What does a banker have to do to not get a bonus? Its time senior management of all companies were subject to the incentive scheme the rest of the world labours under – do your job or you’re fired.

The folly of the so called free market in all its glory.

Socialism for the rich, capitalism for the poor. I bet you get someone to do his job for half the money if they looked outside the cosy closed shop of city elites.

There’s so much wrong with this article, but this stands out:

‘To a large extent, the value of firms is beyond the control of CEOs.’

So – not Fred Goodwin’s fault then?

It’s worse than that.

Due to the uniquely opaque and difficult to understand way people in the financial sector – including Hester – are paid his total 2011-12 pay package could be as much as £7.4 million.

http://bit.ly/yP69sR

Government transparency – what a joke!

Of course, blame for this state of affairs lies more with Brown/Darling more than Cameron/Osborne – fear of negative headlines (and Tory “back to the 1980s” criticism) of nationalising a major bank and letting HMT civil servants run it led to this poor VFM solution.

It’s worse than that.

Due to the uniquely opaque and difficult to understand way people in the financial sector – including Hester – are paid his total 2011-12 pay package could be as much as £7.4 million.

http://bit.ly/yP69sR

Government transparency – what a joke!

Of course, blame for this state of affairs lies partly with Brown/Darling as well as Cameron/Osborne – fear of negative headlines (and Tory “back to the 1980s” criticism) of nationalising a major bank and letting HMT civil servants run it led to this poor VFM solution.

There’s so much wrong with this article, but this stands out:

‘To a large extent, the value of firms is beyond the control of CEOs.’

So – not Fred Goodwin’s fault then?

The value of assets held IS within the control of CEOs, so, still Fred Goodwin’s fault.

Beyond dispute, RBS is a Scottish bank with its head offices located in Edinburgh.

Curiously, I’ve been unable to find any reported comment from the Salmond or others from the Scottish government about Hester’s ill-deserved bonus. I suspect they have stayed quiet either because they regard this as properly an internal matter for the Scottish government to determine and resent the intrusion or because they wish to show just how impotent the Westminister government really is in controlling affairs north of the border.

It bodes ill if an independent Scotland is going to stick with the Pound and cede control over monetary policy and regulation to the Bank of England, especially now that HM Treasury is taking statutory powers to issues directives to the Bank:
http://uk.reuters.com/article/2012/01/27/uk-britain-financial-bill-idUKTRE80Q0OE20120127

Obviously, there is scope for continuing conflict over who decides in the case of Scottish banks and that isn’t going to help to resolve issues in financial crises when most agree that the banks and financial institutions were seriouly under-regulated when the crunch came in 2008 and the Scottish banks – RBS and HBOS – were the largest contributing factors to the financial crisis in Britain.

I originally thought blame more with Brown/Darling, until I remembered that contracts CAN be ripped up for low-earners in the public sector under this Governmemt. So surely can be ripped up for Hester too?

@8: “I originally thought blame more with Brown/Darling”

Well, no. One of the unresolved issues from Britain’s financial crisis is the uncertainty about just who was ultimately in control of the financial system in terms of the existing statutory powers of HM Treasury, the BoE and the FSA and their respective responsibilities.

Even with the coalition’s intended new legislation on financial services, the problems compound if important financial institutions are located in another, independent country close by leaving scope for speculators to make money out of differences in how regulations are applied and enforced.

Hot news update on Saturday evening:

“Both giant pandas at Edinburgh Zoo have been removed from public display after coming down with colic, just weeks after their much-anticipated arrival.”
http://www.telegraph.co.uk/earth/wildlife/9046973/Second-giant-panda-taken-off-display-after-being-diagnosed-with-colic.html

@3. Max: “There’s so much wrong with this article, but this stands out:
‘To a large extent, the value of firms is beyond the control of CEOs.’
So – not Fred Goodwin’s fault then?”

Chris Dillow’s argument is that most CEOs are blokes in suits who make decisions that are blindingly advantageous, blindingly stupid or ridiculously risky. There is always a bit of Marx around Dillow’s arguments, that managers are incidental to management decisions because history or the market has determined that three options are available. Marx and Dillow have a point: CEOs and managers who spot a fourth option are freaks.

Was it Fred Goodwin’s fault? Probably, because whilst he was a potential CEO freak, he didn’t find a fourth option and followed the market.

In the news on Sunday:

Cabinet minister Iain Duncan Smith has said there would have been “chaos” if the government had overruled RBS over a £963,000 share bonus for its boss.

“Nobody would be happier than” ministers if Stephen Hester declined it – but it was his decision, he said.
http://www.bbc.co.uk/news/uk-politics-16779585

Consider what would happen if RBS, in an “independent” Scotland, decided that as a Scottish bank, it didn’t wish to comply with BoE decisions on monetary policy and prudential regulation.

As we know from macroeconomic theory and as the Eurozone has so dramatically demonstrated, a monetary union without a fiscal union is potentially unstable. That potential for instability would be compounded in a monetary union if different regulations were applied to banks and financial markets in the countries comprising the monetary union and banks could decide whether or not to comply with regulations.

HBOS, one of the two failed Scottish banks, is now owned by the Lloyds Group but two new banks have set up their respective head offices in Edinburgh – the Tesco and Virgin banks. By reports in the news, despite all the many job losses in the financial services industry in Scotland, total jobs in the industry there have remained almost unchanged because of the new head offices.

Least anyone regards that analysis as OTT, earlier discussion in LC threads was weeks ahead of the diagnosis of Eurozone problems in Cameron’s speech at Davos and the discussion reported in today’s news about whether Germany is ultimately to blame for the hiatus in the Eurozone by pushing for and then breeching the EZ Growth and Stability Pact of 1995.

News update late Sunday night:

Royal Bank of Scotland chief executive Stephen Hester will not take his near-£1m bonus, the BBC has learned.
http://www.bbc.co.uk/news/uk-16783571

Sack bankers when they fail, with minimum legal payoff, bonuses only for superhuman work ie saving humanity from intergalactic evil and pay them their wages and don’t sack them if they do alright. Just all other mortals. With regular appraisals, and re-applying for their own job.

Greater love for the wider interests of the ruling class hath no man than that he lay down his bonuses to save the credibility of the Tory party.