RBS board blackmail government into giving bonus

Drifterwood

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It was never bought for the national interest in terms of those people to whom it lent money. The national inerest was that the banking system didn't implode.

RBS needs to continue fucking its customers over where it can. The Tories don't wish to be associated with that process.
 

Jason

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I think it is a case of the tail wagging the dog.

I'm inclined to think that best policy would have been to keep all RBS for a few years and then sell it - or part of it - when it could be sold for a profit. But the bonus issue has prevented this. The need of the government is to demonstrate that (part) of RBS is not owned by them and the rest will be sold off, so the bonuses are somebody else's problem.

It is a great example of people getting what they ask for. We've objected to British bankers getting big bonuses. So the government is moving in the direction of people in Abu Dhabi getting big bonuses. I imagine the masses will be happy. It is acceptable for a foreigner to get a big bonus, but not a Brit!
 

Drifterwood

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If it is all about the bonuses causing political embarassment then that is pathetic, because the bonuses are a piss in the wind.

RBS now needs to restructure parts of its lending book in order to look more attractive to the markets and to meet the BofE regulations. Basically this means getting nasty with a more visible level of customer. Perhaps it's the combination of bonuses whilst evicting people that isn't palatable to politicians.
 

Jason

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If it is all about the bonuses causing political embarassment then that is pathetic, because the bonuses are a piss in the wind.

Agreed.

And it is not in the nature of things for government to say "we are doing this because of bonuses". But I think they are.

In general I feel that government should show some leadership and some backbone. But the popular reaction against bankers' bonuses has been so extreme that I don't think the government has much choice. People want to live in a never-never-land world where bankers don't get bonuses and donors of quarter of a million quid to the Conservative party don't have a meal with Cameron and a chance to grumble about whatever is bothering them. Sometimes it is possible to manage public perception. People are curiously unfussed about the absurd salaries of footballers and media celebrities, and perfectly happy to have lottery winners - in these cases interest groups have managed perception. The bankers seem the new outcasts and governments have to distance themselves - which means RBS must go private ASAP (which I did suggest some time ago either in this thread or another).

The real problem is the lack of respect people have for politicians. Before the last election Clegg said "a plague on both your houses" and people voted for him. Now we have voters avoiding the big three. So Brighton now has a Marxist-Green local council determined to abolish the monarchy and befriend North Korea while an obnoxious Galloway wins a by-election (by a mile) over a half-way decent Labour candidate. Livingstone has been accused of playing the race card in the London election (and it might even work for him) - Livingstone might be running for Labour but he is almost an independent. The present pasty gate crisis is indicative of the mess we are in. Our government has decoded to tax hot takeaway food (as required by an ECJ ruling) and this includes pasties. So we now have a media storm about whether the PM eats pasties.
 

dandelion

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RBS needs to continue fucking its customers over where it can. The Tories don't wish to be associated with that process.
I agree they dont want to reform the banking system so it ceases fucking people over, yes, and one way not to be forced to reform it is to cease to own it.

Some here have argued the need for low taxes. Yet they dont see the need to reduce the share of the national income being taxed away by banks.

It is a great example of people getting what they ask for. We've objected to British bankers getting big bonuses. So the government is moving in the direction of people in Abu Dhabi getting big bonuses. I imagine the masses will be happy. It is acceptable for a foreigner to get a big bonus, but not a Brit!
It increasingly seems to be the conservative policy that it is acceptable for anyone rich to get a bonus. This is, of course, their traditional position, but it had at least been considered a vote loser to show it. Now it seems pretty blatant.

On which note the chancellor of the exchequer today apparently said the very wealthy pay only 10% of their income in tax. The report said he was surprised to discover this, but given his own financial affairs I dont see why he would be.

If he has been in the job for a year, cut the headline tax rate on the rich because they are paying too much but only then discovers they only pay 10%, well that sounds like a real prat when it comes to finances.
 

dandelion

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J P Morgan in the US just lost $2bn by incompetent trading. It sounds as though their loss prevention department just managed to lose £2bn. Very rapidly, after it had been warned there was a problem and had dismissed that warning.

I wonder how much bonus everyone is getting there?
 

dandelion

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It was announced today that the UK FT100 top companies executives have given themselves an average 12% pay rise over the last year. 25 of them gave themselves more than 40% pay rises. Most of this came as 'bonuses' rather than pay, which only rose by 2.5%. Executive pay among FTSE firms keeps soaring, survey reports | Business | The Guardian

The highest paid executive is ......Bob Diamond of barclays Bank. The second highest is Sir Martin Sorrell of WPP (advertising agency!) who is set to get a 30% rise. It is expected that a shareholders meeting tomorrow at WPP will have a large vote against his pay package.

This all means that the gap between the people at the top and the bottom is getting wider, despite the economy shrinking. Wow, thats fair!
 

dandelion

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And in the ring round of world class banks, Barclays just got fined £290 million for rigging the libor market between 2005 and 2009. Investigations into other banks continue. Barclays had submitted false figures to regulators to make its position seem better than it was.

Bob Diamond has said he will not take the bonus he gave himself this year, in pennance for ...something. I hesitate to say, in penance for being found out, but he must already have known both that this happened and that it would become public. So Its not the act which caused him to relinquish his bonus, but being found out.
 

dandelion

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Interestingly several people now have said the fines are ridiculously small for multiple and repeated and deliberate falsified returns. Someone just said the british fine is less than Diamond's salary over four years (this was going on for 4 years), and potentially less than the profit made on just one lie. No one is going to jail, and the professional (ex) regulators being interviewed seem to thing people should be. The buck should be stopping with senior management.

The bottom line of all this, apparently, is that everyone, everywhere, has been paying higher rates of interest on their loans. It was suggested some specific cases will be suing.
 

dandelion

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Curious developments continue.

The private agency which currently sets Libor rates is asking the government to take responsibility for determining them in the future.

Newsnight 's Paul mason commented that Barclays fine is low, probably because it agreed to cooperate. This means they will have provided evidence against other banks doing the same thing. That this crisis may become as big as the initial bank crash by the time the lawsuits stop.

Bob Diamond apparently said that the action to fix the LIBOR rate during the bank crash was discussed with government at a high level. (That is, as distinct from when employees of the bank were fixing the rate simply to boost their own profits). This makes it hard to understand Barclays top management claims that they were unaware of any of this rate fixing going on.

Mason reckoned the government was reacting to this oddly. Normally they say the banks have been naughty boys, but things are fine now. But this time political calls for further punishment are getting louder. Things are so bad that banks are going to have to be disciplined.

An MP today was interviewed describing the proposal he had made that all bonuses should be treated as company capital for a certain period. So, if a company goes bust the employee is liable to refund the companies money which he was just holding for that period. Thus making it much easier to get back performance bonuses which turned out to be unwarranted. He also thought that senior management should be required to put up a bond, so that in the event of a company failing they would be liable for this amount. The government did not think either of these was a good plan, others might disagree. The MP said he would be proposing them again in the house of commons.

Apparently RBS is facing a £150mn fine, according to tomorrows newspapers. There is a sting in the tail of all these fines. They go towards funding the regulating agency, which otherwise is paid for by contributions from the banks it regulates. So....if every bank gets fined £100mn, then the regulator will get a big surplus in its funding and the banks will be able to stop making funding payments until the fines they just paid are used up. So they will end up paying nothing!
!!
!!!
Which banker thought that one up?
 
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dandelion

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Chairman of Barclays resigns over libor fixing scandal.

Paradoxically, the chief executive, Bob Diamond, who was apparently in charge of the investment banking section when all this happened, stays in place.

Underling resigns to save chief?


Calls for a public enquiry into the whole thing...government not keen.

Calls for complete separation of investment and deposit banking. (which apparently the Uk government is still refusing despite the only people who resist it being....BANKERS!)
 

dandelion

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Diamond Jack has given up the game and resigned. Shareholders are said to be disappointed at his loss.hardly surprising, someone who oversaw rate fixing to benefit the bank (even if it is correct he didnt know it happened he was running the bank!), why would shareholders object? The other day someone said that disciplining errant staff was a matter for shareholders. But shareholders WANT someone who cuts corners if it makes them money!

Does he get a huge payoff?
 

londonxx

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shareholders may be disappointed but the regulators and politicians made it quite clear that they did not want him to stay. and barclays cannot exist without the support of the regulator and politicians. after all, they kept the banks alive during the crisis and continue to back barclays as a "too big to fail" institution - although they haven't had to interfere to the extent they did with RBS, of course

Diamond Jack has given up the game and resigned. Shareholders are said to be disappointed at his loss.hardly surprising, someone who oversaw rate fixing to benefit the bank (even if it is correct he didnt know it happened he was running the bank!), why would shareholders object? The other day someone said that disciplining errant staff was a matter for shareholders. But shareholders WANT someone who cuts corners if it makes them money!

Does he get a huge payoff?
 

dandelion

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I have been reading about the south sea bubble,a famous British bank crash with a number of similarities to 2008. bankers then repackaged dodgy government debt and sold it on at huge profit. sound familiar?

the books author made this comment:" this was the central tragedy of the south sea year. whatever promise of material progress there was in human ingenuity, was blighted by the determination not to invest, but to make capital gains."

sounds exactly right for now.300 years and we have allowed banks to do it again. there was a reason for all those restrictions on banks which the thatcherites abolished.
 
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dandelion

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which premise? rbs blackmailing government?the people behind the south sea company and also the bank of England were middlemen who arranged cheaper finance for government in return for getting rich themselves. at that time there was no question of threatening to quit. they wanted in on the game and ss effectively outbid bofe for the contract to handle the national debt. they overreached and went bust, so now our promissary notes are issued by b of e not south sea company.

the game of satisfying government demands for funding were exactly the same, and the banks made their money, as now, at the expense of ordinary people.

another parallel seems correct. it was not true that the peple at the bof e were uniquely capable of doing this. their success came from getting a government monopoly to act as a bank. just like now, rbs and the few other major banks form a cartel which is dictating terms.

I hadn't realised the true meaning. of the "I promise to pay the bearer in demand the sum of" bit. it is a promise to swap private bank scrip for real government issued money.
 
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