Friday 28 October 2016

Elites still can't see just how much damage they are doing

Published 20/09/2015 | 02:30

'The financial elites in this country never cease to surprise'
'The financial elites in this country never cease to surprise'

The financial elites in this country never cease to surprise. They are detached from the reality of the rest of us, unwilling to take on board advice from the little people, and deluded into thinking they are doing a good job.

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We are talking here about bankers, their regulators and senior officials in government departments.

The global crash of 2008 has left them protected and still powerful, instead of prompting the much-needed reform the crisis demanded.

A good example of this was the controversial reversal of pay cuts for some 600 high-earning public servants back in 2010.

The initial plan was that public servants at the assistant secretary and deputy secretary levels - and equivalent grades throughout the public service - would be subject to pay cuts of between 8pc and 12pc. However, in a move that shows you how the elites hold sway, the reductions were reduced to between 3pc and 5.5pc.

Just as extraordinary, and more recent, is the attempt by the Central Bank to force insurance companies, banks, financial advisers and brokers, and investment funds to pay a higher levy to fund their gold-plated defined benefit pension scheme. The higher costs will be passed on to consumers.

The scheme is enjoyed by 1,364 staff. In the private sector, such schemes are largely closed to new members, with many drastically reducing the pension benefits members had expected.

At present, the cost of regulation is paid for 50-50 by the industry and the State, through the Central Bank.

Governor Patrick Honohan wants the industry to foot the entire bill. This is the same Central Bank that failed to spot the financial iceberg we hit seven years ago.

But then who can blame him when AIB got away with taking €1bn out of its loan book to prop up its staff defined benefit scheme.

All of this shows that the financial elites continue to get off more or less scot-free, with their generous benefits in place. Meanwhile the political establishment has imposed austerity for the masses.

We could probably just about take austerity if we saw some measure of punishment for the bankers, the ineffective regulators and the senior officials. Instead, the elites have been nothing if not timid in their response to the crisis.

Banks continue to rip off variable rate customers, have to admit to overcharging almost weekly, and motor insurance premiums are surging.

The little people go on picking up the bill for financial recklessness, while the elites look after themselves. And they don't even see a problem with this situation.

Sunday Indo Business

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