We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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What could possibly go wrong? Nice to see the ‘conservative’ government’s attempts to drive the financial industry out of UK is continuing apace.
Bonuses could be clawed back for as long as a decade under new rules published by City regulators today. The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) confirmed they were pushing ahead with rules for a wider seven-year claw-back period but that an added three years is being considered for senior managers.
if HSBC and others do not make good on their threat to leave the UK then they must be out of their bloody minds. Just move to Hong Kong or Zurich. And if you get a bonus in the UK, plan on leaving the UK and working somewhere else at the first sign of trouble in your company, taking your dosh out of the country with you of course, because otherwise some regulator looking to justify their existence might want to take a bite out of your account.
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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Does Britain have any other service to offer the world, besides finance, and being a major financial center? So what would happen if/when business leaves for more rational countries? i suppose the Government will then put in all kinds of barriers to stop that from happening- can’t have the goose laying the golden eggs just deciding to move to Herr Smit’s place, can we?
“Clawback” is a perfect name for this predatory crap.
Modern governments, and this seems to include left and right now have the mindset not taking all your money is a “cost’ to them.
Headlines by excremental quango groups with “we could fix the budget, except for the COST of not taxing peoples homes more when they pass them on when they die”..
The “COST” of not increasing tax on xxxx is such and such.
All money belongs to the government and you plebs should just be given a minimal amount of pocket money and go away.
Recent history says it’s fair enough. All the “clawback” does is allow for the cost of endless mis-selling and other scandals. Reduce the incompetence level, and avoid the clawback.
Of course, it would be better to get government out entirely. Boring retail banks on one side, the rest on the other. If they fail they fail. That might concentrate minds more effectively.
But giving us pocket money would instill capitalist notions in our feeble brains! It would be much better if everything was provided free by our kind government overlords!
The Limitation Act 1980 provides, in the main, for a 6 year cutoff for contractual claims in England and Wales (iirc 5 years under Scots law) and 3 years for personal injury claims, most land claims are 12 years, or 30 years for the Crown or a spiritual or eleemosynary corporation sole.
This is, once again, riding roughshod over well-established legal principles and the rule of law, with self-financing regulatory authorities making up the rules as they go along. Of course, none of them have quite the power of their inspiration, the Spanish Inquisition, which fed off its victims’ assets, but you can sense the wistfulness with which they would view it.
Not to mention that nobody expects the Spanish Inquisition! Whereas this is exactly the sort of crap we’ve come to expect from the government.
Jack C has it exactly right. Get out of the way and let some actual competition sort things out.
A more radical approach would be to encourage the return of unlimited liability partnership structures, or some variation of said, for the ownership of merchant banks, etc. The issue is about how to align the incentives of people taking day-to-day management decisions with banks with the overall long-term health of the banks/other and their clients. The problem is that with banking now concentrated among few firms – made even worse by regulation – the regulators are trying to micro-manage the pay of people working in the industry. It is getting worse than working in government. No wonder anyone with entrepreneurial flair is getting out.
And all this under a “Tory” government.
HSBC and others will leave London, not the UK.
London is full of bright, go-getting wealth creators, not the ordinary people we find elsewhere in the country.
They’ll be OK.
Most likely they will move back to Hong Kong.
“Clawback? Oops I spent it all stimulating the economy!”
@Johnathan Pearce
> The problem is that with banking now concentrated among few firms – made even worse by regulation – the regulators are trying to micro-manage the pay of people working in the industry.
I actually think the problem is different. It is simply that if you take the King’s coin, you have to play by his rules. To me the great curiosity of the whole “too big to fail” thing is why all those professional economists aren’t saying what the real economic truth here is, namely: “too big not to fail”. It is the failure of some of those big banks that would truly have cleaned house in the financial industry. Perhaps returning (the USA) to a land of smaller cottage banks rather than a few massive firms. But big firms are a benefit for big governments. They are easier to control than a million little ants running around, and they have the resources to buy off politicians too.
And this is compounded by the FDIC system of banking insurance (and whatever the equivalent is in Britain.) If you are insuring something or someone you do have a right to determine what risks they are allowed to take at any given price point. So, again, by taking the King’s coin, or insurance scheme, you subject yourself to his rules about risk taking.
Banking needs to be freed. If people want to privately choose fractional reserve banks, all well and good, but they need to understand the risks and rewards inherent in such a thing. There is no reason why banks can’t privately provide a backstop against runs on their deposits via shared risk pools, and there is no reason why banks can’t be assessed on their soundness by private organizations, much as the banks themselves rely on private institutions to determine their borrowers’ soundness such as credit agencies.
I agree with Fraser. Huge banks, while not being financially necessary (notwithstanding some claims to the contrary), are politically desirable for the reasons he stated, and they’re not going away. The recent changes in the law, while ostensibly eliminating “too big to fail” as government policy, in fact had precisely the opposite effect. TBTF is now a permanent fact of life here. That being the case, I don’t really care how much bureaucratic BS they impose on those monstrosities; they’re all de facto government entities anyway.
In the US it is impossible for a bank to opt out of the system. No bank can get a charter unless it is insured (and regulated) by the FDIC. There once was a time when there were a few state-level bank insurance funds, and banks in those states could opt to be insured by them instead of by the FDIC, but they all disappeared after the (second) S&L crisis in the early 1990s. And the FDIC is merely one of the myriad regulatory agencies with jurisdiction over banks; depending upon what type of charter it has a bank can also be regulated by some combination of the Banking Commissioner in its home state, the Office of the Comptroller of the Currency (for national banks), the Federal Home Loan Bank Board, the Federal Reserve, and of course the new and aggressive Consumer Financial Protection Bureau, which seems to recognize no limits to its jurisdiction (beyond banks). The regulatory burden is now so great that it is economically impossible for a small bank to survive. Banking is not being “freed”; the opposite is happening, and there is no indication that this trend will do anything but accelerate. I haven’t seen a new bank charter issued in years, and don’t expect to; one would have to be a lunatic to go into that field today.
@Laird
> Banking is not being “freed”; the opposite is happening, and there is no indication that this trend will do anything but accelerate. I haven’t seen a new bank charter issued in years, and don’t expect to;
Couple of points of info:
1. The credit union business is a little different. They aren’t banks, but they play one on TV. They are not insured with the FDIC, and can have their deposits insured in a number of ways (federal, state or private insurance. Some I believe are uninsured.) For reference see: here. If you can, credit unions are often freer places to keep your money.
2. Here in Illinois there are actually quite a lot of small banks, for example, American Chartered, Old Second National, State Bank of the Lakes, West Suburban and so forth. I used to work in the banking service industry and I remember one bank, whose name escapes me for now, who described themselves as having “one and a half branches” whatever that means.
The reason for this being that it used to be against Illinois law to do banking across state lines, and so banks were restricted to just the state, and mega banks had to jump through hoops. The law is different and these banks are now consolidating across state lines now.
But banking in Illinois is and was one of the freer types of banking in the Union. They also have some of the most permissive regulations with regards to home schooling. All very strange for those of us living in the leftie republic of Illinois, the only state with four of its last seven governors in jail for corruption.
To echo the last two comments, my brother works for a large, international bank that is crawling with regulators. They essentially are running the bank. Another acquaintance of mine in banking drew the picture of some thirty-something regulator berating fifty-something bank presidents/vice-presidents on how they should be doing their day-to-day jobs. I use the term corpora-fascistic to describe the US economy/monetary/fiscal beast. It is not hyperbolic. Large business and big industry are simply infested with IRS agents, Justice Department hacks, and other regulators to a point where you can’t determine where one begins and the other ends. And the lion’s share of these people who are agents/hacks/regulators/gauleiters are the product “Ivy League Youth” schooling. We are royally fucked. And it’s simply not going to end pretty.
Fraser, that’s very interesting — about the relative freedom of Illinois banks, and also about home-schooling. Thanks for the info. Also for the link to info on the credit unions, which I will exercise shortly.
By the way — it’s been evident since Otto Kerner that the last thing one would want to do if one would like to avoid incarceration is to become Governor of the State of Illinois. (Although there was a lot of controversy about George Ryan’s conviction at the time. Further deponent sayeth not.)
(Minor correction: Admittedly I didn’t take off my socks, but by my count it’s four of the last nine governors, not counting our present Gov. Rauner. Shoot, that’s less than 50%! :>)
https://en.wikipedia.org/wiki/List_of_Governors_of_Illinois#Governors_of_the_State_of_Illinois
The really worrying thing is that a of regulations are international – a form of World Government (by stealth).
As it is governments rely partly on the stick and partly on the carrot.
When the oldest private bank in Switzerland was critical of American financial policies (i.e. tyrannical practices) the American government (with the active assistance of the Swiss government) destroyed the bank.
This is the stick – support us or we will destroy you (wherever you are).
But there is also the carrot.
The endless tide of credit money from the Central Banks (such as Bank of England and the Federal Reserve).
Leave and you do not get the money any more.
It is that crude.
Till the whole stinking system collapses.
And it does stink – just in the opposite way to the way the left think it does.
After all there is no sane reason for any bank or other financial enterprise to be in New York City.
The regulations are insane (worse than London) and the taxes are crushing.
So why are the banks and other such there?
Two reasons.
Threats about what might happen to them if they leave.
And the bribes of lots of funny money from the New York Federal Reserve.
Is London really that much different?