It all started with this article... OK, I lie, IT all started with capitalistic banking desks betting that the value of property could never go down (I'm exaggerating of course) and mortgage brokers stopped doing due diligence when assessing the credit risks potentially presented by new customers... yada yada yada. We all know the story.
The Credit and Collateralised Debt desks across the Investment Banking universe virtually imploded, banks (retail and investment) were crippled by the blast, others were brought to their knees before coughing their last, spluttering amidst the dust and fumes of the rubble and fading into the ether (cos you and I know there is no banking heaven...).
Jobs were shed as quickly as a fur coat at a PETA conference. There was a 'weeping and a-wailing and a-gnashing of teeth'. The good years were over, belts were tightened, heads kept down. Whomever raised their necks above the parapet was handed his/her redundancy cheque. Things generally sucked... and the maelstrom that hit the Financial Services industry was so severe that it threatened to bring down the entire financial system. Imagine that - a global recession triggered by what started as a few missed mortgage payments. This is how interdependent we have become on a global scale.
The other 'B' word was bandied about: "BILLION-DOLLAR BAIL-OUT!" As companies failed (mostly banks and insurance companies followed by tremours in the Motor Industry as credit lines became increasingly illiquid tempers flared and the underlying anger felt by the masses rose....
That tax payers' dollars (and pounds) were being used to 'bail out' these companies angered many. Probably rightly so, although some argue that since corporation tax is at 50% and the richer members of society also pay close to 50% tax then really the money the banks were being bailed out with was largely supplied by the banks anyway.
I'm not gonna get into that, although I did recently hear the statistic that the richest 15% of the UK population is responsible for 50% of the UK's revenue from taxes... if this is true there must be some superbly 'rich b**tards' living in the UK!
Anyway - we were talking about what made me descend into a string of B words. It was this article (and the millions like it)
(I should mention that any UK bonus greater than £25k is now subject to 50% tax. Bear in mind that most Investment Bank employees already pay tax at the higher rate of 40% anyway...)
And this article:
Goldman Sachs Bonus Cut - the following sentence in particular...
"Goldman's 32,500 staff, including 5,500 people in London, had been expected to receive more than $600,000 US (£300k) each from a "compensation pool" usually amounting to about half of the bank's revenue.”This is such poor reporting and yet I have been hearing this and similar stories all week. I mean honestly now, do you really believe that EVERY employee in this Investment bank will receive an average bonus of £300k? Really?
And will Joe Bloggs in the street really read that article or hear that report on the news and think: 'oh that's just the average some will get more, some will get less"? Or will it just sink in as
"there are 32,500 staff and they were each going to get over £300k but the government stepped in and stopped it."?Cos that's just plan wrong... and irritatingly misleading... and this is what is annoying me!
I don't work for Goldman Sachs, but I have worked for 3 top tier Investment Banks and a good portion of my employed friends work for IBs too. Sure you have highflying traders and sales people along with other Front Office personnel who earn massive commissions and generate millions of dollars in revenues for the company. Yes. But you also have the other 3/4 of Bank staff who support these guys and perform all the Middle Office and Back Office functions to keep the bank going - accountants, controllers, compliance officers, legal teams, HR & Administrative Staff, Technology and Operations - just to name a few. 80% of these people do not take home £100k a year, many of them will get an average bonus of what? £5-10k? £15-20k (or higher) if you're more senior and it's been a good year? The highfliers at the top (and/or in Front Office) skew the average calculation.
So it feels like the 'public' - no let's call it the media - the media are stirring such discontent amongst the public that they're ultimately making Joe from Ops and Judy from Product Control (as well as Dennis for Equity Trading) pay for the problems/mistakes of Magnus from the Credit Desk… and I don't really like that at all.
If Judy got £10k as her bonus (after expecting none) I think she sure has a right to go hop skipping down the lane as happy as a lark cos someone noticed she did a good job (while the rest of her colleagues were getting laid off).
However, that's not the world we live in - if the media catch Judy rejoicing to her husband on her mobile phone on the way home simply because she's happy to have received any bonus at all this year - they will assume she is one of 'those Bankers' and crucify her even though the woman probably only got £7k!
Listen Judy, girl, don't hop and skip... you'll get fired and that's not on.
Anyway - I just wanted to get that off my chest. Phew.
ps. before you get me wrong - I don't think that any of the teams on the desks responsible for the deep pile of toxic debt that brought down banks like Lehman Brothers etc should receive whopping bonuses either. In reality many of the senior members of those teams were fired, followed by a 'restructuring' exercise resulting in a downsized desk (fuelled by many redundancies) - so the people who are left, on the desk and elsewhere in the Bank are people who have been working their butts off a) to keep their jobs so they can pay their own mortgages and b) to save the Banks from going under (so they can keep their jobs and pay their own mortages). And remember these people have been working in unsavoury environments, with little job security, watching members of their teams/departments disappear and listening to news reports of public outrage at potential bonus payments. Maybe the guys at the top - like the CEOs etc who are likely to receive millions of dollars in bonuses should forgo theirs this year so that Judy etc can have her £7k in peace.
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