UK Chancellor of the Exchequer slams bankers repeating
bonus culture

post from AMERICAblog News| A great nation deserves the truth on 03 July 2009 02:21:00 AM. © AMERICAblog News| A great nation deserves the truth

Glad to see someone in power has both a spine and a will to force change. Business as usual is not going to cut it though the bankers also know that without more games - gambles and leverage being among their favorites - they will not see the fat bonuses that they've come to expect. Look at at this graph and see if you can spot the outrageous distortion brought on during the Reagan (and Thatcher) years.

Amid signs that the bonus culture blamed for excessive risk-taking is creeping back in the City of London, the Chancellor declared in an interview with The Independent: "There are people who are too complacent in my view. They need to be brought back to earth."

Mr Darling disclosed that he will try to end a damaging turf war between the Bank of England and the Financial Services Authority (FSA) by giving them both more powers in a White Paper on banking unveiled next week.

He assured the Bank it will play a central role in preventing future booms turning into bubbles and in assessing risks to the entire system as well as individual banks. The White Paper will endorse the Bank's call for financial institutions to have to provide "richer and more frequent" public disclosures of information. And it will back the FSA's demand to be able to extend its regulatory remit ? a move which in future could draw hedge funds into its net.

The FSA will be ordered to take a more proactive approach to prevent a return to pay hikes and bonuses to reward short-term profits. If remuneration packages encourage risky behaviour, the FSA will force banks to hold more capital reserves to provide a safety net.

Geither never seems willing to upset his tennis partners and the rest of his team from Citi are afraid to create problems for old friends on Wall Street.

All of this comes back again to the many problems created back in the 1980s. The bulk of Americans rely on Wall Street for their 401K retirement plans. Americans view that money as a critical piece of their safe retirement yet Wall Street still thinks it's a game. For Wall Street, they like having those billions to play with because it enabled them to get more credit for more gambles. They still found a way to get paid but the American public has been caught billions in the hole.

If Obama and Geithner had any clue - and the jury is out on both - they would start to think more about how they could help the American public who continues to be battered from this recession. Firming up the Wall Street system is a priority and yes, they are making some moves there but it's too slow and not enough. What about those retirement losses? What about creating an easier 401K system that was clearer about charges and what about forcing more responsibility instead of allowing the casino culture to continue? Obama and Geithner, like every politician in the US, are financially set for life but that's not the case for the rest. It would be nice if both started to think more about that instead of what is good for Wall Street.