The Casino Oligarchs Still Don't Get It

Commentary By Ron Beasley

The Casino Oligarchs still don't get it.  They don't understand that people don't just what their outrageous salaries and bonuses to end they want them drawn a quartered in the public square.

Bankers rage at G20 'witch hunt' against bonuses and buccaneers

Bankers and hedge fund managers were furious yesterday at attempts by the G20 to cap their pay and regulate them for the first time, calling it a "witch hunt" by world leaders.

"Regulation is generally bad. You should let the market decide what the people will get paid," said Matthew Prest, managing director at Close Brothers investment bank. "Sometimes regulation has the opposite effect of what you want and I think bankers' salaries regulation would fall under that category. I don't hear anybody calling for Hollywood star salary caps. This is a trendy, fashionable thing to do, it will have bad consequences."

The end of light-touch regulation heralded by the G20 summit will lead to far-reaching changes to the conduct of business in the City of London.

Bankers in Canary Wharf or Moorgate could face caps on the hefty bonuses they have enjoyed for almost a decade, whilst secretive hedge fund managers in Mayfair will have to start disclosing their positions or strategy. The changes, which are still to be specified in detail, may bring to an end an era that brought financiers astonishing levels of money, status and power.

"Supervisors will assess firms' compensation policies as part of their overall assessment of their soundness," world leaders agreed on Thursday.

Bankers are furious about the possible collapse of a system that inflated their basic pay: thousands of City jobs pay between £80,000 and £110,000 a year, with another £30,000 to £50,000 from bonuses, whilst senior management enjoyed multi-million pound bonuses.

"Salaries in the banking and corporate finance world are not outrageous. The big reward is in the bonus," said Larry Schechter, a director at Schechter & Co, a boutique investment bank in Mayfair. "I am not a proponent of arbitrary compensation restrictions. I believe that bonuses - the rewards - should be commensurate with the level of success. You cannot have the whip without the carrot, and vice versa."

The G20 wants to restrict compensation that rewards short term risk-taking. Investment bankers banks received bonuses for taking big bets in the markets that may have led to longer term losses.

They gambled and millions suffered but they made the big bucks.  What they don't seem to realize is that the millions of losers now realize they are to blame.  They continue to take the path of greedy arrogance as the crowds with pitchforks draw ever nearer.  The casino is closed! 

Comments

[SRW1]

Larry Schechter:

"I believe that bonuses - the rewards - should be commensurate with the level of success. You cannot have the whip without the carrot, and vice versa."

I'll take it then, he agrees that if you sink the world economy the appropriate 'whip' is that you will be taken to the market square and shot?

Maybe he wants to think this through a little more?