Government backs off banks

[crankedup]

As reported last night the weak knee Conservative/Lib-Dem Coalition Government has decided to look the other way regarding the hotbed of bankers bonus payments. No surprise there, lots of talk from Osborne about 'clamping down' on the banks but when it comes to it, nothing. The Government realizes that the banks are just to powerful and hold the whip hand. When the next election comes around the Coalition partners will feel the icy blast of defeat, no matter what may be 'in the interests of the Country' the majority of the population will be incensed at the 'apparent unfairness'in their 'suffering the debt burden' through cuts and taxation whilst the bankers seemingly are business as usual.
This one issue could, in the medium term, bring down the curtain on England.

[theaxe]

Bankers get big bonuses, 40-50% goes straight into public funds, much of the rest trickles down. Isn't this a good thing? It seems to me that the government decided to put actually raising funds ahead of the politics of envy.

Edited by theaxe on Tuesday 11th January 12:25

[Bing o]

Who cares what the proles think? The banks have done at least as well under Labour as they did the Tories, and no-one will shoot the golden goose.

As said, it's 50% to the treasury, so it's win win.

[don4l]

Crankedup, what would you like the government to do in relation to the banks?

Don
--

[thinfourth2]

The governement should bring a tax of 95% on all bankers cash bonuses.

That will keep the proles happy


And if the bankers don't get paid in cash the bankers should be happy also

[otolith]

don4l said:

Crankedup, what would you like the government to do in relation to the banks?

Make sure nobody is better off than he is.

[JagLover]

The current hysteria over bankers bonuses demonstrates how deeply a moronic populism has taken root in the country.

With tax rates plus the 1% NI that is still paid when you reach the end of the NI band it is entirely possible that an individual banker will receive less than half the bonus (the remainder going to the taxman).

Despite of this a Labour leader seems quite content to kill off the goose that laid the golden eggs by making the special bonus tax permanant. Many banks accepted the bonus tax as a one off measure, and paid it out of their global (not UK) bonus pool, do you think they would do so indefinatly. Quite who would fund Labour's client state then is not clear.

[Shelsleyf2]

Can anyone tell me have the government done anything to ensure that in another 20 years when we have all forgotten this mess, we won't be bailing out the banks again?. I thought it was planned to distance high street banking from merchant and investment arms, giving the government the option of letting the speculators carry their own risk.

Jimmy

[Busa_Rush]

50% of the bonus goes in tax at source . . . then whatever they buy will have vat at 20% on it, no doubt they'll buy some property, stamp duty, more vat, cars . . . more vat . . . at the end of the process after a few years I'd guess that 70% or more of a bonus is given back in tax.

I'd hope they spend it in the UK . . .

[Ozzie Osmond]

crankedup said:

As reported last night the weak knee Conservative/Lib-Dem Coalition Government has decided to look the other way regarding the hotbed of bankers bonus payments. No surprise there, lots of talk from Osborne about 'clamping down' on the banks but when it comes to it, nothing. The Government realizes that the banks are just to powerful and hold the whip hand. When the next election comes around the Coalition partners will feel the icy blast of defeat, no matter what may be 'in the interests of the Country' the majority of the population will be incensed at the 'apparent unfairness'in their 'suffering the debt burden' through cuts and taxation whilst the bankers seemingly are business as usual.
This one issue could, in the medium term, bring down the curtain on England.

Your analysis may well be correct, although the final sentence hopefully goes too far.

Regrettably the facts say that for the last two decades UK plc has had only one bet on the table, namely "the City". In the absence of any alternative strategies HMG and the taxpayer have no alternative but to continue to support that one bet for a considerable time to come. As a spin-off, London must remain one of the places on this planet where people actually want to live.

The problem is that Joe Public, whilst not necessarily very bright, is smart enough to realise that the FSA fine of £2.8m levied against RBS/NatWest (for shoddy treatment of Joe Public) amounts to no more than one banker's bonus...

In order to develop an "alternative strategy" based on something other than financial services the UK has IMHO no realistic alternative to reducing the current burden of employment law and taxes upon employers.

[crankedup]

Sorry my post seems to have been misinterpreted, I have stated that bonus payments to bankers are neither
here or there to me. I most likely worded my post poorly, the point I want to make is : will the Governments actions or lack of be there undoing? It is entirely feasible that the Coalition could collapse through internal wrangles and force a general election. Will the electorate punish the Coalition
in view of its current stance toward the issue I have raised? I just happen to fear the outcome of an Election. Or will the issue blow over?
I expect my Son-in-Law will be collecting his bonus any time soon and spending some of that on my Daughter, so I have mixed interest.

[Ozzie Osmond]

When push comes to shove the government has very little scope for action.

That may well be their undoing - due to the lack of understanding of tabloid readers.

[crankedup]

otolith said:

don4l said:

Crankedup, what would you like the government to do in relation to the banks?

Make sure nobody is better off than he is.

Couldn't be further from my wishes that statement, I want my Son-in-Law to be filthy rich, even beyond my own expectations. I had my own expectations and ambitions of where I wanted to be when I were lad, I got off my backside and achieved them. Could always do with more but that's life.

[crankedup]

thinfourth2 said:

The governement should bring a tax of 95% on all bankers cash bonuses.

That will keep the proles happy


And if the bankers don't get paid in cash the bankers should be happy also

Thought that the larger bonus payments were paid in cash and shares, at least for the higher payments?

[Bing o]

Can someone please confirm what they mean by "bankers" bonuses, and whether they want to cut the bonuses paid to those in business management, projects, trade support, operations, docs, IT, HR, credit, legal, etc etc?

[Du1point8]

I like the way that the one time tax levy that the labour government promised is now turned into the coalition is a disgrace for not introducing it as an every year occurance... so they blast them in public even though themselves are the ones that promised it was a one off tax thing.

Even better was their illustrious leader stated that they got £3.5 billion off it... only a billion of what they actually got... Does he know anything or does he just pluck figures from the air?

They get more tax by allowing full cash bonuses rather than shares, but that doesnt matter as long as liebore can be seen to oppose the coalition in public about something neither Liebore or joe public understand other than banker gets bonus = bad...

Rather than everyone who works for bank gets bonus = bad...

[crankedup]

Its all gone way past the issues of bonus payments to individuals, I would imagine that bonuses of less than 250k are not in the minds of politicians (I don't know I just plucked that number from the air). The larger payments of .5 million upwards seem to be causing the pot stirring in the media and Politicians stting themselves over the fear of public anger. So its another Political football, again.

[Ali G]

Can't see RBS, Lloyds or HBOS paying any corporation tax for a bit with the amount of losses to be brought forward and set against (any) current year profit - hence tax on bonuses and other staff related income is the only revenue HMIT is likely to get from these organisations at the moment. Would seem pragmatic to encourage such payments therefore (regardless of how unpalatable this may seem to the rest of us).

A general balance-sheet based levy in support of Government/taxpayer funded deposit holder safeguard would, however, not seem unreasonable (the Lloyd's insurance market has had a similar mechanism in place for years - the central guarantee fund).

[Beardy10]

The fact is the Govt had the banks where they wanted them when they bailed them out....at that stage they could have changed the way the industry was paid as they literally had all the power. Except they didn't...they wrote a cheque to the industry with no strings attached.....Brown did it here and Bush did it in the US.

[Ali G]

Beardy10 said:

The fact is the Govt had the banks where they wanted them when they bailed them out....at that stage they could have changed the way the industry was paid as they literally had all the power. Except they didn't...they wrote a cheque to the industry with no strings attached.....Brown did it here and Bush did it in the US.

Except that they did not bail out Barclays or HSBC so did not have any chance of influencing the management in those organisations. The best that the government could have managed would have been a two-tier system - state owned banks and publically owned banks - with all the differentials in staff remuneration and service that might then go with it.

As has been said many times on this forum, much of this fiasco stems from policy decisions made by the Clinton adminstration way back when it coerced banks to provide NINJA mortgages as a form of privately funded state housing for the unemployable, and therefore does not really stem from excessive remuneration awarded to a handful of investment bankers (workers in retail banking in general do not receive significant bonuses!)