Comments | despaer: Economics for 2010, or How The Banks Were Brought To Heel

despaer

Economics for 2010, or How The Banks Were Brought To Heel

Jan 14, 2010 22:29

I don't believe it. It looks like I am going to be forced to praise a politician, an activity which I am generally not in favour of at all. The individual in question? That would be Barack Obama, for having had the courage to step right out and say that having received vast amounts of taxpayer support, the banks are going to be expected to repay ( Read more... )

Comments 6

gedhrel January 15 2010, 09:18:40 UTC

Mostly, that it actally appears well-thought-out (although there's probably scope for a new financial fictional category of asset that skirts the letter of the law) as opposed to the emotive sop to the media that Brown put in place.

simoneck January 15 2010, 10:18:43 UTC

My point was going to be that it seems to be a well thought out and reasoned piece of legislation. It's not rocket science and you assume that governments share ideas at a high level, so why did our government just do a kneejerk one off hurt the bankers bonuses?

gedhrel January 15 2010, 10:21:36 UTC

A cynic would say: because many of them are going to be out of work in a few months' time and anything that actually hurt bankers long-term would also hurt long-term propects for directorial positions?

simoneck January 15 2010, 12:53:18 UTC

Ooooh, that is cynical. I hadn't even thought of that.
I was just thinking 50% tax on bankers bonus makes good tabloid headlines, where as a long term plan for banks to pay for the risk the taxpayer is underwriting for them doesn't. Also the 50% tax gets money right now and Brown/Darling don't really care about anything apart from themselves beyond June.

justoneway January 15 2010, 17:01:25 UTC

I think that both our governments and the US governments measures are really a bit blunt when it comes to their reform potential. They are not going to do what needs to be done. They are both primarily focussed on salvaging something from the mess rather than instituting some kind of risk management reform. That is fair enough and worth doing but let's not pretend it will change anything in the long run ( ... )

despaer January 15 2010, 20:08:27 UTC

I have to say I don't think our bonus tax measure is that clever. It smacks, as Simon said, of a government who really don't care about anything other than getting re-elected and want popular press on their side. The reason I thought the USA measures were so good is that they don't punish a bank for being big, they punish it for lending assets they don't hold. A traditional building society under this model won't get caned as the tax only applies to loans not backed by tangible assets (this catches the likes of RBS and Lehmans ( ... )