Nassim Taleb: If Bankers Don't Like Bonus Caps They Should Grow Some Balls And Start A Hedge Fund

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"I admire the move by the European Union to restrict the bonuses of that class of privileged civil servants called "bankers" — a recognition that the taxpayers have the right to control the income of those they subsidize and bail out, just as they set the salaries of other state-sponsored workers. Alas, bankers in their current status are an offense to capitalism; they are in a strange situation of having upside without downside, no skin in the game. As an additional insult to the taxpayer, bankers paid themselves the largest bonus pool of their history in 2010 — thanks to Troubled Asset Relief Program. If a banker wants to be free in his income, he should start his own hedge fund. Because hedge fund operators are invested in their funds; they typically have 50 times more risk as a share of their net worth than their largest customer." [NYT]

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Deferring 'Significant' Amounts Of Compensation, Placing Caps On Bonuses Not Working Out So Well For Barclays

Only in that senior people the bank worked hard to recruit are quitting en masse. Otherwise, it's great. Barclays spent a decade assembling a team of the most successful gas and power traders in Europe. It took less than 16 months to lose most of them. Mercuria Energy Trading SA, based in Geneva, hired five members from the group of about a dozen from March 2011 to June this year, including Phil Sutterby as head of U.K. and European gas and Roger Jones, the former global chief of commodities, according to people with knowledge of the moves. Another six left for companies including UBS, Noble Group Ltd. and Freepoint Commodities LLC. The departures from the U.K.’s second-biggest bank reflect bonus caps, limits on the amount of money traders can risk and shrinking revenue from the division that includes commodities. While hiring from hedge funds and rival lenders helped Barclays catch up with Goldman Sachs and Morgan Stanley in commodity derivatives, according to Greenwich Associates, a focus on deferred pay left the bank vulnerable to headhunters. “The significant amount of deferred compensation and the aggressive cap on cash payouts at Barclays has unsettled a number of individuals,” said Peter Henry, New York-based head of front-office research at Commodity Search Partners. “Add to that the fact they have been systematically targeted by privately held trading houses, specifically Mercuria, and it’s fairly understandable why senior traders are leaving.” Bonus Limits Spark Exodus At Barclays Trading Unit [Bloomberg]