Billy Bragg to Withhold Taxes in RBS Bonus Protest

January 18th, 2010 by The Parallax Brief

Billy Bragg, the singer-songwriter, will refuse to pay his taxes on January 31 unless the government restricts banker bonuses at RBS to GBP25,000 per person. Mr Bragg has launched a Facebook Group “NoBonus4RBS” where he encourages others to do likewise.

Mr Bragg writes on the NoBonus4RBS info page:

“I understand that the Treasury had little choice but to use taxpayers’ money to safeguard savings and stabilise and restore confidence in the financial system.”

“What I don’t understand is why, now that we taxpayers are the majority shareholders of these banks, we seem totally powerless to curb their excessive bonus culture? The estimated £1.5bn that RBS will pay to its investment bankers next month in the form of bonuses will ultimately be drawn from the taxes that you and I are due to pay on 31st January. Meanwhile, we are being softened up by the main political parties for painful cuts in public spending after the election…

“There is a brief window of opportunity in the next two weeks in which to exert pressure on the government over the issue of the RBS bonuses. If enough of us are prepared to withhold our tax payments, we may be able to convince the Treasury to act decisively to curb the multi-million pound bonuses at RBS. If you are a British tax payer and feel strongly about this issue, I invite you to join this campaign by simply writing a letter to the Chancellor informing him of your decision to withhold your tax payment until he acts on bonuses… If nothing else, we may discover if people in this country care more about banker’s bonuses than they do about who will be the Xmas No1.”

In response, Stephen Hester, the chief executive of RBS, has said his firm would pay its investment bankers “the minimum we can get away with” in the next round of bonuses, according to the Guardian.

Obviously there are so many organizations willing to lavish millions on incompetent bankers that RBS feels the minimum it can get away with is billions.

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Categories [ Economics and Finance, UK Politics ]

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Obama to Back Brown on Battering Bankers

January 13th, 2010 by The Parallax Brief

Despite giving Prime Minister Gordon Brown’s idea to introduce a global Tobin Tax, a levy on every currency trade transaction, the shortest and most dismissive of shrift at the last g20 conference, the Obama administration appears ready to join Britain’s efforts to crack down on the banking sector.

According to former IMF chief economist Simon Johnson, the US president has taken the banking sector’s decision to award itself ludicrously huge bonuses this month — instead of using the money to pay back tax payer loans, repair balance sheets, increase small business lending, or pay dividends — as an opportunity to fight back:

The Obama administration tipped its hand today – they are planning a new tax of some form on the banking sector…unfortunately too late to make a difference for the current round of bonuses.

We know there is a G20 process underway looking at ways to measure “excess bank profits” and, with American leadership, this could lead towards a more reasonable tax system for finance. In the meantime, my point is that taxing bonuses – under today’s circumstances – is not as bad as many people argue, particularly as it lets you target the biggest banks.

The prime minister’s and chancellor’s decision to levy a super tax on bonuses looks more and more right every day. One hopes that the rumoured scale of the next round of organised skimming from the banking sector will be the straw the broke the camel’s back and finally lead to serious reform, not just of the wage system, but of the whole sector.

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Categories [ Economics and Finance, UK Politics ]

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Bankers: “Greedy Souls” With “Contempt of Democratic Authority” Who “Steal”

January 13th, 2010 by The Parallax Brief

It’s very difficult for the Parallax Brief to disagree with a word of what Simon Jenkins says in his column for the Guardian today:

Over the next two weeks the executives of the leading British and American banks will announce that some £50bn is to be taken from accumulated profit and handed over, not to shareholders or taxpayers, but to themselves. It will be the most outrageous contempt of democratic authority in modern times.

The sums will be breathtaking, starting with Friday’s predicted payout of £18bn at the American bank, JP Morgan Chase. This is almost exactly what it cost the US taxpayer to rescue the bank a year ago. A similar sum is predicted at Goldman Sachs. This is happening at the heart of the western economy that has just endured its worst crash for 30 years, almost entirely through the doings of these banks and executives.

Since I delight in anti-state gestures, I have some admiration for devil-may-care effrontery, but this money is way beyond any concept of reward-for-work. A few thousand greedy souls benefited hugely over the past decade by gambling with shareholders’ and customers’ money. When, as tends to happen, the winning streak ended, they had to be rescued by the taxpayer.

This is all going to hit the fan starting from Friday this week, and it really is impossible to defend the remuneration practices of the banking industry. Readers looking for a comprehensive and brilliantly argued preview of the objections that will be raised should read Mr. Jenkins’s full column, linked above.

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Categories [ Economics and Finance, UK Politics ]

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Guido Fawkes Defends Bankers’ Free Lunch

October 27th, 2009 by The Parallax Brief

Guido Fawkes is brilliant as a spiky muckraker and purveyor of parliamentary plots. Less endearing are his efforts to defend the obscene and wholly undeserved bonuses being awarded to bankers. Guido doesn’t seem to get it at all:

“George Osborne is off to Canary Wharf this morning to make anti-Banker noises at the Reuters HQ.   His speech will call for the successful to be penalised as an act of collective punishment for the mistakes of senior management.  No word as to what punishment the Bank of England Governor and Chairman of the FSA will face, Guido suspects none.

[…]

The successful traders who make profits for their firms help the banks re-build their balance sheets, why drive them overseas?   Punishing successful City folk after the event is a displacement activity when they should be punishing those responsible for the crisis – central bankers, regulators and those few bankers who actually had direct responsibility for the crisis.”

Even ignoring the point that at many banks the government is a major shareholder and therefore has every right to have its say on pay, Guido doesn’t seem to realize that these so-called successful traders aren’t successful at all. They’re simply piggybacking of taxpayer largesse and backing.

Pushing to one side the gargantuan equity injections that saved the banks — and the banking system — from collapse, the government’s tacit and explicit support is the only thing allowing the banks to trade at all, let alone make a profit. Let’s repeat that to make sure it’s sunk in: Government money and guarantees and, perhaps more important, the understanding that the government will support the major banks no matter what, are all that keep the banks in profit. Banks would find it far more expensive to raise capital — if they could at all — without government guarantees, while trust in their solvency would evaporate, battering their share prices and likely precipitating the kind of vicious circle that did for Bear Stearns and Lehman Brothers.

When the banks can operate without a taxpayer funded, trillion dollar zimmerframe, Guido can make his free market pitch — although even then, there are plenty of social, economic, moral, and business reasons for the banks to change their remuneration structures. Meantime, in the absence of a free market, there is no conversation to be had.

The bonuses must be stopped.

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