To the average person, the word “bonus” implies something unexpected or unusual to what is normally expected. This definition clearly does not match up to that held by top executives and high earners in the financial sector. To them bonuses have of late been both expected and usual.
But with the fall-out of the global economic crisis still being felt across the world, and with Britain’s economy failing to emerge from recession during the third quarter of this year, as predicted, may things be about to change?
On Thursday Barack Obama revealed that the top 25 earners at seven U.S. firms bailed-out during the financial crisis, should have their salaries cut by 90 per cent. Meanwhile, on this side of the Atlantic, City Minister, Lord Myners, denounced the idea of continued bonuses in UK finance sector’s as tantamount to “market failure”.
As you might imagine not everyone welcomes such a dour analysis.
Obama’s move has already drawn criticism from some business commentators, who insist that the handsome salaries and bonuses awarded to bankers are but a drop in the ocean when compared to the retained profits that investment banking generates.
There is also the assertion that, without the bonus culture, “talent” in Britain’s finance sector will simply up sticks and go abroad. This was certainly the contention made by Goldman Sachs vice-chairman Lord Griffiths during a recent ethics debate at St Pauls Cathedral.
The thought of bankers’ bonuses rising by as much as 50 per cent at a time when many are struggling financially cannot be considered morally defendable. It was after all taxpayers’ money that helped bail-out the banks- the very institutions that are now set to receive inflated bonuses.
Goldman Sachs, which only survived due to bail-outs from the Federal Reserve, is set to reward its 30,000 strong workforce this year with bonuses of £428,000 each. In such circumstances, you have to question whether grandees like Lord Griffiths are in touch with the everyday realities of the recession for ordinary people.
The public have a right to see a return on their money- the money that saved so many financial institutions from going under — instead they’re seeing it go into end-of-year bonus pots. Imagine if the situation were reversed: banks would have no hesitation in repossessing a home if repayments had not been made on time, why should banks be treated any differently with the boot now on the other foot?
(Photo James Cridland, CC2.0)
