What did the Governor of the Bank of England think of Goldman Sachs’ plan to wait until the 50p rate is cut in April to pay bonuses? At this morning’s Treasury Select Committee, Mervyn King declined Teresa Pearce’s invitation to label it ‘morally repugnant’ but did declare it ‘depressing’, ‘clumsy’ and ‘lacking in care and attention to how other people might react’. According to the BBC, Goldman Sachs has since decided not to press ahead with the plan — perhaps they heeded King’s warning that ‘in the long-run financial institutions, like all large institutions, do depend on goodwill from the rest of society’.
Here’s the video and transcript of King’s comments:
Teresa Pearce: ‘Sir Mervyn, just as a matter of opinion, on the recent reports of people deferring their bonuses to the 6th of April — do you think that’s ordinary tax planning or do you think that’s morally repugnant?’
Mervyn King: ‘Well it’s clearly not unlawful. Investment banks are in a privileged position, because a lot of their compensation comes in the form of a bonus, the timing of which can be adjusted. And I find it a bit depressing that people who earn so much seem to think that it’s even more exciting to adjust the timing of it to get the benefit of a lower tax rate which they will benefit from in the long run to a very great extent, knowing that this must have an impact on the rest of society. Even now it’s the rest of society which is suffering most from the consequences of the financial crisis. I don’t know what will happen — they haven’t made any statement — but I think it would be rather clumsy and lacking in care and attention to how other people might react. And in the long-run financial institutions, like all large institutions, do depend on goodwill from the rest of society.’