Britain frets as Wall Street defies Obama with $100bn pay bonanza

With massive payouts expected across the pond, bankers' bonuses are back in the spotlight here in the UK.

Last Updated: 31 Aug 2010

The bonus row seems to be rearing its ugly head again. Despite President Obama’s new levy on Wall Street, four of the biggest US investment banks are apparently planning to pay their staff nearly $100bn in salary and bonuses this year, the Sunday Times claimed this weekend – despite the fact that three of them aren’t even profitable. RBS is due to meet this week to decide the size of its own bonus pot, and it’s already feeling the heat from MPs, the public and politicised folk singers. Unfortunately for the Government, this is still very much a live issue…

The Times reckons that Goldman Sachs alone is planning to shell out $20bn in bonuses to its well-heeled staff, which averages out at around £660,000 a head (and since this includes all the back office staff, the mind boggles as to how much the big swinging dicks will get). The Sunday Telegraph claims that Goldman is so worried about this that they’re going to force their senior bods to donate some of their wedge to charity. Still, at least Goldman is actually making a profit. Three other Wall Street titans - Citigroup, JP Morgan and Bank of America - are apparently planning to pay out billions despite the fact that they’re all currently loss-making.

In fact, the Wall Street Journal reckons the total bonus payout this year in the US will be even higher than in the boom year of 2007. Obama is hoping to head the banks off at the pass with his so-called $90bn 'financial crisis responsibility fee' – but it looks as though these banks are so worried about losing their top talent that they’re going to keep paying out these huge bonuses anyway. And it’s likely to be a similar story at RBS: boss Stephen Hester insists that he’ll pay ‘as little as he can get away with’, but the final figure (probably about £1.5bn) is bound to attract controversy.

This morning City Minister Lord Myners was on the Today programme defending the Government’s approach, insisting that it was going further than any other country in the world to tax bankers’ bonuses. Whether that’s true or not, the fact remains that it doesn’t seem to have slaked the public’s thirst for payback.

Still, don’t despair: Billy Bragg’s on the case. Everyone’s favourite protest musician says he won’t pay his income tax unless the Government starts capping RBS bonuses at £25k. Where popular pressure has failed, perhaps the threat of a jauntily-scored folk song will do the trick (it’d certainly break us). ‘If nothing else,’ Bragg opined, ‘we may discover if people in this country care more about banker's bonuses than they do about who will be the Xmas No 1.’ We’re not terribly sure we want to know the answer to that one.

In today's bulletin:

Britain frets as Wall Street defies Obama with $100bn pay bonanza
140,000 UK firms on the rocks as recession keeps biting
ASOS out of vogue as sales growth slows?
10% of Brits think Steve Jobs is a trade union boss
MT Expert's Ten Top Tips: Learn to roll with the punches

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