I was listening to Radio 5 Live the other day when the issue about Bankers Bonuses came up. It seemed that the government had vetoed huge bonus payments for RBS executives and the banks cheer leaders were up in arms. This was incredibly damaging warned the rather lame talking ‘expert’ who further prophesised an exodus abroad of the great talent which makes this bank such a brilliant success. When asked if he thought people in this particular part of banking were greedy, he said yes! He then tried to explain that society was like that now and it wasn’t unusual. When challenged, he agreed it was bad but he still thought they were worth it and it would make RBS uncompetitive if bonuses of twice their yearly salary were not paid!
The sheer effrontery of these self styled greedy bankers will I know leave many fuming and perplexed all at the same time. We know he’s talking utter balls yet how on earth do they get away with it? We may then secretly and reluctantly agree that whilst the bankers are greedy they must be doing something right to be able to get away with such brazen behaviour. The country must be a better place because of them surely?
The question no one really asks is: Well, what do they actually do? And that’s where the whole murky business descends into complete darkness. Investment banks and Investment bankers are their name.
So, what’s their special skill or expertise?
Let me explain! They use your money to give to other people to try to make more money by guessing which company or product will make money in the future. Then they get some back. In turn, they then dish it out to shareholders and the government in tax. Easy! What can go wrong? Nothing because they are experts of course! And what do they do with all the excess profit? The bankers give it back to themselves! It’s only right isn’t it because they deserve it?
But, what do they do if they guess wrong? They get more of your money to bail them out and still pay their bonuses. Simple. It’s a win win. For the banks any way. Great game for them and a mugs games for the rest of us.
Here is an example anyone will understand. I know the ‘experts’ will deride this point as me not understanding the whole complex issue. I do and what’s more they know it. When you take out an ISA or for that matter any type of investment, you will get a very simple but telling piece of advice: ‘Past performance is no guarantee of future results.’ In other words: guess. Yes, that’s what they want you to do because that’s what they do.
Except one big difference.
If you lose, unlike them you won’t get your money back, never mind a big dirty bonus for being ‘unlucky’! It’s a con and everyone knows it.
Another question on one seems to ask is: What happened before banks ruled the world or more to the point, the economy? Did we all live in penury and on the bread line? No, of course not. Or maybe as the Five Live pundit admitted, some people were just not as greedy as they are today.
There is though a solution.
Remember back in the early 1990s when all these building societies, driven by pure greed bribed their customers to take ‘free’ shares or a sackful of cash in return for converting to a bank? Can you remember the word of the time? That’s right: Carpetbagger. Greedy speculators joining building societies for as little as a tenner and using their right to vote to force demutualisation of the society.
What was the result?
Bigger banks, closed branches and less choice for the customer with many bailed out by you the taxpayer when it all went wrong.
Fortunately, the building society I’m a member of (and note the word member) didn’t go down that ill trodden route. Today, they are in rude health, growing and doing a service for its customers and members. Yes they make money and yes they pay tax. And they pay interest on savings though admittedly not much. The difference though is this. Not one penny from the tax payer and stability and trust for the customer. Note that word: trust. They still have it. This is the answer to economic stability for both the industry and those it serves.
Bonkers Bankers: please take note.