Bonus season, the time of year when us mere mortals wish we had paid more attention in maths class and had become bankers instead of following our less financially rewarding path.
Every annum this causes controversy and this year it was kick-started by Royal Bank of Scotland (RBS) announcing chief executive Stephen Hester would receive an additional £1 million.
With RBS being 82 percent state-owned this resulted in an even stronger backlash from the banks shareholders, better known as the general public.
However, this will only be the tip of the proverbial iceberg as every other financial institution, including fellow state owned bank Lloyds TSB, reveals its bonuses.
The problem is there are two arguments here, one for the state owned banks, such as RBS, and another for the others who were not bailed out by the tax payer. Let us start with the state owned banks.
Despite both the Labour administration, who bailed out RBS and Lloyds in the first place, and the current ConDem government saying the tax payer will not play an active role as a shareholder, is there not a moral responsibility?
Mr Hester, as has been noted several times in recent days, is the worst paid bank chief executive in the country and yet was still entitled to receive nearly £1 million as a bonus.
Agree with the bailout or not, the tax payers of the UK are not just the majority shareholder in RBS, but given the option would be in total control, in an absolutely unbeatable position at an annual general meeting.
So while numerous RBS share holders are unemployed, unable to find work and struggling to make ends meet, the top dogs get more in a single year’s bonus than many will earn in a lifetime.
There have been many on the radical left who believe the RBS board should be paid in line with civil servant salaries.
Now while this may seem like a popular idea it is of cause ridiculous to suggest a bank executive should be paid £28,000 a year.
Not only would nobody be interested in taking the job, but the bank would struggle commercially, shares would become worthless and the public would never get their money back when the shares were eventually sold.
It is in the public interest to ensure RBS and Lloyds become successful again, assuming George Osborne does not take leave of his fiscally responsible mind and sell the shares at a loss.
What many would like to know is who in their right mind at RBS thought this was a good idea. It is about time the bailed out banks realised they are state owned and acted in a responsible way to their shareholders as they would normally do.
Instead, how about this for an alternative bonus plan for RBS. All the money to be paid out this year to all employees is not given to the employees, but to the government and is used to pay off the deficit.
Admittedly a couple of million quid is not going to make a huge difference, but is probably enough to buy a significant proportion of Greece at current market value.
At this point a round of applause is required for Mr Hester. He did the ethically and morally right thing by turning down the bonus, an action requiring a lot of guts from a man with the least enviable job in the financial services sector.
Now for the more difficult question of banker’s bonuses in general.
Although it looks as if the government is going to introduce legislation on the banks, many want to know why it has taken so long.
Let us begin with a little house keeping and some home truths. The recession was NOT caused by the budget deficit as the Tory’s would have people believed.
The UK owing so much money did not help and removed the safety net, but the initial problem was caused by the banks. Secondly, this government became electable as it had abandoned its conservative roots and became a caring party for the people.
Following the financial crash the people were livid with the financial services sector and wanted reform, but every government around the world has refused to tackle the problem.
Occupy Wall Street, Occupy London and others have been protesting for several months and battled court orders from various organisations for calling attention to something the people want.
This is understandably difficult. The banking sector is privately run and political parties of every stripe do not like interfering in the private sector, not to mention most political parties get themselves elected by cosying up to money bags in the city.
The fact governments do not like interfering in the private sector is in fact a reason why state owned banks like RBS are given such a loose reign when it comes to salary acquisition and bonuses.
It is also important to remember before the credit crunch the reason people complained about banker’s bonuses was motivated by envy, because everybody else was lucky if the boss gave them a bottle of cheap vino at Christmas.
The point here is despite a majority of the global population wanting regulation on bank practices and bonuses, the people are not being listened to.
Why should we be experiencing unprecedented public service and public sector jobs cuts, not to mention rising unemployment, repossessions and rising inflation, when the culprits for this have not been punished?
Not one banker has been put on trial for causing the financial crash, not one employee of a ratings agency has been called to account about the grading sub prime mortgages as safe and not one regulator has been punished for letting this situation get out of hand.
In fact the closest we have come to it is the rather British punishment of stripping the formally Sir Fred ‘The Shred’ Goodwin of is knighthood, embarrassing for him, but an action with little or no consequence.
Even this has been criticised for being a hysterical reaction aimed at a man who was only a tiny fraction of the problem.
Curbing bonuses, and excessive risk taking, requires a global solution. One country cannot make a difference here. If the UK turned around tomorrow and said no more bonuses and the splitting of commercial and investment banking operations, by Friday all financial institutions will have left the country.
It is time for premiers of every country to stop messing about and wasting the people time and actually punish these people for what the rest of us are enduring.
This is a hard decision, but almost every elected leader uses the phrase ‘will not duck the difficult decisions’, or something similar, at some point during a campaign.
To paraphrase the great Theodore Roosevelt nothing worth doing is ever easy, or, if you prefer you philosophy closer to home, as Irishman George Bernhard Shaw said ‘Nothing is worth doing unless the consequences may be serious’.
Should not all leaders take from these to legendary figures and realise fixing banking practices and bonuses is not going to be a walk in the park, but is something worth doing and worth doing well.
Perhaps they should take note of the rest of Teddy Roosevelt’s quotation. ‘I have never in my life envied a human being who led an easy life. I have envied a great many people who led difficult lives and led them well’.
Voters want action on the issues of the day, not laissez-faire.
