Tackling excessive bonuses

The Financial Times reports a Vince Cable anecdote that in the early 18th century, after the bursting of the South Sea bubble, a parliamentary resolution proposed that bankers be tied up in sacks filled with snakes and thrown into the Thames.

Even the Liberal Democrats would not advocate such a drastic measure as a solution to excessive bonuses. There is no doubt that something must be done. It does not help though if the Treasury's own team are also getting big bonuses. The Times takes up the story:

UK Financial Investments Ltd (UKFI), the Treasury-run body created by Alistair Darling to manage the state’s stake in the banks, is set to approve more than £1 billion in bonuses for bankers bailed out by the taxpayer. The Royal Bank of Scotland, which is 70 per cent owned by the state, wants to pay staff close to £1 billion in bonuses. UKFI is also being asked to approve bonus payments in another part-nationalised lender, Lloyds Banking Group.

........

Since its creation UKFI has hired around a dozen senior bankers and other financial experts. They include John Kingman, a senior Treasury official, John Crompton, formerly managing director of Merrill Lynch, and the banking analyst Tim Sykes. The Government has so far refused to say what UKFI’s staff are paid, but a spokesman yesterday admitted it intends to run a bonus scheme. The full details had yet to be finalised, he said.

Such a revelation surely helps to put the Chancellors review into the way banks are run into context. This is one bubble that needs bursting.