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Reining in the banks must be more than bonus capping

The last ditch defence of unlimited sky-high bankers’ bonuses by Osborne in Brussels exposes as nothing else can the sordid nakedness of Tory values – hands off £10 million bonuses for bankers who nearly crashed the global economy and will hav e cost this country an increase in national debt to £1,400,000,000,000 by 2016 whilst at the same time targeting a cut of £28,000,000,000 in the UK welfare budget.

Anyone would think that the EU proposal for a banker’s bonus to be limited to an amount equal to salary, or twice salary if agreed by a majority of shareholders, erred on the extremely generous side. But the greed of the corporate elite, and their contempt for everyone else and for any system of proportionality or fairness, knows no bounds. The EU rules, though, do need to be tightened.

The rules should be made to apply to EU bank subsidiaries operating outside the EU as well as other foreign banks based within the EU. Because a clear aim of the proposals is to control outlandish excess in remuneration, there should be an extension of the existing proposals to restrain compensatory increases in basic salaries, with any rise above twice that awarded on average to other employees in the bank requiring the specific consent of a shareholder vote.

And any attempts to circumvent the new rules, for example by deferral of bonuses to some later date (in the hope that by then the rules may have changed), should be blocked by disqualifying future postponements or any other form of evasion. Indeed we still need a High Pay Commission to lay down the guidelines to limit egregious greed at the top.

The banks of course, and the government, have only themselves to blame. The greed was on such a monumental scale – the top earner at HSBC last year had a salary of £650,000, but a bonus of £6.35 million despite the bank being found guilty of massive money laundering for drug cartels and pariah states – that a crackdown was inevitable.

Yet the banks were incapable of constraining their own greed and Osborne was incapable of being party to any restraint because the Tory party gets half its annual funding from the City of London and the banks. Don’t expect the banks however to take this with good grace – they will niggle behind the scenes on every detail of the legislation to try to claw back ev ery fraction of their ill-gotten self-interest that they can. The banks remain wholly out of control and much wider legislation is still needed to make them conform to the national interest, a concept they hardly recognise.

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