Progarchives.com Homepage
Forum Home Forum Home > Topics not related to music > General Polls
  New Posts New Posts RSS Feed: Bonuses for bankers
  FAQ FAQ  Forum SearchSearch  Calendar   Register Register  Login Login

Bonuses for bankers

 Post Reply Post Reply Page  123 5>
Poll Question: Should any banker be awarded a years salary or more as a bonus?
Poll Choice Votes Poll Statistics
1 [6.67%]
1 [6.67%]
1 [6.67%]
1 [6.67%]
11 [73.33%]
You can not vote in this poll

Author
Message Reverse Sort Order
Dean View Drop Down
Special Collaborator
Special Collaborator
Avatar
Retired Admin and Amateur Layabout

Joined: May 13 2007
Location: Albion
Online Status: Offline
Posts: 32566
Post Options Post Options   Quote Dean Quote  Post ReplyReply Direct Link To This Post Topic: Bonuses for bankers
    Posted: March 08 2013 at 02:18
Originally posted by Gerinski

I'm not an expert either, but I don't think we're talking in circles that much. With re-insurance, an insurance company faced with an in principle bankrupt threat such as a major disaster affecting most of its insured customers can survive without needing support from the government, from my money, or without screwing its customers.
This is not the case with banks, when they screw it they screw it and regardless of such schemes, they often take along their customers with them (for example the protection scheme in Belgium covers only up to 100.000 euro, any further amounts are not insured and you just loose them), and then it's nice for them having the government backup with the motivation that 'they are too big to let them fail'.
Banks have needed our money to be rescued from the excessive risks they took, that is a fact, therefore I don't see it the same as the re-insurance case, as far as I know not one of my euro-cents has been used to rescue insurance companies.

I absolutely agree with everything you have said. BUT they will not adopt your re-insurance idea while the existing methods are in place because it costs money.
 
Insurance companies are not saved or bailed-out, their assets and liabilities are transfered to other insurance companies, all the consumer sees is a change in the name on letterhead. Insurance companies are not squeaky clean - anyone with a private pension, life insurance or endowment policy on their mortgage will know they are just as capable of taking stupid risks with other peoples money


If you cannot be wise, pretend to be someone who is wise and then just behave like they would - Neil Gaiman
Back to Top
rogerthat View Drop Down
Forum Senior Member
Forum Senior Member

VIP Member

Joined: September 03 2006
Online Status: Offline
Posts: 5426
Post Options Post Options   Quote rogerthat Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 19:10
^^  In short, are you arguing for a way to re-insure the deposits of customers of a failed bank?   A good idea, there should be some recourse for a customer to claim his lost deposit.   It is the fear of losing deposits that triggers bank runs and, eventually, a financial crisis.  Banks routinely write off loans on which they have no further scope of recovering money because they've gone bad.  It's the risk they undertake, like any other entrepreneurial activity.  It is also a heavily regulated industry and there are norms on what percentage of your assets can be NPAs, your reserves and how they are maintained.   The problem is in the 2008 crisis banks were saddled with loans that had been identified as good but were really NPAs. 

If you've watched the documentary Inside Job, even economists managed violent conflict of interest at that time, receiving huge sums of money from the chamber of commerce of countries on which they would write favourable opinions.   If the integrity of regulatory and academic institutions is compromised so seriously, there is no hope of averting a future crisis....we can only hope the next one is at least a decade away. 
Back to Top
Gerinski View Drop Down
Prog Reviewer
Prog Reviewer
Avatar

Joined: February 10 2010
Location: Belgium
Online Status: Offline
Posts: 3165
Post Options Post Options   Quote Gerinski Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 14:08
I'm not an expert either, but I don't think we're talking in circles that much. With re-insurance, an insurance company faced with an in principle bankrupt threat such as a major disaster affecting most of its insured customers can survive without needing support from the government, from my money, or without screwing its customers.
This is not the case with banks, when they screw it they screw it and regardless of such schemes, they often take along their customers with them (for example the protection scheme in Belgium covers only up to 100.000 euro, any further amounts are not insured and you just loose them), and then it's nice for them having the government backup with the motivation that 'they are too big to let them fail'.
Banks have needed our money to be rescued from the excessive risks they took, that is a fact, therefore I don't see it the same as the re-insurance case, as far as I know not one of my euro-cents has been used to rescue insurance companies.

Back to Top
Dean View Drop Down
Special Collaborator
Special Collaborator
Avatar
Retired Admin and Amateur Layabout

Joined: May 13 2007
Location: Albion
Online Status: Offline
Posts: 32566
Post Options Post Options   Quote Dean Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 11:43
Originally posted by Gerinski

Originally posted by Dean

 This is exactly what you are proposing - spreading the risks (ie loans) to other banks
No, there's a big difference, a loan needs to be paid back, an insurance does not (sure you need to pay the premium but not the amount of the eventual damage). What I'm saying is that banks should be compulsorily insured against the risks they take.
I think we are talking in circles here, because that's what the FDIC, FSCS and all those other "insurance" schemes are currently doing. The bank can always foreclose on a bad loan, it cannot magic-up a lost deposit. Since protecting the loan has the same net effect as protecting the deposit then it doesn't matter which you pay the insurance premium on - however, from the insurers perspective the deposits are a lower risk so the premiums for the banks will be lower.


If you cannot be wise, pretend to be someone who is wise and then just behave like they would - Neil Gaiman
Back to Top
Jim Garten View Drop Down
Special Collaborator
Special Collaborator
Avatar
Retired Admin & Razor Guru

Joined: February 02 2004
Location: South England
Online Status: Offline
Posts: 14527
Post Options Post Options   Quote Jim Garten Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 11:17
Originally posted by Padraic


Originally posted by The T

^But Pat, all evidence points towards you. YOU are responsible for the crisis.

Funny, still haven't received my bonus check in the mail.  Wink


You won't - I think the standard form of payment is a bag containing 30 pieces of silver.

Jon Lord 1941 - 2012
Back to Top
Gerinski View Drop Down
Prog Reviewer
Prog Reviewer
Avatar

Joined: February 10 2010
Location: Belgium
Online Status: Offline
Posts: 3165
Post Options Post Options   Quote Gerinski Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 10:46
Originally posted by Dean

 This is exactly what you are proposing - spreading the risks (ie loans) to other banks
No, there's a big difference, a loan needs to be paid back, an insurance does not (sure you need to pay the premium but not the amount of the eventual damage). What I'm saying is that banks should be compulsorily insured against the risks they take.
Back to Top
Dean View Drop Down
Special Collaborator
Special Collaborator
Avatar
Retired Admin and Amateur Layabout

Joined: May 13 2007
Location: Albion
Online Status: Offline
Posts: 32566
Post Options Post Options   Quote Dean Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 08:13
Originally posted by Gerinski

 In a 're-insurance scheme' on the other hand, the re-insurer will carefully judge the risk it is taking, and will not allow excessive risks being taken by the insured party. It provides a more self-regulating mechanism.
I'm no expert but isn't this how banks work anyway - unlike the simplistic view presented in Frank Capra's It's A Wonderful Life, no bank has deposited funds equal to the loans they give out - they loan out more money than they hold in deposits. This is exactly what you are proposing - spreading the risks (ie loans) to other banks - they borrow the money they lend, the repayments on the first loan funds their repayments on their subsequent loans, all they have to ensure is their interest rates to the customer are higher than the interest rates they get charged. This is why the LIBOR rates are so important to the banks, this is why toxic assets are so bad for them. 
 
Banks function because money moves, if money stops moving they simply cannot operate because they don't hold sufficient fixed deposits to pay their loans. Bank 'A' lends the money to customer 'B' and then borrows the same mount from bank 'C', 'B' uses the loan to buy from 'D', 'D' deposits that money with bank 'A', 'C', or even 'E'  - within the system of 'A', 'C' and 'E' there is now a sufficient deposit to cover the loan. All the need to do is ensure that 'A' funds that movement of money by charging 'A' interest on the loan so that 'B', 'C', 'D' and 'E' can all make money.


If you cannot be wise, pretend to be someone who is wise and then just behave like they would - Neil Gaiman
Back to Top
Gerinski View Drop Down
Prog Reviewer
Prog Reviewer
Avatar

Joined: February 10 2010
Location: Belgium
Online Status: Offline
Posts: 3165
Post Options Post Options   Quote Gerinski Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 07:38
Originally posted by Dean

Originally posted by Gerinski

Originally posted by Dean

Originally posted by Gerinski


A similar principle should be mandatory for banks so if they do something wrong their customers do not loose their savings and they do not need to be bailed out by yours and my money.
This already exists - in the USA it is the FDIC, in the UK it is the FSCS, Belgium and all the other EU countries have their own systems. These are funded by the banks.
It did not work well enough when it was needed, the EU Central Bank has had to inject 40 billion euro into the Spanish banking sector to keep it from bankrupcy.
Well, quite - that's a bail-out. The "insurance" schemes only kick-in to protect investors money after the bank goes bust. The bail-out was not to save customer's savings, it was to save the banks.
Yeah that's what I mean, these schemes provide some protection to the bank's customers (often not enough, you may read about the recent case of the 'preferentes' by the big Spanish bank Bankia where a lot of people have lost their savings, my father among them) but they do not really add responsibility to the banks behaviour.
These are funds collected by the government from the banks by the hard way (by law). In a 're-insurance scheme' on the other hand, the re-insurer will carefully judge the risk it is taking, and will not allow excessive risks being taken by the insured party. It provides a more self-regulating mechanism.
Back to Top
Dean View Drop Down
Special Collaborator
Special Collaborator
Avatar
Retired Admin and Amateur Layabout

Joined: May 13 2007
Location: Albion
Online Status: Offline
Posts: 32566
Post Options Post Options   Quote Dean Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 07:21
Originally posted by Gerinski

Originally posted by Dean

Originally posted by Gerinski


A similar principle should be mandatory for banks so if they do something wrong their customers do not loose their savings and they do not need to be bailed out by yours and my money.
This already exists - in the USA it is the FDIC, in the UK it is the FSCS, Belgium and all the other EU countries have their own systems. These are funded by the banks.
It did not work well enough when it was needed, the EU Central Bank has had to inject 40 billion euro into the Spanish banking sector to keep it from bankrupcy.
Well, quite - that's a bail-out. The "insurance" schemes only kick-in to protect investors money after the bank goes bust. The bail-out was not to save customer's savings, it was to save the banks.


If you cannot be wise, pretend to be someone who is wise and then just behave like they would - Neil Gaiman
Back to Top
Gerinski View Drop Down
Prog Reviewer
Prog Reviewer
Avatar

Joined: February 10 2010
Location: Belgium
Online Status: Offline
Posts: 3165
Post Options Post Options   Quote Gerinski Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 07:16
Originally posted by Dean

Originally posted by Gerinski


A similar principle should be mandatory for banks so if they do something wrong their customers do not loose their savings and they do not need to be bailed out by yours and my money.
This already exists - in the USA it is the FDIC, in the UK it is the FSCS, Belgium and all the other EU countries have their own systems. These are funded by the banks.
It did not work well enough when it was needed, the EU Central Bank has had to inject 40 billion euro into the Spanish banking sector to keep it from bankrupcy.
Back to Top
Dean View Drop Down
Special Collaborator
Special Collaborator
Avatar
Retired Admin and Amateur Layabout

Joined: May 13 2007
Location: Albion
Online Status: Offline
Posts: 32566
Post Options Post Options   Quote Dean Quote  Post ReplyReply Direct Link To This Post Posted: March 07 2013 at 03:24
Originally posted by Gerinski


A similar principle should be mandatory for banks so if they do something wrong their customers do not loose their savings and they do not need to be bailed out by yours and my money.
This already exists - in the USA it is the FDIC, in the UK it is the FSCS, Belgium and all the other EU countries have their own systems. These are funded by the banks.


If you cannot be wise, pretend to be someone who is wise and then just behave like they would - Neil Gaiman
Back to Top
Gerinski View Drop Down
Prog Reviewer
Prog Reviewer
Avatar

Joined: February 10 2010
Location: Belgium
Online Status: Offline
Posts: 3165
Post Options Post Options   Quote Gerinski Quote  Post ReplyReply Direct Link To This Post Posted: March 06 2013 at 20:22
Originally posted by Easy Livin

But imagine the situation if they had not been bailed out. If a bank such as RBS/NATWest or HBOS/Lloyds/TSB had been allowed to fail, everyone in the country would have suffered. Bear in mind what happens when a company goes bust. Those with deposits in the bank could potentially have lost their money, those borrowing money would have found their loans and mortgages being called up. Wages could not be paid as the payment system could not operate properly. And it would not have been just the bank going bust that would have suffered. The whole banking system nationally and potentially internationally would have been at threat. It's a real house of cards situation. 

Like them or loathe them (and who actually likes them!?) banks are a cornerstone of our society. What is needed is tighter regulation of speculative activities (including commodities trading) globally. 
The insurance business has a common practice called re-insurance, which basically means that the risk of the insurance company is itself insured. Let's say a certain insurance company A operates in region X, if there's an earthquake in region X it is most likely that the insurance company A will not be able to cover all the damages it has insured and would go bankrupt. By re-insurance the damages will be covered by other insurance companies B, C and D, and A can survive. Conversely A is re-insurer of B, C and D so they will pay a part of the costs if the same would happen to B, C or D.

A similar principle should be mandatory for banks so if they do something wrong their customers do not loose their savings and they do not need to be bailed out by yours and my money.
Back to Top
Padraic View Drop Down
Special Collaborator
Special Collaborator
Avatar
Honorary Collaborator

Joined: February 16 2006
Location: Pennsylvania
Online Status: Offline
Posts: 29246
Post Options Post Options   Quote Padraic Quote  Post ReplyReply Direct Link To This Post Posted: March 06 2013 at 13:06
Originally posted by The T

^But Pat, all evidence points towards you. YOU are responsible for the crisis.

Funny, still haven't received my bonus check in the mail.  Wink
Back to Top
The T View Drop Down
Special Collaborator
Special Collaborator
Avatar
Honorary Collaborator

Joined: October 16 2006
Location: FL, USA
Online Status: Offline
Posts: 16358
Post Options Post Options   Quote The T Quote  Post ReplyReply Direct Link To This Post Posted: March 06 2013 at 13:00
Hang that b*****d
Back to Top
Finnforest View Drop Down
Special Collaborator
Special Collaborator
Avatar
Honorary Collaborator

Joined: February 03 2007
Location: 1950s Suburbia
Online Status: Offline
Posts: 13092
Post Options Post Options   Quote Finnforest Quote  Post ReplyReply Direct Link To This Post Posted: March 06 2013 at 12:00

That's what I found too.  I did several months of research on this a while back and found it was not some secretive group of bankers.  It was indeed Pat.

Tongue


Back to Top
The T View Drop Down
Special Collaborator
Special Collaborator
Avatar
Honorary Collaborator

Joined: October 16 2006
Location: FL, USA
Online Status: Offline
Posts: 16358
Post Options Post Options   Quote The T Quote  Post ReplyReply Direct Link To This Post Posted: March 06 2013 at 11:44
^But Pat, all evidence points towards you. YOU are responsible for the crisis.
Back to Top
Padraic View Drop Down
Special Collaborator
Special Collaborator
Avatar
Honorary Collaborator

Joined: February 16 2006
Location: Pennsylvania
Online Status: Offline
Posts: 29246
Post Options Post Options   Quote Padraic Quote  Post ReplyReply Direct Link To This Post Posted: March 06 2013 at 11:36
I'm still trying to sort out how I'm personally to blame for a global financial crisis.
Back to Top
Dean View Drop Down
Special Collaborator
Special Collaborator
Avatar
Retired Admin and Amateur Layabout

Joined: May 13 2007
Location: Albion
Online Status: Offline
Posts: 32566
Post Options Post Options   Quote Dean Quote  Post ReplyReply Direct Link To This Post Posted: March 06 2013 at 10:12
Are people in this thread whining about the value of their investments? I'm not. I'm questioning the validity sanity of paying bonuses in the current economic climate based upon the questionable justifications that have been put forward for continuing to pay them. If I am partially to blame for the ills of the banking world then I am perfectly entitled to complain about their subsequent behaviour.


If you cannot be wise, pretend to be someone who is wise and then just behave like they would - Neil Gaiman
Back to Top
rogerthat View Drop Down
Forum Senior Member
Forum Senior Member

VIP Member

Joined: September 03 2006
Online Status: Offline
Posts: 5426
Post Options Post Options   Quote rogerthat Quote  Post ReplyReply Direct Link To This Post Posted: March 06 2013 at 09:44
Originally posted by ExittheLemming

At the risk of sounding glib, why do we merely mutter curses when our chosen horse pulls up lame but strike heroic moral poses when our pension funds go teats skywards in the marketplace?

All investments are speculative and subject to the performance of any underlying stock at any moment in time.

Most of the comments to date in this thread consist of those faintly risible protestations to the effect that 'my continued investment is guaranteed but only if the market conditions are favourable but if they are not, I blame the traders and professional financiers for this unfavorable climate'

Contrary to popular belief, your savings and investments are insured by banks (to which you pay squat)

Let's allow all who invest our money go to the wall and attempt to extract our losses from zero shall we?




I'd agree with all of what you said if it were true that everybody who was affected by the events of 2008 had tried to ride the tide of dirt cheap credit, hoping to get rich the easy way.  But nothing could be further from the truth.  I am not sure how much you appreciate the level of interdependence in the world economy today.   All the more reason that govts should be prudent and contain risk to a minimum instead of fuelling more risk taking by speculators with easy money. 

Coming to my own case, I predicted the stock market crash of 2008 even though I was not aware of the magnitude of the financial crisis yet because I saw penny stocks going for crazy valuations and knew the market was headed for a steep fall.   My colleagues didn't listen to me and they lost money when their investments dropped from a cliff.   So far so good (or bad, however you put it).   But the impact also extended to widespread fall of demand and economic growth.  It so happened that I had just finished my apprenticeship and was looking for a job in the industry then and much to my dismay, I found the going very hard.   At least I was fortunate not to have been one of those engineers who had been offered a job in campus by IT majors only for their employment to be kept on hold for months, if not more than a year or so.   How am I or those engineers supposed to be only owning responsibility for excessive speculation or investment risk?   How are we supposed to be taking up hypocritical positions?  I don't see, at all.  The crisis affected many who had absolutely nothing to do with it and continues to because there is next to no political will to come up with any meaningful solutions.


Edited by rogerthat - March 06 2013 at 09:48
Back to Top
ExittheLemming View Drop Down
Prog Reviewer
Prog Reviewer
Avatar

Joined: October 19 2007
Online Status: Offline
Posts: 7587
Post Options Post Options   Quote ExittheLemming Quote  Post ReplyReply Direct Link To This Post Posted: March 06 2013 at 08:39
At the risk of sounding glib, why do we merely mutter curses when our chosen horse pulls up lame but strike heroic moral poses when our pension funds go teats skywards in the marketplace?

All investments are speculative and subject to the performance of any underlying stock at any moment in time.

Most of the comments to date in this thread consist of those faintly risible protestations to the effect that 'my continued investment is guaranteed but only if the market conditions are favourable but if they are not, I blame the traders and professional financiers for this unfavorable climate'

Contrary to popular belief, your savings and investments are insured by banks (to which you pay squat)

Let's allow all who invest our money go to the wall and attempt to extract our losses from zero shall we?


Back to Top
 Post Reply Post Reply Page  123 5>

Forum Jump Forum Permissions View Drop Down

Bulletin Board Software by Web Wiz Forums® version 9.69
Copyright ©2001-2010 Web Wiz

This page was generated in 0.156 seconds.