IN THE FIRST three months of 2009, British banks’ bonuses totalled £5 billion. Goldman Sachs’ bonus pot is $20 billion – $700,000 for each partner. Morgan Stanley’s bonus pot is $14 billion. Nine US banks recently paid $33 billion in bonuses. No wonder the City crows that bonuses are back.
Gordon Brown said in October 2008, “Where there is excessive and irresponsible risk-taking, that has got to be punished. The day of big bonuses is over.” On 3 July, Alistair Darling said, “Some (banks) are only operating at all because of very substantial support from taxpayers, who are entitled to tell the government we must not repeat the mistakes. If they go back to the way they were – to business as usual – without asking themselves over and over again whether they understand what they are doing, that would be disastrous for them and the rest of the world.” He ended by saying - that he would do nothing to cap bonuses.
On 22 June, the 70 per cent state-owned Royal Bank of Scotland announced a £15 million pay packet for its new chief executive, Stephen Hester. UK Financial Investments, the quango that manages taxpayers’ stakes in bailed-out banks, agreed to this. RBS also wants to sack 11,700 workers.
The big lie is that high bonuses for partners boost private sector productivity, while wage freezes and job cuts boost public sector productivity.