Events | 2009.10.21
Darling blasts Goldman Sachs bonuses
Chancellor attacks Wall Street bank\'s £10bn payout plan after vice-chairman Lord Griffiths says huge salaries are price worth paying
Alistair Darling has openly criticised Goldman Sachs over its plan to pay huge staff bonuses so soon after the financial crisis nearly crushed the banking sector.
Speaking at an event in London this lunchtime, the chancellor cited the Wall Street giant as an example of a bank that "manifestly" failed to appreciate how the City landscape had changed.
"What happened with Goldman Sachs last week sends the wrong signals," said Darling, who was attending an event at Canary Wharf. "I\'ve spoken to all our banks and none of them would be standing here today if the taxpayer hadn\'t put their hand into their pocket."
Goldman Sachs itself does not appear to share Darling\'s concerns. Last night, Lord Griffiths, vice-chairman of Goldman Sachs International, claimed that huge salaries were a price worth paying .
"I believe that we should be thinking about the medium-term common good, not the short-term common good ... we should not, therefore, be ashamed of offering compensation in an internationally competitive market which ensures the bank businesses here and employs British people," said Griffiths.
The City is expected to pay out £6bn in bonuses this year , 50% more than a year ago. Last Thursday Goldman revealed that its bonus pot had swelled to $16.7bn (£10bn) , after the company almost quadrupled its profits in the last quarter. Unless the firm\'s fortunes take a sudden reversal, its staff can look forward to an average bonus of $700,000 each.
Darling insisted that the government had already taken steps to prevent a return of the excesses that led to the crash, by banning cash bonuses at the partially nationalised Royal Bank of Scotland.
"It\'s very important that a clear message is sent that if you make a mess of things, you don\'t get rewarded for it," said Darling.
RBS, though, has still built up a £2bn pot to share between its 20,000 investment bankers.
Darling also criticised the Conservative opposition for pledging to make dramatic cuts in public spending to bring down the government\'s huge borrowing requirements. "The Tory party sometimes seems to wallow in the idea of spending cuts, which they\'ve probably wanted to make for ever," the chancellor claimed.
Darling is himself expected to announce spending cuts in the pre-budget report next month. But he insisted that the UK economy could grow its way out of trouble. "As a country, we have a choice. You can say there\'s nothing we can do, wallow in an age of austerity, tell people there is no alternative. That is a poverty of aspiration.
"Or we can say, yes we can make a difference, there are jobs out there, we have a diverse economy with many strengths, ready to seize the opportunities of the future," he said.
Some retailers have urged the government to maintain the temporary reduction in VAT to 15% beyond 31 December. But Darling said he was not prepared to do so. "It\'s interesting that many people who said it was useless and not very helpful are now saying: \'Could you extend it a bit?\' But that\'s life."
For more information, please visit
http://www.guardian.co.uk/business/2009/[...]arling-attacks-goldman-bonuses
