Testosterone poisoning on the floor

Discussion in 'Wall St. News' started by stock777, Nov 20, 2008.

  1. They must be talking about those asswipes that run Traders Monthly Magazine.

    Traders' `Machismo' Must Be Curbed Parliament Told

    By Caroline Binham

    Nov. 19 (Bloomberg) -- The ``culture of machismo'' that pervaded trading floors should be examined as well as excessively risky business models, the Treasury Select Committee in London was told today.

    ``Culture really is a factor,'' said Peter Montagnon, the director of investment affairs at the Association of British Insurers, at a committee hearing today. ``Culture can add to risk if it's not properly managed. It seems to me that this is the duty of boards.''

    Scrutiny of pay is one of the ``strings attached'' to the government investment of 37 billion pounds ($55.8 billion) in three of Britain's biggest lenders to prop up the U.K. banking system. The British regulator is under pressure from lawmakers and taxpayers to rein in bonuses that encouraged excessive risk- taking, which helped contribute to the worst financial crisis since the Great Depression.

    ``There is a culture that exists within investment banks,'' said Nick Ainger, a Labour member of Parliament who is on the committee. ``There is a machismo driving a culture on trade floors that encourages excessive risk.''

    The Financial Services Authority is currently reviewing pay structures of 28 banks after it sent a letter to their boards demanding immediate action to reformulate bonuses. If they don't comply, the FSA could force banks to boost capital by billions of pounds to make up for perceived risks.

    `Significant Stake'

    Banks across the world have said their top executives won't be getting bonuses this year. Goldman Sachs Group Inc.'s Chief Executive Officer Lloyd Blankfein said this week he would forgo his bonus, while Zurich-based UBS AG scrapped bonuses for CEO Marcel Rohner and 11 other top executives. Barclays Plc, which refused U.K. government money in return for an equity stake, yesterday joined the list of banks relinquishing bonuses for senior management.

    In addition to tying bonuses to profit rather than revenue, as the FSA sees as good practice, claw-back of bonuses and a delay in payouts are two changes to bonus structures that banks should consider, said Carol Arrowsmith, a partner at Deloitte who advises companies on pay.

    The heads of the three banks that received government money in exchange for equity stakes, HBOS Plc, the Royal Bank of Scotland Group Plc and Lloyds TSB Group Plc, received bonuses totaling 5.1 million pounds in 2007, according to Bloomberg data and company accounts.

    Montagnon and Miles Templeton, the head of the Institute of Directors, an advocacy group for executives, told the panel that they favor independent remuneration committees that are elected each year.


    Andy Hornby, HBOS CEO, received a base salary in 2007 of 940,000 pounds and a bonus of 449,000 pounds. Eric Daniels, the CEO of Lloyds TSB, got a bonus of 1.78 million pounds compared with a salary of 960,000 pounds. Fred Goodwin, the former CEO of RBS, last year received basic pay of 1.29 million pounds, supplemented with a bonus of 2.86 million pounds.

    Ronnie Fox, principal of Fox Law Firm specializing in employment, said today at the hearing that he didn't believe bonuses were to blame for the economic crisis and that there was misunderstanding among politicians and the public about how financial companies operate.

    Unite, a trade union, today published a report that said basic pay and cash bonuses between 2003 to 2007 to five CEOs at HBOS, Lloyds TSB, RBS, Barclays and HSBC Holdings Plc totaled more than 52 million pounds.

    ``As taxpayers we now have a significant stake in the country's banking system,'' said Derek Simpson, Unite's joint general secretary, in a statement. ``We are urging the government to set an example and take an active, interventionist approach''.