Sunday, 6 September 2009

"Cut bankers’ bonuses and we will all suffer"

Dominic Lawson has a piece in the Sunday Times (Sept 6th 2009) which is entitled Cut bankers’ bonuses and we will all suffer . Here is part of his "reasoning":

Yet when people get a cheaper mortgage because some financial whiz-kid on the trading floor did some clever forward buying in the currency markets, they don’t feel any particular sense of gratitude to the bank.

The problem with this argument is that many UK taxpayers would consider that the "whiz kid" was probably more lucky than smart, and what is most irksome is that when the whiz kids on the trading floor are unlucky the losses to the bank are underwritten courtesy of the Asset Protection Scheme, aka the national income of the future.

Actually I think Mr Lawson's iconography gives the game away (i.e. that he doesn't really know how banks structure mortgage products). Connecting whiz kids on the trading floor, engaged in proprietary currency trading activities for a bank, with the business of providing residential mortgages doesn't quite pass the bullshine test.

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