Bonus payouts in banking and finance totalled £14 billion in 2011. If such amounts were redirected to social spending, they would be way more than enough to reverse all the Government’s social cuts. Benefit cuts to 2015: £18 billion. Cuts in education and local services: £16 billion.
This year the bonus total will be a bit smaller. It could hardly not be, even on the most shameless capitalist criteria, since banks did poorly in 2011.
Prime minister David Cameron is bidding to “call a truce” and “call off banker-bashing”. The startling thing, though, is that the top bankers are still shameless taking home truckloads of loot after they were bailed out by the taxpayer in 2008 and at the same time as revelations of their rapacity multiply.
Banks are apologising about ripping off people with “payment protection insurance”. They are a bit apologetic about ripping off pensioners who get “defined contribution” pots on retirement, have to swap those pots for an annuity (a yearly payment until death), and are often swindled into signing poor annuity deals.
As the Financial Times reported on 10 February, often “a bank can be too big to fail”, so its bosses reckon they can gamble at will with an implicit guarantee that the Government will save them if things go bad.
And... “a penalty could be too catastrophic to impose”. The scale of bank transactions is so large that the top bankers know that even in the worst case of misdealings being exposed, a few people may lose their jobs, but penalties will be much smaller than the previous gains.
Bank regulators internationally are now investigating charges that banks manipulated the interest rate for banks to borrow from each other overnight, as they routinely do, That rate, the London Interbank Offered Rate (Libor), is set daily as an average of banks’ “bids”, and could be manipulated by banks colluding to make artificially high or low “bids”. More than a dozen employees have been fired, suspended, or placed on leave at banks including Citigroup, UBS, Royal Bank of Scotland, JPMorgan Chase and Deutsche Bank.
The FT comments: “There are about $350 trillion worth of Libor-linked products globally. Should a bank or two be found guilty of manipulating the rate by, say, 0.03 percentage points over 10 years, the theoretical compensation could be $1 trillion... Such a penalty could, of course, never be practically implemented”.
These huge concentrations of wealth should be under social and democratic control, instead of being manipulated for private profit.