Well folks, it’s been a long time coming, but at last we have a sensible suggestion about what to do with dodgy bankers. Here’s what, and why it’s important.
The Parliamentary Commission on Banking Standards, set up last year by the government after it emerged that British banks had been lying habitually, has come up with a 571-page report (here if you want to read it) about how to bump banking off its number two spot in the list of Britain’s most distrusted professions. (Ironically, it’s politicians—top of the list—which are going to have to do it)
High up on the list of recommendations are two important things (among many others):
1) If a senior bank employee shows reckless misconduct, they should be imprisoned.
2) Bankers’ ludicrously high bonuses should be deferred for 10 years and linked to the performance of their investments.
Why is this important?
Because banking is a messed up world. In Britain, banks hold around four times as much money as the entire worth of the country’s economy. Their successes and failures have direct repercussions for all of us (banking created this economic crisis). But when investment bankers make trades, they are effectively gambling with other people’s money and receiving a cut even if the investment goes bad. That, in a very simplified nutshell, is how bankers are still phenomenally richer than the rest of us despite screwing up the global economy. Many bankers have also ripped us off criminally. In a previous post on banking, I put in pretty table form just how badly behaved Britain’s banks have been.
So holding bankers responsible by the threatening jail-time (the stick) and suspending their bonuses (carrot) is a great way to put the fear of god into them and put an end to the kind of reckless banking that caused the crisis in 2007/8.
There’s just one problem.
The government has to actually accept the Commission’s recommendations. The UK Treasury said it was “an impressive piece of work,” but may take a few weeks to decide what to do about it. Given historical reluctance to penalise banks for fear that they might just move somewhere else, there’s no guarantee that an impressive piece of work won’t just become filing cabinet ornamentation.
Bottom line: we prosecute doctors who screw up our lives. Why not bankers too?