Banking it

Baroness Deech

The solution to the dilemma of the banker’s bonus is obvious.  Mr. Hester should take it, and give it to charity.  That way the contract he seems to have had with RBS is fulfilled; honour is preserved; and the money goes back to the people for good purposes.

The chair of RBS and of the remuneration committee is Sir Philip Hampton. A Sir Philip Hampton was the author of the Hampton Report on Good Regulation in 2005, which recommended principles of best practice, such as accountability and proportionality.  Surely not the same man?

20 comments for “Banking it

  1. MilesJSD
    27/01/2012 at 7:55 pm

    The two underlying, and overarching, Issues to be dealt with

    by Lateral Thinking,
    by Formal-Argumentation & Moral-Reasoning, and by Method III Cooperative Problem Solving,

    remain

    (1) Why any one human-being should be

    (a) deluded into thinking that some one-human-being(s) Need more than one-human-living

    (b) be actually demanding, taking, and being given, multiple human-livings

    from the Common Purse.

    (2) Why percentage-arithmetic thinking has not been established for the basic formulation of Expenditure-Necessities and Income minimums/optimums ?
    for those in “Upper” classes equally with those in “Lower” and “Under” classes ?
    ————
    Incidentally a propos this particuluar RBS-cum-BritishEstablishmentarian one-off rip-off,
    Lord Mandelson (Labour) “justified” both the
    multi-multiple annual pay-packet (for ‘doing the banking job’) without question, actually without mention;
    and went expressly further off-mind-functioning, about the absolute-rightfulness of further big-bonuses, notably the current one to a Mr.Hester (as RoyalBankofScotland Chief-Executive-Officer) of a super-amount
    “just short-of-PM Cameron’s wink-wink nudge-nudge £1,000,000 upper-limit” –
    at a ‘mere £900,000’.

    That the RBS Board (including British Taxpayers Seats upon) has now already “awarded” to their “best-performer” because (as Mandelson lopsidedly concludes) “all of the Others on-high were also excellent performers, but

    (“) none quite as good as Hester” (“)

    is faulty-thinking such as even our well-loved Ten-Year-Olds on the Tv Gameshow would have spotted and not committed.

    So go on, ‘Lord’ Mandelson, tell us how ‘not-quite-as-big’ are the various bonuses of all the very many but trailing ‘other good-performers’ ?
    ============
    NB Any person living healthily, citizenlike, and environmentally-supportively upon that (British-legislated-sufficient) one-human-being-lifesupportive-income (all-up that would be around £250 per week)
    should probably also take into account that any involved-party also drawing more than one human-living from the Common Purse is compromised thereby,
    ‘guilty’ even though proportionately less-so perhaps, of over-drawing-from, and over-expending, our Human-Race’s (and this Living Earth’s) Finite lifesupportive-Resources and Common Purse Limits.
    ===========
    So what matter, to such lesser multiple-human-livings drawers and the Noble Baroness, whether Sir Philip Hampton of 2005 “Good Regulation” notability is the same Sir Philip Hampton now “notably
    leading” the pecuniarily-pilfering-pack, that is helping-each-other, to millions of pounds each, on top of which they suddnly and fait-accompli are dolloping “outstandingly good performance bonuses”
    of further hundreds-of-thousands of pounds, each ?

    Surely, if one does the job, one actually “needs” no more than one-human-living

    but since so does every individual employed, unemployed, sick. disadvantaged, dying

    possibly the worker could, where both Earth-Lifesupports and Common Purse capitally-beneficial, and individually-further-needed, be given an additional small lifeplace-bonus and publicity.

    If the worker has failed to do the job, then s/he still draws one-human-living but from the Lifeplace (Welfare) not the Workplace (Salary/Wage);
    and of course is de-moted or outrightly sacked.
    ————
    It is neither good-thinking nor good-healthy-governance, to be guzzling-away at our precikous and finite Lifesupports,
    not even when they happen to be cleverly and carefully hidden-from-the-public-mind, eye, and conservation, behind a printed-paper-money and easily inflatable Exchequer and “common-purse”.
    ===========
    Lords Spiritual, too –
    would it were only true, that
    “God helps those who help themselves;
    but God help those who get caught helping themselves”.

  2. Senex
    27/01/2012 at 9:03 pm

    Here is how to enjoy your own banker’s bonus.

    Discretionary income is the money remaining after all your bills have been paid off. This is the money the government wants you to spend to boost growth in the economy. People however are wary of spending such money in uncertain times so they save some of it whilst some of the remainder goes toward paying off large long term debts.

    A household in control of its finances will have a spreadsheet that shows the monthly outgoings for say gas, electric, rates etc paid into and from a bank account set up specifically to pay bills, a budget account. The prudent householder might be paying bills such as rates and energy as monthly direct debits to ease cash flow and avoid Mr Hester’s bank charging you for the use of an authorised overdraft.

    Cash flow is always a problem especially for things like car insurance and road tax. You could borrow the money from Mr Hester’s bank and pay the cost in one go then spread that cost over the year in the budget account. Mr Hester would love you to do this as he will charge you a hefty amount of interest but you don’t want to pay any interest.

    On average people save about 500 pounds and you won’t get much in the way of savings interest from Mr Hester’s bank as he creams off what should be payed to you so that he can repay his long term debt to government. So how can you put your 500 pounds to good use in Mr Hester’s bank and make a profit?

    Set up an online savings account with your 500 pounds and call it MyBank. When a large bill is due borrow from MyBank and transfer the money to your budget account to pay off your creditor in one go. MyBank, that’s you, will charge an admin fee for its loan facility, something comparable with what Mr Hester might charge. Divide the premium plus fee by 12 and repay MyBank monthly from your budget account using a standing order.

    Upside: You are actively recapitalising the banks. MyBank is profitable and the Treasury cannot touch a penny of that profit (that’s the bit I really like). You learn to make your money work for you. You avoid Mr Hester’s overdraft charges. You acquire financial discipline. You appreciate just how easy it is for Mr Hester’s to earn his bonus so why make it easy for him.

    Downside: Poor old Mr Hester, he is never going to pay off his banks debt.

    • maude elwes
      28/01/2012 at 11:58 am

      Better than this, if you are on a very low budget, take the loan from your bank via your credit card and pay it monthly ‘in full’ on the last day possible without incurring interest, from your ‘one and only’ free bank account.

      Next, pay cash whenever you can and don’t take no for an answer. Of course making sure you have a receipt and keep it.

      Example: Post office telephone broadband and land line charges are inexpensive and can be paid by cash into the post office when you receive the bill. Do not leave the bill until next week. Take the money from your free bank account and pay it off.

      Direct debit only where no charge is made. If you don’t have this in your bank account facility, change it to free banking. It saves a lot over a year.

      All direct debits can then be paid directly without cost to you.

      Grocery shop when you are not hungry and pay cash. Make a withdrawal from your free account before going to the shop.

      And if you are saving for something you need or want, keep it in your free account but deduct from your tally the amount you are allocating to saving, so that it doesn’t show on your personal audit you have it there. Simply write it in the back of your diary, or whatever, to keep a tab on how much you saved. The tally will mount quicker than you think and becomes harder to want to spend it.

      But the biggest way to take care of a low income is, pay cash, cash and cash again.

      Government is trying to force us not to have cash at all, which is their way of removing our freedom in every way.

      Do not give your information to any organization no matter how they demand it. They simply sell it on and you will be inundated with people wanting to take from you what you have had the good sense to put aside. Utilities already have what they need in information. And don’t give out your date of birth as a security method to anyone, you don’t know who they are.

      Pay cash at your garage for petrol and service, pay cash for all bills that make it possible to do so. It has an effect on the psyche, for you keep in mind what you are paying and how much it is costing you in real terms. This has the added effect of forcing you to ask yourself if it is value for money. And it help to stop banks playing casino games with your money.

      And as far as the banker getting his annual bonus is concerned and giving it to charity. That is bull. His pretense at giving it to a good cause leaves him or her in the position of receiving that money and that his expectation of the sum as ‘wages’ will continue unabated. His entitlement factor will not diminish. And like a spider he will simply wait until he can grab it back ‘from us’ twofold.

      Giving to charity, whilst removing the rightful funds of the tax payer, means he is taking the power of that gift from us to himself. And he is deciding who is worthy of our money, not us. That is the old US trick of, we are philanthropic, we are therefore deserving and you, the people, owe us for our overwhelming goodness. It is trickery. A con.

      And the last little mantra for the day should be, why is it government find it so easy to remove the welfare from the disabled and sick, but so hard to remove millions from a banker who has misled them into believing he has done something to deserve the tax payers money? Here is a question you must keep turning in your mind.

      What are the politician making out of the banker that keeps same banker in the money? Your money? Too much representation in parliament for them is one reason.

      Another little tickler is this, why is it the press and the media are not telling us, on a daily basis and in big headlines, that Germany’s growth was 8% last year and their forecast is 3% for this year. Yet, we cling relentlessly to the US and their policies, whilst pretending Europe isn’t the answer to the problem? Now why is this I wonder?

      What is it the Germans have done to get such a remarkable outcome whilst we sink further into the mire along with the yanks? Ruminate on that one for awhile.

  3. Croft
    28/01/2012 at 12:55 pm

    “The solution to the dilemma of the banker’s bonus is obvious. Mr. Hester should take it, and give it to charity.”

    Err I’m not sure you have thought the tax implications through at all. Assume a bonus in shares a taxpayer is liable for 50% tax on the value of the shares now even if you can’t sell the shares for several years (as is the norm). Depending on any change in share value there will be a capital gains liability on this. Take a scenario of 1M salary + 1M bonus once you factor in NI you can have a in year tax liability greater than your salary.

    Just saying give it to charity rather misses the point!

  4. MilesJSD
    29/01/2012 at 7:07 am

    re Senex’s above:
    (Please be patient with me, because I believe the following might well be of possibly vital interest to both Government and the Low-Income-People in this Topic).

    A/C #1 would be my sort-of ‘income-cum-capital’ holding a/c ?
    whilst
    A/C #2 (“MyBank”) would be my sort-of ‘expenditure’ a/c ?
    ————
    Up to 2007 I couldn’t find a bank that ‘welcomed’ opening two accounts,
    one specificly limited to receiving Income (forbidding expenditure therefrom, lock the card away and never use it)
    from which one transfers money to one’s Expenses (only) a/c.

    (Even HSBC appeared to have “never heard of such a duplication” (but they did it for me, including opening a separate non-expenditure Savings a/c));

    until the Big Banks started capsizing; then I wanted to transfer out of my single Halifax a/c (but to something more ‘English’ than the HongKong&Shanghai)
    and lo and behold Lloyds TSB was already advising new customers expressly to open an Income/ac separately from an Expenses a/c; and they strongly-recommended opening a ‘back-up’ non-expenses Savings a/c too.

    It must have been two years later when the news broke that the Cooperative Bank was in effect the only bank to have not needed, nor applied for nor been offered, a Taxpayer-Handout;
    so I decided to ‘rationalise’ to the Coop; and they welcomed separate Income and Expenses accounts, and ‘automatically’ sort-of ‘tied’ each such account to its own Savings account.
    (Four accounts, two with ODs of £200 each; then later a £1000 Credit Card Visa account).

    That works well
    (but it’s proving a long-job getting one of my incomes (from the DWP Pension Credit + Carer’s Allowance) switched to the Coop Bank).
    ————–

    Is that the kind of “MyBank” set-up that allows one to achieve all those advantages or avoidances-of-‘rip-offs’, that you altruisticly list (?), and for which I thank you …
    ————
    Incidentally, whilst USwitch likes the Standing Order set-up wherein one opens the Utility a/c with say a two-months-in-advance credit margin
    and one sets up a separate S.O. for one’s monthly usage.
    none of the Utilities will offer that S.O.-in-credit option (one or two will allow it, but not in writing),
    even ‘though it could be giving them (huge) interest-profits (millions of customers),

    and might allow Government to take a biggish-cut out of such S.O.-credit accounting, too.

    (After all, what interest am I likely to get even from my Cooperative Bank off a mere £200 ? pennies per annum, not half enough to cover even my own costs in book-keeping and managing it !

    and what better Co-Democratic and Common Purse management solution and easy-avenue is there available ?)

  5. baronessmurphy
    30/01/2012 at 12:00 pm

    Of course now we know that Mr Hester has waived his bonus and the world is happy. As Croft says, the charity thing doesn’t work. I tried it when I was feeling particularly flush but you still have to pay tax on the amount you would have received, which feels a bit unfair but understandable from the Revenue’s point of view. Personally I think we have no right to change a contract of employment at the whim of the public. We should not be persecuting individuals who are working in our best interests rather than earning double in the States. While I agree there is scope for reducing bankers’ remuneration this will need a global culture change not a little islander response. I’m probably the only person ho has any sympathy for the beleaguered Mr Hester.

    • Matt
      30/01/2012 at 7:33 pm

      “Personally I think we have no right to change a contract of employment at the whim of the public”.

      So you don’t believe in Parliamentary Sovereignty, then??

  6. Senex
    30/01/2012 at 4:05 pm

    Maude, I take your point on the use of cash. In fact you might say the Greeks are way ahead of you on this. What is important for young people who are also cashed based because they either have a poor credit history or have never used credit at all is to acquire an acceptable credit history.

    Let say a young couple have always paid by cash to avoid debt; a virtue whilst they live within their means. Both have cash savings on deposit of 15,000 and 8,000 and they want to hang onto as much of this as possible.

    They apply for a mortgage but immediately find difficulty because they are invisible in terms of credit history. The provider insists on a higher deposit because of this. Had the couple used the MyBank principle they would have collected a credit history that may have led to a smaller deposit on their home?

    Sadly, the reality is that most young people have a bad credit history that forces them to run on a cash basis. It may come as a disappointment to you but credit card cash advances do not come with a charge free period; the fee is due immediately. People do use 0% credit card balance transfer deals to purchase however they are not always available when wanted – better they operate their own MyBank.

    Let’s say MyBank has lent you money and only 100 pounds is left on deposit but you need to borrow another 500. Relatives are operating their own MyBank units and they are over capitalised.

    The MyBank community agrees on an inter bank wholesale lending rate of 2%. Uncle Hester lends your bank the 500 but charges your bank a 2% fee. MyBank, that’s you, charges a fee of 4% for the loan. This way both Uncle Lester and your bank make a profit. However, Uncle Hester would be liable for tax on any profit, that is, if he declared the income, 10 pounds in this case, under self-assessment.

    For young people feeling that Whack-a-Bank would be therapeutic:

    http://www.timhunkin.com/a153_whackabanker-words.htm

    Some caution in the last paragraphs; your whacker may go bust before the bank does.

    • maude elwes
      31/01/2012 at 9:52 am

      @Senex:

      You are so right, I must be more careful in my submissions to explain clearly what I mean. In this matter when I wrote ‘take a loan through the credit card’ was, use it to buy what you need during the free usage period, making sure it is paid off immediately before interest is accrued.

      You can use a credit card to purchase almost everything now, even groceries. So if you are short you can get through if you have one of those little monsters. And there are ways of getting free credit cards with very little or no credit. Simply be reliable in all your transactions. Banks are not stupid they follow every penny you spend and if you stay in the black it is no time at all before they are begging you to accept their numerous offers for a card of your choice.

      However, my main thrust was really to simply play the banks at their own game. Which can be done in many ways. Think strategically, inflation is poised to be rampant over the next three to five years. A small loan you know you can certainly afford and will have a surety to cover for that period, will buy you more today than tomorrow. If you can manage a good interest rate with your bank, and some still do it. Then a small amount from a solid income per month may be worth it. If you have a track record of regular income, even a very small one, and manage it well they are game. After all they are in the business of selling you money.

      However, cash is the real answer, save your money and pay for your items with cash. It is the only way to ensure freedom in the long term for all of us.

      • Lord Blagger
        31/01/2012 at 10:58 am

        A small loan you know you can certainly afford and will have a surety to cover for that period, will buy you more today than tomorrow.

        =========

        Be careful. A lot of people make the assumption that their pay will keep up with inflation.

        • maude elwes
          31/01/2012 at 5:21 pm

          Well, LB, ,that is of course something to be sure of, but, if you take the last thirty years into account you should be under no illusion there.

          Salaries, in real terms, have consistently fallen except for those at the top, who know full well that inflation will erode their pay standard. And how they can trade so effectively when it comes to their own interests.

    • Twm O'r Nant
      07/02/2012 at 1:32 pm

      They apply for a mortgage but immediately find difficulty because they are invisible in terms of credit history.
      Keeping their own account of their cash account, day by day, is one way round this.

  7. Senex
    31/01/2012 at 5:22 pm

    Lets say you have your budget all planned out for the year and you bump your car. Typically you will have to find 350 for the excess. So where can you borrow 350 at short notice? RBS minimum is 1000 and you have to bank with them. Lots of people have to resort to short term Payday Loans with rates anywhere between 500 and 2000% APR a rate which reflects the risk involved.

    Its very, very difficult to persuade some people to save and the high street banks are cashing in because they ‘don’t’ pay savings interest. If you like, the MyBank principle separates retail from investment banking. These youngsters do everything from one bank and they get into all sorts of trouble just like RBS did at the other end of the scale.

  8. MilesJSD
    31/01/2012 at 10:32 pm

    re Baroness Murphy’s emotional but not-very-rational nor mature claims
    (1) “the world is happy”
    (2) “the charity thing doesn’t ‘work'”
    (3) “which feels a bit ‘unfair'”
    (4) “we (Government) have no ‘right’ to change a contract of employment -(at the ‘whim’ of the public)”
    (5) “we should not be persecuting ‘individuals’ who are ‘working in our best interests’ rather than ‘earning’ double in the USA”
    (6) “there is scope for reducing bankers’ ‘re-muneration’ (but) this will need a Global culture change, not a little (British) islander response”
    (7) “I (Baroness Murphy) am probably the only person who has any ‘sympathy’ for the ‘beleaguered’
    (2-million-pounds-a-year salaried) Mr Hester (who has failed to meet the agreed-with-the-Government & British Public’s singular Goal of sufficiently increasing and adequating Loans to British Small Businesses)”.
    ————
    (1) Who on Earth constitutes Baroness Murphy’s “world” ?
    “We” (many ‘levels’ of humans) live in at least Two Different Worlds, anyway;

    and “happy” –
    about a literally failed-banking, public-funds-bludger,
    already obscenely and insultingly drawing 2-million-pounds-of-pay-for-(not)-doing-the-job ?
    (PS Maude points to a govt-&-banks complicitly concealed further £49 million given to the failed Chief too ?)

    (2) so, were a failed-bank-chief to donate £1million 980 thousand pounds to ‘Charity’ (i.e. £2million minus his Lifeplace-egalitarianly-entitled £20000 one-human-living (£200 per week))
    he would still have to pay the Exchequer (governed by Baroness Murphy withal) tax on that £1,980,000 – (at what, 40%) ?
    (( So not only would that be ‘life-threatening’
    (‘unfair’ is a bit of a woolly-minded understatement then, isn’t it ?)
    to one such as this failing one-human-being ?))

    • maude elwes
      01/02/2012 at 12:13 pm

      Now, Miles, they must start cutting off the heads of the rest. Wanna bet they don’t! This was simply a show.

      Fred is only a sprat in this pond. And his usefulness has diminished. Notice they took his Knighthood, not our money back. Want to bet the trade of title for money was an easy choice. He’s laughing all the way to the sun or the ski slopes.

      • MilesJSD
        06/02/2012 at 1:12 am

        SHE versus SHE
        “Swanky-Human-Emoluments versus
        Super-Heated-Earthlife”,
        innit ?

        Maude, any-one being-given/taking
        more than one human-living from the Common-Purse is
        “laughing all the way to the sunshine and scratchcard-slopes”.

      • Twm O'r Nant
        07/02/2012 at 1:34 pm

        “Notice they took his Knighthood, not our money back”

        We see the level Maude is at.

        • maude elwes
          09/02/2012 at 9:35 am

          @Twm:

          Do you seriously believe removing his K is going to affect the education of any offspring, remove his ability to find proper health care, or, end his expectation of selecting a good care home in his old age? Nobody gives two hoots about his title, it’s his money they have their eye on.

          But, the money he and his like stole from the tax payers security fund affects all of us in every aspect of our lives.

          The K is worthless in real terms. Our money isn’t.

          • Lord Blagger
            09/02/2012 at 10:52 am

            The only problem with your argument is that he didn’t steal it.

            He was incompetent and made a mess.

            Then along comes Gordon Brown. He takes money by threat of force from you (see the Rednapp trial for what they do when they think they don’t get their hands on your money), and hands it over to the incompetent.

            You lost money because politicians took it and gave it to other people.

  9. Gareth Howell
    03/02/2012 at 9:13 am

    Mr. Hester should take it, and give it to charity

    Why give it to charity when he could give it to a good cause? Givng it to charity might well be taking it, and still taking it, so many fake charities about.

    He would be popular at the masonic lodge.

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