Last Wednesday I published a short and long overdue piece of legislation: The Bank Bonuses Bill. If the government accepts this Bill in September then we can at last do something to tackle the continuing scandal of bank bosses awarding themselves excessive bonuses.
It is a simple piece of legislation. It will require all top bankers to defer all bonuses of over €1,000 for a 5 year period. I drafted the Bill to apply to bank staff on salaries of over €60,000.
The bonuses would only be payable where the performance has been exceptional or where there is a contractual entitlement to a bonus. Not only would the payment be delayed for 5 years, it would only be made where that banker had not been directly involved in the bank losing more than €100,000 during that period.
In other words, a bonus would be just that – a bonus – something extra in recognition of outstanding performance: not an entitlement. It should not be just another form of regular payment to mask already exorbitant salaries.
A few weeks ago the CEO of Ulster Bank came to an Oireachtas Committee to tell TDs what he and his management team were doing to resolve the chaos his bank was causing for his hundreds of thousands of Irish customers.
During that exchange my colleague Michael McGrath asked him if he would be turning down his bonus following the debacle. Incredibly, he refused to do so.
A few hours later he saw the light. He issued a statement saying what he had not managed to say at the committee: he ruled out accepting a bonus. The madness here is that it appears he would still have qualified for a bonus despite leaving over half a million Irish account holders with uncertainty and no full service for a month.
The irony is that those opposing my Bill will offer the excuse that introducing this measure will interfere with the market.
I don’t accept that for a moment.
These same people tell us that the market is insisting that wage rates and wage costs across the rest of business must be reduced in order to stimulate productivity – how come this market force doesn’t apply to bankers pay?
Why are bankers exempt from this market force? Why, at a time when pay is being cut, at all levels, across the rest of the private sector must their pay be maintained and propped up?
Why must their massive unearned bonuses be paid irrespective of performance, productivity or investment in the economy? How can a non-performing bank pay a performance bonus?
If these bank bosses expect big bonuses when their banks succeed what penalty do they pay when they fail or make a loss? As we have seen in recent years the answer is simple: none. Why must the dice be loaded in favour of the bank bosses?
It is this casino banking culture of greed coupled with the irresponsible and reckless bonus hunting that fuelled the collapse in Irish banking of the past 5 years.
One of the ways that we prevent the mistakes of the past is to show that those who were responsible for those mistakes pay the price. The problem with this approach however is how pitifully slow it can be.
It is just under two years (August 29, 2010) since I set out in detail in this newspaper how Section 60 of the Companies Act could be used to pursue the so called Anglo 10.
While I welcome the charging of some of the main players this week, under Section 60, I have to wonder why it has taken two years to get us just to this point. Remember, we are still just at the starting point in this process. It may well take another three or more years for the trials to reach their conclusion.
This has been too slow a process, but we do not need to await the outcome of these cases to start taking remedial action and ending the damage that the casino banking approach has brought on our economy..
My short, but carefully targeted Bill, is one measure in doing this. I call on the Government to accept this Bill and join with me in passing this immediately when the Dáil and Seanad return in September.