Bringing the bankers to heel must start right here, right now

This article was published in The Observer 16 January 2011

Big Finance has to be brought under control or outrageous bonuses will still be paid and there will be another crisis.

Bankers' bonuses unite everyone in outrage – from captains of industry bewildered how top bankers can earn so much more than they do to the newly unemployed who wonder what they have done to deserve poverty and hardship while the moneymen pocket millions. Last week, the country looked askance as Bob Diamond, the richly rewarded incoming CEO of Barclays, attempted to argue to a parliamentary select committee that bonuses were simply an immutable fact of banking life and that the time for remorse and apology by bankers was now over. Echoing the prime minister, he wanted everyone to move on.

That's not going to happen. Bank bonuses, which Big Finance and its governmental apologists insist cannot be changed except by a nigh-impossible international agreement, are but the visible sign of ongoing dysfunction in the financial system. Big banks across the industrialised west are too big to fail, too concentrated and too able to manipulate the markets in which they operate to create super-profits, thus throwing up the incredible bonuses.