Bank bosses – face facts call

Bank bosses during the financial crisis “got away” with their pay and bonuses intact and never faced any financial or legal penalty, the Governor of the Bank of England has said.

And he told bank bosses who did not like new criminal penalties of up to seven years in jail for misconduct that they should quit.

In a hard-hitting speech to the International Monetary Fund, earlier this week, Mark Carney said, “One of the legacies of the crisis in the US and by and large in the UK was that the individuals who ran the institutions got away.

“They got away with their compensation packages, they got away without sanction.

“Maybe they were not at the best tables in society after that, but they’re still at the best golf courses. That has to change.”

Dominic Hook, Unite national officer for finance said the speech was another shot across the bows of international bankers still fighting attempts to curb their excessive pay, bonuses and a high risk culture in pursuit of profit.

“Carney is aiming at the top executives in the corporate headquarters and in the world’s financial centres,” he said.

“The problems we face are nothing to do with the staff working in the local branch of your bank,” added Mr Hook, “but are the responsibility of those at the very top.

Most bank workers low paid

“It’s the top executive pay which hits the headlines. But the reality is that banks are low-paying employers with starting pay at the rate of the living wage.”

But Mark Carney also warned that attempts to limit the pay and bonus culture would not, on its own, prevent a re-run of the banking crisis. And he said those who were paid to provide a bank’s own internal oversight had to do the jobs they were paid for or leave.

Responsibility

“If you’re chair of an audit committee, you have responsibility for the activities of an institution. And if you don’t think you can discharge that responsibility, you shouldn’t be on that board.”

Carney warned in two separate speeches in New York against bank bosses who worked in a “bubble” and had become “detached”.

“Operating in a heads-I-win-tails-you lose bubble, the world’s largest banks threatened the stability of the global financial system”, he told the meeting.

“Their bail-out using public funds undermines market discipline and goes to the heart of fairness in our societies. This cannot be allowed to continue.”

Loan rate rigged

Carney also addressed another bank scandal which rigged the interest rate banks charged each other for loans.

The financial crisis was deepened by the reluctance of banks to trust each other with loans between banks, using Libor, the inter-bank leading rate, set in London.

This rate, and how it was rigged, is a scandal still stalking the Square Mile of the City of London where millions were made by the scam.

Carney said, “These are individuals who were totally detached from what the ultimate purpose of what that benchmark really is.” It had become “a game between people within a square mile.”

Business as usual?

It’s clear that the hundreds of thousands of bank workers are paying the price for their bosses’ actions – as are the rest of us.

“Hundreds of billions of pounds have been pumped into the banking system in bail outs and by printing more money to keep the world’s financial system going,” said Dominic Hook.

“The result of the austerity caused by the financial crash is our pay being hammered and our public services being torn apart.

“A huge number of those in the top tax bracket work in the banking and financial sector. As Carney says, it is business as usual for them with the added bonus of even bigger tax cuts being offered by the Tories, and that cannot be justified,” he added.