Huge Bonuses

It has been a long time since my last article. But I'm back to deal with the huge bonuses that the banks gives to their traders.

First of all, let me give you few figures. 33 billion dollars have been allocated to the traders of banks in Wall Street. The champion is actually Goldman & Sachs with JP Morgan, bailed out during the beginning of the crisis. A trader is even more paid than the chairman. He has a bonus of 29 million dollars whereas the chairman receives 19 million dollars. I think that is purely not moral first but also, econimically speaking, a very bad communication in terms of image for the banking sector.

Finance, and particularly the banking sector, suffers from the crisis not only in terms of results but also in terms of image. For example, notations agencies like Standard's & Poors are now discredited on the market. Banks are actually doing the same and that is impacting the real economy. Banks do not want to give loans anymore so investments, for the firms, and consumption are hugely impacted.

However, some banks, and even all of them, need to give these bonuses because they have been agreed in a contract between the bank and the trader before the crisis. So they must fulfill their contracts. It is as simmple as that.

I think that the german idea concerning the bonuses is good. The bonuses should be agreed by the board of directors and they must include the idea of performance. Because in times of crisis, you can not give 33 billion dollars to traders that do not gain a penny, can you ?