February 11, 2009

Sorry is not enough

Former bank managers have publicly apologized for their wrong decisions which led their banks to lose millions in risky transactions, while at the same time they were receiving huge bonuses and taxpayers' money to pay for their failures.
The anger of the society is understandable as the misbehaviour of those executives was rewarded with public money, and a simple apology won't solve anything. If the correct decisions would have been taken by those executives, who perfectly knew about the volatility of the financial environment, the money that is being used in the bank bailouts could have served to invest in public infrastructure to help the economy boost again. The problem is that private banks have too much power and when they take bad decisions, they perfectly know that the governments will do almost anything to rescue them, in order to prevent an understandable social chaos that would surge if people lose their money. But to which extent can the government intervene in putting limits to bonuses for executives of the financial sector? At least, more restrictions should be imposed to banks that receive public money in order to limit the exorbitant amounts their executives receive in reward for their narrowness.

Cynically, the Royal Bank of Scotland's former CEO, Sir Fred Goodwin, told the UK Treasury Committee he "could not be more sorry", but at the same time said that if bankers felt they aren't paid enough, they will leave. Such a comment demonstrates the sense of untouchability these people have, apologizing and justifying their high pays at the same time.