Thu Jan 24, 2013, 08:48 AM
HiPointDem (20,729 posts)
Cut bankers' pay or risk another crash, IMF chief tells financiers
Christine Lagarde, the managing director of the IMF, has warned that "corrosive" inequality was hindering the world's economic recovery.
In a combative speech to an audience of some of the world's wealthiest financiers at the World Economic Forum, Ms Lagarde said that bankers' pay should be cut to close the gap between the rich and poor. "Excessive inequality is corrosive to growth; it is corrosive to society. I believe that the economics profession and the policy community have downplayed inequality for too long" she said...
Ms Lagarde told delegates that bankers' pay is too high. "We must move in the direction of more prudent compensation practices" she said. "Ultimately, this is all about accountability: we need a financial sector that is accountable to the real economy– one that adds value, not destroys it"
Ms Lagarde was speaking after Jamie Dimon, chief executive of US bank JP Morgan, launched a scathing attack on banking regulators, who he accused of botching attempts to protect taxpayers from future bailout costs. "We're trying to do too much too fast, we should just focus on the basics" he told delegates in Davos. He added that regulatory attempts to cut large banks, such as his, down in size was wrong-headed and that the sector had been the subject to a campaign of "scapegoating and misinformation". Mr Dimon also apologised to JP Morgan shareholders for the "London Whale" fiasco which saw the Wall Street giant rack up trading losses of $6bn last year – but added that "life goes on".
The chief executive, who saw his bonus cut in half to $10m over the Whale fiasco, said that none of the bank's customers were hurt by the losses and insisted that the affair could not be bracketed with other recent offences such as interest rate manipulation and money laundering.
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