By Stephen McPhie, CA
Partner, RSD Solutions Inc.
Politicians in Britain are constantly targeting banks for, in their words, massive unwarranted bonuses, getting us into the mess we’re in, failure to lend and generally anything else that has gone wrong. Investment banking is often referred to as “casino banking” and derivatives are referred to in terms that suggest they are the root of all evil.
As usual, when politicians become involved, there is a massive amount of misleading information being bandied about. It generally comes from one or more of ignorance, pandering to the crowd, living in some sort of dreamland and, their speciality, deflecting attention from their own shortcomings.
Most politicians probably don’t know what a derivative is, and certainly wouldn’t be able to distinguish between an FX future and a long-term synthetic structure. Do any of them really think that if across the board bonuses had been half or even a quarter the level they actually were in recent years, other conditions being the same, that bank behaviour would have been any different? And while ranting on about reckless lending in the past, they call for a return to the same levels of lending! “We’ve got to get the banks lending again” is a familiar refrain. It seems that if only that would happen we would return to a land of wine and roses.
Of course, along with consultants, banks are easy and perennially favourite targets for politicians. Objectivity and accuracy seem irrelevant. To be fair, the banking industry has brought many of the problems upon itself.
The level of some of the bonuses seems obscene to many, including me in some cases. However, it misses the point. What is the point? I’ll get to that anther time, but would welcome comments on that topic in the meantime.
1 comment:
Really, It is a nice blog. Here you provide lots of information about banking and politicians. Politicians are constantly targeting banks. I would like to tweet your blog and will be back again soon. Thanks a lot.
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