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3 August 2009

What a bunch of bankers

They owe us - and don't let them forget it

By Mehdi Hasan

Here’s an understatement of epic proportions from the Times today:

Bankers at Barclays’ investment bank are set to see their pay and bonuses more than double to nearly £250,000 this year as their division reports bumper profits today.

The return of bankers’ bonuses is expected to provoke outrage so soon after the meltdown in the financial system, which prompted the worst recession since the Second World War.

“Outrage”? I feel nothing but loathing, hatred and contempt for these people – and as I read the latest research from the respected thinktank, the Centre for Economic and Business Research (CEBR), warning that bonus payments by all banks could hit £4 billion this year, up from £3.3 billion in 2008 and less than a year after the crash, I feel sick to my stomach. It is, as John McFall’s Treasury Select Committee and others have pointed out, the greed-fuelled bonus culture that helped cause the financial crisis and subsequent recession, through reckless short-termism and excessive and irresponsible risk-taking.

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By the way, if I hear one more supposedly informed person tell me that banks such as Barclays and HSBC are entitled to pay out bumper bonuses and ignore popular opinion because they didn’t receive taxpayers’ cash, in the form of a government bailout, I think I will scream. The fast forgotten fact is that there would be no banks left standing in this country had the Treasury and the Bank of England not intervened in late 2008, and again in early 2009, to prop up the entire financial sector with significant financial guarantees and a promise that the authorities would never let them fail. One estimate puts the cost to the taxpayer for this wider financial support for the banking system at £1.4 trillion – or £56,000 for every household in Britain.

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The BBC’s Robert Peston makes a similar point on his blog:

Of course, different banks have required different amounts and different kinds of aid from the state, depending on how reckless they had been in the boom.

But they’ve all had some succour in the form of taxpayer loans and guarantees – even those like Barclays and HSBC that didn’t need to be wholly or partly nationalised.

The banks and the bankers owe us – the taxpayer – for their very survival. We owe them nothing – except, perhaps, eternal contempt for dragging us all into the worst recession in living memory.