and tax payer left standing when the music stops.

remember this ain't some govt quango-these guys are making quite large amounts of cash at times and deserve a slice. if you want a comparison look at the bonus paid to uk border control or whatever. when was the last time you saw them make 50m?

 

[Pat494]

Teamwork teamwork teamwork

That's what will save UK businesses at risk from foreign competition

 

[Prawnsandwich]

right good start. so now if RBS don't pay out to the guys on the coal face who have made the money this year, they all down tools and go to GS/MS/JP/CSFB/Barcap etc who will pay. result-RBS shares plummet and tax payer left standing when the music stops.

remember this ain't some govt quango-these guys are making quite large amounts of cash at times and deserve a slice. if you want a comparison look at the bonus paid to uk border control or whatever. when was the last time you saw them make 50m?

First off I'm all in favour of traders who perform being rewarded handsomely for their efforts - isnt that why we're at this lark....in theory anyway.

The point is that, looking at RBS specifically, this was a failed venture and effectively went bust due to mismanagement. Now, Ive said that I was referring to bank managment in my previous posts. If it was not for tax payer money there would be no RBS, so the money they are proposing to use to pay managment bonuses, is tax payer money.

Lets leave aside traders for the minute. Bonuses should be based on performance , so if traders are earning money for the company owners ie the tax payer then they should be appropriately rewarded. Overall the company was going bust though, so you cant justify bonuses across the board. As Ive said in a previous post, dealing with bonuses in one company in isolation is obviously problematic.

Also, maybe some investment banks are now doing well not necessarily due to the god like genius of the talent who work their :

"Investment banks, however, are enjoying a boom in profits due to the loss of competition in the sector after the demise of Lehman Brothers and Bear Stearns, and because of the trillions of pounds in financial stimulus pumped into the system by governments around the world. "

 

[gooseman]

"Investment banks, however, are enjoying a boom in profits due to the loss of competition in the sector after the demise of Lehman Brothers and Bear Stearns, and because of the trillions of pounds in financial stimulus pumped into the system by governments around the world. "

where is this from?

 

[Aussielad]

The banks are in a unfortunate situation. They can do two things and they are as follows:

1. Pay the bonuses to their staff.

2. The banks do not pay any bonuses to staff.

Alternative 1, both the banks and members of staff are slugged with a marxist rate of tax.

On a bonus of 100000 pounds paid, the banks would pay 50000. The staff member would probably pay 25000 pounds out of the 50000 pounds thus leaving only 25000. So in effect, the tax rate comes to 75%. This is absolutely ludicrous. Where is the reward for effort? There is none.

Alternative 2.

If the banks do not pay any bonuses, this will leave a bad feeling amongst staff especially the most productive members of staff and they may be tempted to look elsewhere.

So what if there is a 3rd way whereby both the banks and the members of staff can eat their cake and have it too and not pay 1 cent in taxes?

It is presumed that the banks employ the best legal and tax professionals that money can buy. No doubt these experts will be able to find a way around this.

One suggestion of getting around this is as follows and is demonstrated in the following example:

Bank ABC in the UK is contemplating giving 100m pounds bonuses to its staff and does not want the bank or its employees to pay 1 cent in taxes. The bank's tax lawyers suggest the following strategy:

1. Bank ABC sets up a subsidiary in a low or no tax tax country. The Caymans are probably ideal as for some reason, when there are conferences by Revenue officials around the world, they seem to leave out mention of the Caymans when they are attacking other countries in so called international tax avoidance.

2. The Cayman subsidiary charges the UK bank a "management fee' of $100m pounds.

3. The UK bank gets a Tax deduction for this management fee of $100m pounds. It is assumed in this example that there are no transfer pricing issues.

4. The Cayman subsidiary Bank then prepares "Loan Agreements" between the bank and the employees of the UK bank for the total amount of $100m pounds.

5. The employees receive the $100m pounds and to them as this is classified as a loan, therefore it is not income to them at all.

6. Two weeks after all the loan agreements have been signed and the employees have received their "Loans", the Cayman Bank writes to each employee stating that each individual loan has been "forgiven".

So in this example, if say a $100000 pounds is given to an employee, the employee will keep $100000 pounds instead of receiving $25000 after taxes.

One has to be smarter than the average Gordon Brown, and certainly the Banks in this instance would be.

 

[meanreversion]

The tax announced by Darling, which effectively raises the overall cost of a cash bonus to 104% (50% paid by the bank, up to 54% paid by the employee in income tax and NI), will be easy to circumvent. Banks can either loan the money to staff at 0 pct interest and forgive it at some point in the future, or they can simply wait until next year to pay the bonus.

What is a "banker"? Is that someone who works for Barclays, HSBC or Lloyds? The majority of City workers are not bankers anyway; they might work for hedge funds, or private equity. If the definition of banker is anyone who works at an organisation that received government assistance, does that mean Barclays bankers are exempt? If not, and Barclays, Stanchart, HSBC etc. also have to pay the tax, then it's patently unfair and unjust. To say bankers benefited from government assistance is disingenuous.. so did lawyers, hedgies, accountants etc. Why not tax their bonuses as well?

I didn't think our government could sink any lower than it has, but it continues to amaze. They should all be arrested and shot dead for the treason of attempting (and possibly succeeding) to destroy the United Kingdom.

 

[Pat494]

If the politicians had their full quota of working braincells then they would have forced banks to be in 2 seperate parts decades ago.
1. The high street bank we all know, that keeps our savings safe.
2. The hedge fund side with traders etc,

The purpose being that the hedge fund side wouldn't bankrupt the savings side. So simple really it makes one wonder what politicians are thinking of ??

 

[gooseman]

glass steagall. blame bill.

 

[Pat494]

glass steagall. blame bill.

you've lost me with that goose ???????

perhaps you could explain