So Goldman Sachs are the first out of the traps to make it clear just how sorry they are for making so much darned money.
Partners at the firm have announced that they are rationing themselves to a meagre £1m bonus package each in a move which, I suspect, will be repeated across the financial sector as businesses aim to appease an angry electorate and increasingly belligerent political class.
While this will certainly leave their swollen pockets looking rather like a windsock on an eerily calm day, what is most interesting about this latest round of public self-flagellation is who it will not impact. If you guessed those very same traders who got everyone into the mess in the first place then give yourself a pat on the back.
We, the ignorant public, are continually told that if we try to take away bankers’ money we will drive them into the waiting arms of our global competitors, like a sheepdog hounding its herd towards the wolf. This is obviously madness, goes the logic.
It is interesting, therefore, that in 2003 Hank Paulson, both a former chief executive of Goldman Sachs and the erstwhile treasury secretary, said the following:
“I don’t want to sound heartless, but in almost every one of our businesses, there are 15 to 20 per cent of the people who really add 80 per cent of the value.”
Ah, so they’ll only be dishing out bonuses to the very best of them then, right? Well, no.
In an interesting piece by Anatole Kaletsky in the Times he made the point that investment banks could be regarded as one of the last bastions of the workers’ co-operative. Their business model priorities employees over shareholders by ploughing earnings back into salary packets instead of into dividend payments and share buybacks. This puts its interests at odds with both its shareholders and the broader society it claims to serve.
But why dole out these huge bonuses to people who they know aren’t adding value to the company?
The answer is best illustrated by an anecdote that is supposed to have taken place after Paulson made his somewhat ill-advised remarks.
With Paulson having effectively accused 80-85 per cent of his employees of being worthless chaff, journalists were sniffing for a story camped down outside Goldman Sachs headquarters in New York. As employees filed past they attempted to probe them for details on the atmosphere in the building following the announcement.
Although most were unsurprisingly unwilling to comment, one eventually did.
“So is there a lot of anger inside over Paulson’s comments?” asked an eager reporter.
The man paused to think for a second.
“Um, not really,” said the banker.
“Oh, and why’s that?” the journalist continued,
Another pause and a furtive glance behind him.
“Well this is Goldman Sachs, everyone thinks they’re in the top 20 per cent.”