Wednesday, 25 January 2012
Why banking bonuses are only a sideshow for ordinary people
The bonus season is almost upon us and the politicians are sharpening their rhetorical tools. It sometimes seems that they cant wait to criticise the bankers, as if all the ills this country suffers from would magically disappear as soon as bankers accepted smaller pay packages.
I argued before that this represents a curious distortion of reality and that it borders on irresponsibility by the political class to maintain the illusion that banker’s bonuses are the root of all evil.
While you may think it immoral to give away millions of pounds to a director of a company which teeters on the brink of bankruptcy or to an investment banker, it is hardly something that makes a difference to the lives of the poorest in this country.
Looking at the banking sector, what affects people’s lives is not whether or not a banker goes home with obscene bonuses, but rather what fees and charges banks levy on ordinary people when they go over their overdraft or use a temporary loan facility.
Just think about the numbers: Barclays Bank charges £22 per 5 working days for any amount above the agreed overdraft. If you have paid for a package of chewing gum in the store, which may cost you less than a quid, and it pushes you over your overdraft, you may face a bill of up to £88 per month.
If I am not mistaken, that could easily be more than a 4,000% interest! While politicians think they have to respond to the (justifiably) outraged public about high board room pay and bankers’ bonuses, they have consistently neglected the real issues that would make a difference to ordinary people: charging structure of banks for ordinary customers!
Anyone heard anything constructive about this issue recently from our political class? I didn’t think so. After all, bank charges only hit the poorest of the poor who cannot make their monthly wages stretch to the next pay day. But as politician know very well, they are rarely the ones who shout loudest.