The bankers are the screwer and the taxpayer is the screwee in these strange transactions. You might as well get a bonus for training monkeys to eat bananas
The top turn-around team at RBS have awarded themselves £28.0 million in bonuses for 2010, but the turn-around is far from complete as the bank is still losing money: the UK taxpayers’ rescue shareholding of £45.5 billion – yes. Billion! – is still unrecovered.
And it’s much the same at the taxpayer’s other disaster site of Northern Rock Bank, the first one to jump-start the banking collapse in 2007: here the 2010 losses were £232.0 million but the bonuses are £13.1 million, as they rashly launch a range of 90% mortgages for first-time buyers. The bankers are the screwer and the taxpayer is the screwee in these strange transactions. You might as well get a bonus for training monkeys to eat bananas.
At Citigroup on the other hand, the bank is back into profit, $10.6 billion in 2010, and the US government has sold out its $45.0 billion rescue shareholding at a profit of about $12.0 billion. CEO, Vikram Pandit, who got paid just one dollar in 2010, and will receive a salary of $1.75 million in 2011, a huge discount to last year’s rewards for the CEOs running the still non-profitable RBS and Northern Wreck, take note.
And at Barclays, which never resorted to the UK-taxpayer during Global Crunch, the profits came in at £6.1 billion and its CEO received a bonus at about the same level as the CEO of RBS. Obviously, not all bankers are as good as each other, but mysteriously this has absolutely no discernible effect on their relative rewards.
The idea that there is an inviolate market for bankers’ bonuses to which every bank must subscribe is a myth perpetrated by a threatened species of bankers who cannot run their businesses properly, or in other words cannot do their jobs properly: the normal capitalist response to such failures is to sack them with no compensation. Whatever happened to dismissal for Gross Negligence without any compensation. Or, in other words, if they don’t know what they’re doing in their day-job, apart from conning the taxpayer, why are they walking away without being sued for their transgressions?
But the situation at RBS is even more grotesque when you examine the UK taxpayer’s exposure under the Asset Protection Scheme (APS): here the gross exposure was a further £282.0 billion, of which RBS would take the first £82.0 billion loss. So where is RBS now with this one? Answer, not good: after writing off £38.7 billion of this first loss exposure in 2010, the assets at the taxpayers’ risk are still stuck at an incredible £195.0 billion.
Even more revealing, the analysis of the APS gives the lie to the assertion made before The Treasury Select Committee by RBS’s former chairman and CEO, Sir Tom McCodswallop and Sir Shredded Wheat, that the failure of RBS was caused by the ill-fated acquisition of ABN Amro in 2007. It wasn’t: over four-fifths of the dud assets put into the wretched APS scheme were on the books of RBS, and less than one-fifth from ABN Amro!
What should have happened, not with hindsight but with historical foresight, is that RBS should have been put down like the mangey-manky dog that it had become
An RBS spokesman said about these bonuses, that “These awards follow exhaustive consultation with our shareholders and show … restraint”, my big left foot. And I am a taxpayer and so am a shareholder in RBS and I wasn’t consulted at all, let alone “exhaustively”! It all goes to show the complete folly of trying to rescue busted banks. And now the very sensible Mervyn King at the Old Lady has warned that these screwers are still at large and are setting the system up for a bigger crash, with bigger bonuses, as he emphasises the suspended “Too-Big-To-Fail” syndrome is giving way to the “Too-Big-To-Manage” syndrome. He wants to see the separation of Casino and Commercial banks actually happen, soon.
What should have happened, not with hindsight but with historical foresight, is that RBS should have been put down like the mangey-manky dog that it had become and all the depositors’ money should have been rescued inside a new structure, with no bonuses for anyone until all government funding was repaid in full, with interest. Rescuing busted banks is a mug’s business, as the rescued incumbents become the latest muggers.
And the UK-taxpayer is now being ripped off again by those claiming monstrous bonuses for themselves before they have achieved anything for us tax-payer owners – the biggest rip-off in history, especially when you remember that Sir Tom and Sir Fred staggered off carrying monstrous pay-offs for total failure and giant pension pots that we all are paying for, for years to come.