Brown: No reward for failure
Monday, 9 February 2009 6:14 PM
By Ian Dunt
Gordon Brown has promised there would be "no rewards for failure" in the banking industry today, despite claims from economic analysts that the UK government is going easy on bankers.
The prime minister called for "rewards only for long term sustainable success" at a speech in central London today, and promised a review into how well remuneration, audit and compliance committees had dealt with the financial crisis.
The speech comes as the government refuses to buckle to demands for the UK to adopt a firm cap on bank executives pay similar to that imposed by president Barack Obama in the United States.
Ministers claim to be using the government's stake in RBS and Lloyds to ensure bosses are not overly remunerated. But RBS has some contractual obligations to pay bonuses to some of the banks it is associated with.
Government sources said capping bosses' remuneration packages would mean the best talent headed elsewhere.
But later this morning, Downing Street said Mr Brown believed bankers should consider waiving their bonuses.
"They may want to ask themselves some searching questions about whether or not they should be receiving bonuses," the prime minister's spokesman said.
When asked whether Mr Brown was angry about the bonuses, he replied: "Of course he's angry, but him being angry is not going to solve the problem on its own."
Conservative leader David Cameron, meanwhile, said the government has been "asleep on the job".
"We raised this problem just before Christmas," the Tory leader said during his monthly press conference.
"The government seems to have done absolutely nothing about it and yet the bonus season is now upon us."
Speaking about the taxpayers' money that has gone into banks, Mr Cameron added: "He who does the paying does the saying."
Chancellor Alistair Darling announced an inquiry into bonuses over the weekend although it may not reach any conclusions until next bonus season.
The review will put forward recommendations about the risk management practices of banks as well as whether pay structures within banks incentives the taking of risks.
He wrote in the Daily Telegraph: "It [The inquiry] will also look at how boards operate, at the balance of skills, the role of institutional investors and whether our approach is consistent with international best practice.
"Of course, no government should try to remove risk-taking from the system. Nor would we want to.
"But a government can act to protect people when excessive risk-taking threatens us all," Mr Darling stated.
Last week, Commons leader Harriet Harman also announced an inquiry into whether bonuses in the city discriminated against women.
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