Defaulting banks - where will it stop?

[Jan Klimkowski]

These banker scumbags have no shame and no morals.

Bonus time as banks pay out £40bn

Exclusive: Chancellor Alistair Darling's windfall tax has not led to cut in rewards for bankers

The world's biggest investment banks are expected to pay out more than $65bn (£40bn) in salaries and bonuses in the next two weeks, reinforcing the view that it is business as usual on Wall Street and in the City barely a year since the taxpayer bailout of the banking system.

Despite efforts by Alistair Darling to deter banks from handing out multi-million pound bonuses through the introduction of a 50% windfall tax, City sources believe that the biggest employers will absorb the cost of the tax rather than cut the size of the bonus pools they amass throughout the year.

This will mean that while proceeds from the tax could top £2bn – more than four times the £550m estimated by the chancellor in the pre-budget report – the government will have failed to alter the traditional bonus culture in the City.

Lord Oakeshott, the Liberal Democrat Treasury spokesman, described the size of the potential bonuses as "global greed by banks when global governance has failed". He added: "Britain's bonus tax only toys with the symptoms of the sickness, not its cause. These last few investment banks left standing have state-backed licences to print money so they must pay supertax on their superprofits, not hold taxpayers to ransom."

The leading Wall Street firms employ thousands of people in the City – Citibank alone employs 10,000 – and bankers are hoping their payments will not be reduced because of the 50% tax on bonuses over £25,000 implemented in last month's pre-budget report.

The major US players are scheduled to report their full-year trading performance in the next fortnight, starting with JP Morgan on Friday and culminating with the titans of Wall Street the following week when Goldman Sachs and Morgan Stanley will announce their results. Their bonus policies will be watched closely by their European rivals, particularly Royal Bank of Scotland – of which the taxpayer owns 84% – which has a large investment banking business and must have its bonus payments approved by the government.

Figures already published by the five highest-profile US banks reporting in the next fortnight show they have already set aside $50bn to pay their staff in the first nine months of the year. In the final three months of the year, analysts at Sanford Bernstein reckon a further $10bn will have been put aside by Goldman Sachs, Morgan Stanley and JP Morgan even though 2009 was the worst year for the US economy in 30 years.

While the Sanford Bernstein estimate takes the Goldman compensation cost to $19.8bn, analysts reckon it could swell further to $22bn and the other two banks might amass an estimated $5bn. Brad Hintz, an industrialist turned banker and now an analyst, conceded that workers on Wall Street are overpaid. "I've worked in the industrial world and I know there was equal talent in industrial America but when I went to Wall Street my compensation went up by a factor of three."

The potential for a $22bn compensation bill at Goldman was cited by an Illinois pension fund in a lawsuit filed on Thursday which argued that the payments harmed shareholders. Goldman maintained the lawsuit was "completely without merit".

The figures that the banks report as "compensation" include a number of costs including salary and benefits which are paid throughout the year, as well as the one-off cost of bonuses.

Staff at the banks will be informed of their bonus payouts in the coming fortnight although they may not receive the payments for a few more months.

http://www.guardian.co.uk/business/2010/...city-banks