Banks should stop complaining about tough reform

by , Lead Investigative Researcher Money 25 November 2010
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The banks want to dictate how they are to be reformed. That’s like a convicted criminal wanting to impose his own punishment. They might not like tough reforms, but would we get anywhere if we took a soft approach?

Banker asking for help

Our banks, you’ve got to admire their front. First they get the likes of you and me to bail them out, then they insist on being able to keep their huge bonuses, and now they want the Independent Commission on Banking to soften its approach to banking reform.

Some of the leading banks have already put pressure on the Commission to water down any calls for reform. Reform that includes the break-up of the four big banks to split-off risky investment banking and greater protection for retail accounts – both recommendations of the Which? backed Future of Banking Commission.

The banks think such reform would hamper their ability to lend and support investment, claming that a tough approach would hinder economic recovery. Yeah, right, we wouldn’t be in this mess if someone had taken a big stick to them before the financial crisis. In any case, more competition would actually be good for consumers, businesses and the economic recovery.

Making out that they’ll be harmed by regulation of their structure is a bit rich. The banks are still free to conduct business – they’ve not been banished from the kingdom. And their pretty disastrous track record suggests that a soft approach won’t make them act any better than they have done so to date.

It’s time to make the banks lay-off the caviar, which we’ve been picking up the tab for, and eat some humble pie. In short, tough reforms would seem the only way forward if we’re to avoid a repeat of the banking meltdown that we’ve all had to endure.

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fat sam

It beggars belief that the banks feel they’re being hard done by. I doubt there’s little if any sympathy for them. What I don’t understand is the whole issue of bankers’ bonuses. Why are they based on annual targets? Why is the growth of the economy gambled on the performance over 365 days of activity? Please someone correct me if my assertion is incorrect but why can’t bankers be rewarded for longer term gains, say over 5, 10, 15 years? Why can’t parts of their bonuses be deferred, paid out only if they continue to do well? Because of the risk to the economy their performance should be continued to be measured regardless of who they work for. And why aren’t bankers fined for losses? Surely even they must accept that the value of their ‘investments’ Better still, issue their bonuses in the form of shares. Even they will soon realise that the value of their investment can go down as well as up. That’ll make them think twice about gambling with our money.

Reward them by all means for any gains, but make them pay when they make losses.

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fat sam

Thanks to a bit of sloppy cutting and pasting I think some of that didn’t make sense! Here’s what I meant to write (I blame the credit crunch for not allowing Which? to provide a larger box for replies :) :

It beggars belief that the banks feel they’re being hard done by. I doubt there’s little if any sympathy for them. What I don’t understand is the whole issue of bankers’ bonuses. Why are they based on annual targets? Why is the growth of the economy gambled on the performance over 365 days of activity? Happy for someone to correct me if that assertion is incorrect and why can’t bankers be rewarded for longer term gains, say over 5, 10, 15 years? Perhaps parts of their bonuses should be deferred, paid out only if they continue to do well?

And why aren’t bankers fined for losses? Better still, issue their bonuses in the form of shares. Even they will soon realise that the value of their investment can go up as well as down! That’ll make them think twice about gambling with our money.

Reward them by all means for any gains, but make them pay when they make losses.

Your comments can be as long as you want them Fat Sam. Plus you can actually extend the comment box by clicking and moving the bottom right corner of the comment box to as big as you want it. We’re nice like that.

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bill cruickshank

Once upon a time..There were men with rolled up brollies and funny looking hats,
They parade around a square in London Town all day like cats,
Singing as they went …A penny for this guy,I am down on my luck,
The goverment do not love us, they want to take my last buck,
We love you David Cameron not as much as the last lot they gave us our head
If you control us we will be down to our last penny and can’t afford any bread.
Save the Children Fund

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Rob

Bankers seem to regard themselves immune from the dire state of the world economy that their reckless greedy gambling has caused.
Does it not seem ironic, given that they had gone bankrupt, that the “bankers” who bailed them out (ie Governments via the taxpayers) are the ones being made to suffer. If the boot was on the other foot, you can be sure that there would be no bonuses to be paid until they, the banks, had had their due returns.

We expect bankers to manage their affairs professionally. That is why they get paid substantial salaries. The fact that they are managing vast sums in everyday transactions does not entitle them to take an obscene bonus at the end of the year unless they are also prepared to take a similar sized reduction in salary for failures such as we have had recently.

All “bonuses” and any other profits should go back towards paying the their debt until it is cleared. THEN they can reward themselves with bonuses for having achieved something substantial and worthwhile for those who supported them when they fell on hard times due to their own mistakes.

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richard

There is no doubt that self regulated banks are not to be trusted,

Who deregulated banks? I’ll give you one guess – it wasn’t Labour.

Banks should be as well regulated as they were after the great depression – also caused by banks. Those regulations lasted well for around 80 years.

Directly they were given free reign – greed and irresponsibility came to the fore. Banks now are too big so they have the power to dictate policies – particularly due to globalisation.

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A. Worrall

Sorry chum, it was Gordon Brown who took away the Bank of England’s regulatory role. He also kept interest rates artificially low, (as did American fiscal policy) thus allowing people to take on more debt than they could repay.
Then there was the ‘carry trade’ . This was where the interest on deposits were greater in the east than in the west. A lot of money went to-ing and fro-ing that way. Some got rich on it, but of course someone had to pay for it. Guess who?

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Jeff H

Banks need to be able to make their points. However, to allow them to set the Rules they are judged by is just lunacy. There probably needs to be a hierarchy of committees with Bankers and Customers on them (to deal with specific aspects) but a quite small decision making Group at the top to make the decisions. The Group at the top at the top to have equal Bank (and this includes the Regulator) and Customer membership with an additional Customer representive to act as Chairman (with the casting vote). The Chairman must not be a politician – they are not to be trusted. Casino banking must be separated from High St. Banking for Regulation purposes.

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lamy

banks dont get me started,throw the lot of them off canarey wharf,a slow death is too good for them

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Chris

I’ve been dealing with Barclays bank, who bought Woolwich Bld Society and destroyed it.

My Mortgage is up – but I have spent hours and had to lodge 3 complaints because the fools haven’t wrapped up the mortgage when it was due.

Barclays Mortgage can’t talk to Barclays life assurance (yes a mis-sold endowment too) and when I forced the issue – the fools sent and lost a cheque (supposedly) for £20,000, thus delaying the a/c closure even further; which costs me every day it goes on. Why did a bank not use a CHAPS electronic transfer? it cost them part of their profit. (!)

It is quite unbelievable – the sheer incompetency of these supposedly professional money lenders – as defined in the worst of the Biblical sense of course!

Then I read about Bankers bonuses.

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Martyn

I posted this on another conversation but thought it was also relevant here.
For some time now inflation has been above the pityful intrest rates paid by all the British banks who appear to be in league to maximise profits for shareholders and employee bonuses. The people paying for this are the Taxpayers and the millions of people who saved during the the near collapse of these “Nose in the Trough” organisations. The majority of these people were not responsible for the banking problems.
The Government should instruct the banks “owned by the people” like RBS etc , to introduce higher interest rates to encourage all savers to transfer their savings from the the “faulty” banks. This would enable the Goverment to exert pressure to start money flowing into small and medium sized firms who are currently being denied this facility. All this direct action might send the greedy bankers a message that some of them could go to the wall if they don’t change their attitude towards the mass of small savers. The Government of this country need to take control to kick start the system.The banks have demonstrated they are incapable of doing this on their own.
I’m no “Lefty” , but I don’t like being mugged !

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