Bank goes bust. Shareholders get wiped out. Creditors stand to lose over $100bn. Bankruptcy causes further crisis of confidence in entire financial system, requiring potential $700bn bailout funded by taxpayers. Employees get $3.5bn bonuses.
Hello, there. Something is wrong with this script. If one was making a film about greed on Wall Street, it would be hard to come up with a better sequence. But this is not fiction. This is Lehman Brothers.
The exact details of the bonuses on offer from Barclays and Nomura – which have bought the US and Europe/Asian operations respectively – are unclear. But Barclays has set aside up to $2.5bn and Nomura has reportedly made $1bn available for European employees alone. In both cases, the bonuses are based on what was paid in 2007. There are also some wild numbers doing the rounds about what the top guys in New York are receiving.
It’s all too easy to understand why the purchasers are offering big sums to tie in key staff – and why the employees want fat bonuses. One can even feel a bit sorry for the more middle-ranking staff as they didn’t steer the bank onto the rocks. Also, it’s not that the employees should have received no bonuses; it’s just that basing them on last year’s boom numbers looks out of whack. Were these sums really necessary to hang onto talent when there are so few jobs going elsewhere?
What’s more, there’s are the other stakeholders to consider. Smaller bonuses might have meant lower losses for creditors. The liquidators might have been able to coax a bit more out of the purchasers if less was going to the employees.
There is also the wider public interest. At a time when a backlash against Wall Street greed is mounting, this sort of behaviour further undermines the moral basis of financial capitalism.
Source: The Telegraph
Current Mood:
Aggravated
