|22-10-2009, 04:27 PM||#1|
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"Fat cat" bankers refuse to give up their "cream"!!
Inequality is good, says Goldman chief, echoing Gordon Gekko as he defends huge bank bonuses
By Rupert Steiner
Last updated at 8:41 AM on 22nd October 2009
The vice-chairman of Goldman Sachs has launched an astonishing defence of bumper bonuses just a year after bankers brought the world's economy to the brink of collapse.
In a speech likely to recall fictional banker Gordon Gekko in the film Wall Street - whose mantra 'greed is good' came to sum up the excesses of the 1980s - Lord Griffiths claimed taxpayers should 'tolerate the inequality'.
And he insisted that banks should not be ashamed of rewarding staff.
Lord Griffiths (left) has echoed the 'Greed is good' maxim by Gordon Gekko, played by MIchael Douglas in the film Wall Street, by saying inequality is good
His comments came as it was revealed that President Barack Obama is set to slash bonus payouts by as much as 90 per cent to executives at Wall Street banks that received billions of dollars in taxpayers' cash.
Last week, Goldman Sachs provoked anger after revealing that it planned to lavish a record £13.4billion in pay and bonuses on its staff.
Around 5,500 of its employees work in London and are in line to pocket an average of £440,000 each after the bank revealed a sharp rise in profits.
Lord Griffiths, who was speaking at a debate on ethics held at St Paul's Cathedral, said: 'We have to accept that inequality is a way of achieving greater opportunity and prosperity for all.
'We should not be ashamed of offering compensation in an internationally competitive market to ensure that businesses stay here and employ British people.'
The 67-year- old, a former adviser to Lady Thatcher, also said government attempts to rein in bonuses would only result in banks quitting Britain, causing huge damage to the economy.
'We should think about the mediumterm common good and make sure that going forward we have one cluster of industry here in London - the financial sector,' he said.
Lord Griffiths's comments will be a major embarrassment for Chancellor Alistair Darling and Treasury minister Lord Myners, who have already promised to slam the brakes on corporate excesses.
They are also likely to enrage millions of credit-starved businesses and families hit by the credit crunch.
Lord Myners yesterday issued a stern warning to the banks, saying they would 'score an own goal' if they paid out large bonuses.
Speaking in the City last night, he said banks must focus on rebuilding their balance sheets to safeguard against future problems, not pay out excessive rewards to top traders.
'Contemplation of big bonuses in these conditions is nothing short of a market failure,' he added.
And he pointed out that banks are pulling in big profits as a direct result of the Government's injection of cash to support the financial system.
'To say that the compensation practices in the City are "necessary" is simply not the case; they are culturally embedded in an industry that needs to reform.'
Taxpayers have been forced to shell out more than £37billion to rescue high street banks deemed too big to fail.
A spokesman for Goldman Sachs last night claimed that Lord Griffiths's comments had been taken out of context.
'He said we have had to tolerate inequality on a temporary basis for a limited period of time and he did not in any way welcome it,' he said.
'He also said that if the present extent of inequality was permanent it would be intolerable for our society.
'It would undermine social cohesion and that radical action would be required.'
However, it appears to be business as usual at London's banks.
The Centre for Economics and Business Research said the Square Mile is preparing for a 50 per cent rise in annual bonuses to a staggering £6billion.
But news of President Obama's crackdown sent shockwaves through the financial world last night.
Under the proposals - to be announced by the U.S. Treasury in the next few days - the seven banks and companies that received the most government money will have to cut payments to their top 25 executives.
Compensation for all executives - including cash pay and bonuses - will drop by around 50 per cent.
Companies targeted include Citigroup, Bank of America, AIG, General Motors and Chrysler.
The move, which was revealed by the New York Times last night, underlines Mr Obama's growing impatient with Wall Street and his determination to end the bonus culture.
He has already lashed out at the 'reckless speculation' and 'shortsightedness' which he believes led to the world financial crisis.
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