Bring Back The Guillotine

VINCE CABLE: 'Bring back the guillotine...for bankers' | Mail Online

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Vince Cable: 'Bring back the guillotine...for bankers' By Vince Cable Last updated at 10:45 AM on 09th February 2009 The crass behaviour of Britain’s financial aristocracy rivals the last of the Bourbons. Marie Antoinette famously patronised the Parisian mob with her ‘let them eat cake’, while dining in luxury in the Tuileries. The City bankers who ruined their banks but have been kept in employment by the taxpayer now demand we pay them their bonuses to maintain the aristocratic lifestyle to which they have become accustomed. They know no shame and take no blame. They are lucky the British have no guillotines in stock. Is the public outrage simply the politics of envy? I think not. Most of us have no problem with successful entrepreneurs earning lots of money. They rightly command respect, as the backbone of a healthy, private enterprise system. The bonus-hunting bankers, by contrast, stand charged with destroying wealth on an epic scale. Foolish, greedy, irresponsible behaviour and excessive risk-taking led to massive losses and the crisis in the banking system which is now costing millions their jobs and many their homes. Why should such failure be rewarded?

CABLE: 'The unfettered greed and rewards for stupidity and failure which have been exposed in the City leave a very bad taste in everyone's mouth'

The banks were deemed ‘too big to fail’. Otherwise, the bankers would be on the dole. The Royal Bank of Scotland/NatWest has a balance sheet – assets and liabilities – much bigger than the British economy. It is one of the biggest banks in the world. Had it been allowed to go bankrupt, it would have caused massive destruction: the financial equivalent of detonating an H-bomb. So the Government had to step in, using taxpayers’ money to buy shares. The chief culprit, the bank’s former chief executive Sir Fred ‘The Shred’ Goodwin, has disappeared with his millions. But most senior executives and the whizzkids in the investment banking arm whose trading activities with billions of pounds of ‘toxic’ paper lie at the heart of the present crisis, have remained. Managers now seek their ‘bonuses’, arguing that their unique skills are needed to dig the bank out of the hole they created. This is a little like the managers of a hospital with a terrible record of poor hygiene and premature deaths surviving the sack, then demanding more money as an incentive to improve. Other banks, less in the spotlight, incubate the same culture of excessive pay. It was revealed last week that Barclays pays a man £40million to legally avoid British taxes – the ultimate insult to taxpayers who have to underwrite the bank. When I debated these issues with a leading hedge fund manager on Newsnight, he argued that there is a ‘market’ rate and we have to pay it to attract the best people to clean up the mess. I understand the pragmatic approach, but it is wrong. There are more bankers than banking jobs. Large numbers are being laid off. Those who remain are lucky to be in work. Nor are there easy pickings overseas. The Obama Administration is cracking down on bonuses in the US. Even the banker-friendly Swiss government has now slashed bonuses in the banks it had to rescue. In this new world, those running the Government-subsidised or guaranteed banks are public servants, in the same position as the top managers of the NHS or the

2/10/2009 12:21 PM

VINCE CABLE: 'Bring back the guillotine...for bankers' | Mail Online

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immigration service or the prison service. The head of the NHS, the fourth-biggest employer in the world, is paid £220,000 a year, an extremely good salary but way below what the City bankers have come to expect. The Government will have to be firm and stop dithering on the sidelines appealing plaintively to them to behave, like a weak teacher struggling to control an unruly class. First, the pay and benefits of all employees in publicly supported institutions should be fully declared. Anyone paid over, say, £100,000, should have their remuneration made public. Just as MPs are being called to account on careless policing of expenses and generous pension arrangements, so should others who benefit from the taxpayers’ support. Now is also the time to set the rules for bonuses in future contracts. Many good companies have incentive schemes which motivate their employees. The banks, by contrast, have incentivised their employees, particularly in investment banks, to take extreme risks with depositors’ money, then walk away from their deals with fat commission payments. In future, any bonuses must be in company shares, properly priced, which can only be cashed in after five years or more. In other words, cash bonuses should be banned. The future of High Street banking will also be very different. The old-fashioned clearing banks should be stripped of their high-risk, gambling operations and be required to operate as the safe, reliable, stable institutions they once were. Britain will continue to need bright, enterprising people and to reward success. But the unfettered greed, and rewards for stupidity and failure which have been exposed in the City, leave a very bad taste in everyone’s mouth. The financial aristocracy has to learn to respect the public who pay their wages. Otherwise we shall soon be importing French guillotines.

Sir Fred 'The Shred' Goodwin, the former head of Royal Bank Of Scotland, presided over the company as it plunged to losses of £28bn

Vince Cable is the Liberal Democrat Treasury Spokesman.

Comments (56)

These banksters are no way stupid, they are the Enemies Of the People. Stalin knew very well how to make them useful for the country. If it was impossible, they just were executed, and other executives had a good example. Click to rate

Rating 14

- chara, Russia, 09/2/2009 06:59

Count me amongst the billions who are ready to haul out and gut some fat lazy bankers, along with their equally fat lazy lawyers. Click to rate

Rating 27

- Tom Lowe, Nun, USA, 09/2/2009 06:33

Marie Antoinette did not, in fact, suggest that the poor of Paris eat cake, instead of bread, but the people of Britain are being asked to stomach an even greater insult. How could 'rescue' packages have been formulated, by governments on both sides of the Atlantic, which allowed vast amounts of taxpayer's money to go to the very people who have trashed the economies? That's where the real scandal lies, and demonstrates which is the tail and which is the dog. Click to rate

Rating 38

- Anthony Lawson, Phuket, Thailand, 09/2/2009 05:17

2/10/2009 12:21 PM