Make bankers personally liable, says MP

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It is four years or so since the start of the financial crisis and bankers remain as unpopular as ever. It is fair to say that there are few messages of support for the profession among our postbag or inbox. But whatever our niggles and gripes about high street banking, it is the investment banks which caused and continue to cause the greatest concern.

The biggest company in the world is said to be the computer company Apple. In 2008, amazingly, it was the Royal Bank of Scotland which had “assets” of £1.9 trillion, more than the entire GDP of the United Kingdom.

It did not get to that position by paying savers a little less interest than it charged borrowers. And while RBS is now a pale and public-owned shadow of its former self, there is no general feeling that bankers in general are either contrite or more risk-averse than before. They continue to pay themselves bonuses which bear little relation to financial performance and it remains the case that the greater the risk the bank takes, the greater bankers’ remuneration might be. No wonder Sir Mervyn King said:

“Of all the many ways of organising banking, the worst is the one we have today.”

The Financial Institutions (Reform) Bill

This Wednesday, February 29th, after Prime Minister’s Questions, Steve Baker MP’s 10-minute rule motion will ask for leave to introduce a bill which aims to improve the governance of banks. Its fundamental aim is to make bankers liable for their own actions, believing that by so doing, rampant moral hazards and excessive risk-taking would be curbed.

The system at present virtually incentivises bankers to take appalling risks. If they make profits, then the bankers pay themselves even bigger bonuses. If not, then it is no skin off their nose, for it is not their money that they have risked; instead shareholders or taxpayers will have to pay to pull their chestnuts out of the fire.

Steve Baker’s bill would see board members of financial institutions liable for any losses. With unlimited personal liability their own personal wealth will be at risk if banks became insolvent. In fact they will have to post personal bonds in advance which would be forfeit if the institution made a loss.

Bonus payments would be deferred for five years to prevent the situation where profits which reward senior bankers handsomely turn out to be illusory. Not only board members would be paid from this deferred bonus pool, but also the bank’s traders. In this way, Baker believes, bankers and traders will be discouraged from excessive risk-taking.

We wish Steve Baker well with his proposed bill. He deserves our support.

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13 Comments

1. frances

   February 28, 2012 at 4:34 pm

   The day every CEO and Director of Banks or indeed any company become personally liable the better

   However for MK to say things are badly organised in Banking makes me laugh

   He and the entire MPC sit on their rear ends on mega salaries which have increased wildly while savers incomes have nose dived

   The MPC must take responsibilty for our losses and do something about it

   Instead they play hand in hand with what is increasingly becoming another corrupt Government intent on benefitting their rich cronies while stripping the prudent , the sick , the disabled of every last penny

   A plague on all their houses !!!!!!!!!

   Recommend (10)
2. Edward

   February 29, 2012 at 12:49 pm

   New Zealand Bank Directors are required to validate their institution’s financial statements and have the responsibility of unlimited liability if their institution’s financial statements are found to be false or misleading. The same could be applied to UK banks and the unlimited liability extended to their reckless risk taking which cause a future collapse.

   Recommend (6)
3. WH

   February 29, 2012 at 7:00 pm

   There used to be a claw back called ‘unjust enrichment’.
   Why is it not used or reinstated if defunct?

   Only now has HMRC introduced a ‘retro’ element into tax
   avoidance/evasion with Barclays (with the usual furore)
   so why not for those bankers who have fled with our money?

   Current bankers should be subject to the ideas proposed, ongoing, but the ‘robbers’ who escaped with the loot must have it stashed somewhere as returnable assets.
   The bolt holes have been closed – a little.
   Close them more and backdate the debt we are currently all paying against assets unjustly achieved.

   Recommend (5)
4. John.

   March 1, 2012 at 11:41 am

   Not a hope in Hell.

   The establishment are sitting pretty, they have their hands on all the levers and dials, and are enjoying an extremely comfortable existence at our expense. It would take a bloody revolution to change anything, a single question by an MP who can just as easily find himself marginalised and shut out if he becomes too much of a nuisance for the powers that be, isn’t going to change a thing.

   UK governments are corrupt and the establishment are only interested in enriching themselves at citizens expense, it leaves savers and taxpayers no practical option other than to live with it and take the beating being dished out. There is no cohesion or collective process amongst the countries savers and the government know it, which is why they abuse savers. The one guerilla action open to savers would be to organise a huge withdrawal of cash from all the banking institutions, cause a run and basically shut them down but that’s just wishful thinking.

   The likelihood of that happening and being successful are about the same as Mr Baker MP being taken seriously by the crooks in charge.

   Recommend (7)
5. john in cheshire

   March 1, 2012 at 9:49 pm

   The crux of this matter, in my mind, is the management of expectations. At the moment, bank employees (because that’s what all of them are) have grown used to expecting large amounts of money for doing what they do, regardless of whether they are fruitful or not. However, until they are conditioned to expect significantly less for doing their job, they will continue in their delusional belief that they are actually ‘worth’ what they expect.
   The sooner they are treated like serfs, and thrown the occasional bone, to keep them salivating, and alert, the sooner the banking system can begin to be regarded as part of the normal world.

   Recommend (3)
6. John.

   March 2, 2012 at 3:10 pm

   Those are just the symptoms.

   The illness that’s killing us, that’s easy to identify, is fractional reserve banking. Quite simply theft by transfer, of an entire nations wealth. A private central banking cartel aided by a complicit government and establishment, there is no other way to describe it, a bunch of wealthy crooks struck a deal with the nations policemen to steal their wealth and share the swag.

   The retail banks have simply been exploited and used to consolidate debt slavery, the bailouts ensure future generations are snared.

   The solution, well that’s far, far more difficult. An educated and politically energetic public would be a good start but that would require moving the debate into the public domain and that is a monumental challenge, how long that would take in a dumbed down society like ours with all the mainstream establishment media vested interests, money, manipulations and distractions available is anyone’s guess.

   The key to any solution is electing educated representatives who aren’t corrupt, who are educated enough to properly understand the problem and honest enough to have a desire to kill off the central banking swindle for good rather than simply jump on the gravy train and maintain the status quo. In short a government by the people, for the people. That would be a first.

   The chances of success, just about nil.

   “Give me control of a nations money supply, and I care not who makes it’s laws.” Mater Amschel Rothschild, founder of the Rothschild banking dynasty.

   See if you can find out who owns the Bank of England, or the US Federal Reserve or any number of these central banking criminal enterprises to whom the governments have sold our soul.

   If you’re going to say the government, then just ask yourself why the government borrows money from itself and then charges itself interest on the loan.

   Recommend (8)
7. john dobbin

   March 2, 2012 at 4:53 pm

   Surely, the time has come for savers to have a LEGAL RIGHT
   to the return of full value on any deposits they have made
   with financial institutions!

   Recommend (5)
8. frances

   March 2, 2012 at 5:13 pm

   I have very often been told i should get elected as an MP

   My response …….they wont have me because i call a spade a spade and tell the truth ……..forget the waffle and the double talk

   C Bean and company need to re learn O level Maths or get new Calculators because all they spout is a bunch of utter rubbish

   Osbourne does exactly the same just got a letter from that twit who thinks CPI increase on state pension is WONDERFUL

   It wont begin to cover the increases in food prices over just the last month let alone Electric Gas and Council tax

   But hey >>>>Charlie Bean says Pensioners have nothing to moan about and should accept 50% drop in income for the greater good

   HUMBUG

   Recommend (6)
9. Anita Thompson

   March 4, 2012 at 7:51 pm

   The billion pounds of profit which the banks make is money which belongs to the people of this country who saved it and are entitled to a share of it , in interest payments.

   Recommend (6)
10. John.

    March 5, 2012 at 4:00 pm

    Until people can be properly educated and made to understand that the banking industry is a crime syndicate with central banks and money printing presses at the heart of the operation, and that national governments act as enablers and accomplices, complicit in the crime, nothing is going to change.

    All you can realistically do is understand the simple concept, and spread the word. Until enough people are made to understand through education, voice their concern and transfer words into action by protest and electing representatives who are not criminals, the theft will simply continue.

    Everything else is just smoke and mirrors.

    Recommend (6)
11. H D

    March 9, 2012 at 3:30 pm

    Absolutely true. The Banking System is a Crime Syndicate , ably assisted by Corrupt Government .

    Recommend (7)
12. Keith

    June 2, 2012 at 11:33 am

    I agree with every body and i think its time we took all our money out of these banks

    Recommend (3)
13. des you

    June 4, 2012 at 3:06 pm

    How long before this crime syndicate takes over the Inland Revenue? Or has that happened already?

    Recommend (1)