In a recent attack of conscience – spurred on by a pitiful bonus payment – a friend of mine left his job at one of the world’s largest investment banks and set his sights on joining the world of financial regulation.
After a spate of redundancies left him as the last remaining member of his team his image of the hard-working high-living lifestyle of a banker had been almost entirely dispelled. He felt in need of a new challenge and where better than at crisis management HQ – the Bank of England.
Having seen the effects of the near-collapse of an institution from the inside he believed that he was in a prime position to join Mervyn King in the great reformation of the banking system. Earlier this month Mr. King outlined his frustrations with the current model in unambiguous terms:
“Executives at the top are earning vast sums, beyond the dreams of ordinary people, for doing a job which it’s very hard to say justifies that kind of bonus,” said our modern day John Cartwright. “It is a form of compensation which rewards gamblers if they win – but with no loss if they lose.”Of course one could say that conveniently left out is the government’s own £500 billion bailout scheme which, it could be argued, implicitly underwrote the risks taken by major financial institutions and cemented the “too big to fail argument”. But who am I to take issue with a man so intent on sorting out this broken system?
Imagine my friend’s surprise, therefore, when upon receiving a job offer from the Bank he was told that he would be subject to an annual review to establish a suitable performance-related bonus.
Well I suppose if the system ain’t broke don’t fix…oh right. Um, perhaps it’s about recruiting the best talent, I mean how could the Bank hope to recruit the finest financial minds without offering some form of financial cherry to tempt them with.
Hold on, but wasn’t it Mr. King himself who said only this month that banks should be “tough”and not get sucked into the culture of paying excessive bonuses simply because other institutions were doing so?
These are confusing times indeed.
David Cameron, meanwhile, is insistent that we should be handing more power over to the good ship King. Under a Conservative government, he assures us, city regulators would be paid more and workers at firms in the square mile would have to be seconded to the Bank so that it could benefit from their experience.
Obviously the success of self-regulation within these institutions has impressed the Tory leader.
Maybe it is time that someone reminded Mr. King of Uncle Ben’s words of advice to a young Peter Parker (aka Spiderman) struggling with the consequences of his newly discovered powers:
“With great power comes great responsibility.”