Bankers’ Bonuses

« Big bonuses ? It would be wrong to stop paying them » is the title of an article in The Independent (Tuesday 4, 2009).

“Bank bosses were adamant yesterday that they would continue to pay seven-figure bonuses to workers, describing them as ‘essential if we want people to work in our industry’ ” write journalists James Moore and Nigel Morris.

But precisely that’s the question: which people should they hire? Should banks continue their operations in sophisticated and high risk products that require these high-calibre graduates? In the past, when they were content with selling traditional credit products, they apparently did not need very sophisticated (and expensive) personnel, any more than insurance companies did.

In a narrow banking perspective – much more favorable to depositors’ and taxpayers’ interests – banks should stop paying these big bonuses, and stop recruiting these specialists.

Maybe such a reorientation is not just wishful thinking after all. As reported by The Independent, banks “also claimed that high-calibre graduates were starting to think twice about working in the financial services industry because of the growing backlash against bankers.” Let’s hope that they correctly anticipate future trends.