American-born Bob Diamond, one of the country's highest-paid bankers, who started his career as a teacher but now routinely takes home bonuses running into double-figure millions, made his plea for an end to banker-bashing in front of a committee of MPs yesterday.
For a man paid a fortune, there were a lot of things Diamond didn't know. He wasn't saying how much his bonus is likely to be this year (around £8m) and certainly wasn't inclined to accept MPs' invitation to forgo it. Neither could he explain why bankers need huge additional wedges of cash, on top of their basic pay, to do the job they are hired to do. The smooth-talking Diamond had no idea why nurses and teachers did not require an extra incentive to do more than just show up in the morning.
Neither did he understand why Manchester United boss Sir Alex Ferguson thought a recent request by a top footballer's agent for a goal-scoring bonus was plain wrong. Sir Alex pointed out the footballer was a striker and it was his job to put the ball in the back of the net – an answer that clearly doesn't compute in bankerworld.
Bankers, like top-flight footballers, have their employers over a barrel. The vast riches that have gone in to football have not gone to the owners but straight into the players' pockets, to be spent on designer labels and fast cars. Similarly, the huge fees the banks charge are not used to bolster their safety margins but have gone straight into the bankers' pockets – to be spent on designer labels and fast cars.
The only real option to rein in bankers' wealth is to tax them, as Denis Healey once said, until the pips squeak. That could raise billions – Alistair Darling managed to rake in £3.5bn in just four months last year, a whopping £3bn more than he had expected – but it didn't stop the bonuses being paid. And that tax was just 25%.
But if such a tax was three times higher and became a permanent arrangement, the banks would threaten to take their business elsewhere, where taxes are lower. Similarly, if footballers faced penal taxes, they would simply take their talents to Serie A. Yesterday Diamond had no answers for MPs about bonuses – but the government doesn't seem to either.
