With the focus on the corona virus my attention like many others has been elsewhere. But it remains important to stay in touch with what is happening in the banking world. In the weekend came an excellent opinion piece from Sheila Bair in the Financial Times. Ms. Bair was chair of the FDIC in the US and she has solid insight into the issues facing banks. She has long been a proponent of strong capital for banks and comes with a relatively sensible suggestion that banks halt dividend payouts and share buybacks during the time of economic stress arising from the impact of the corona virus. She goes further and suggests that now is also the time for a moratorium on discretionary bonuses. That is leading by example during a time of stress.
Clearly that leadership message is not shared by Goldman Sachs who just awarded their new CEO a total pay package for 2019 of $27.5 million as reported by Bloomberg. Many bankers wonder why their reputations have suffered over the last several years. Perhaps looking in the mirror at their compensation practices which seem to be disconnected from economic reality may help them understand the source of their bad reputations. Or maybe leading by example is not very important?
