Bankers Agree They Get Paid Way Too Much: Survey

06/06/2013 11:31 am ET
  • Mark Gongloff Managing Editor, Business and Tech, The Huffington Post
AP

If you are like 99.999 percent of humans, then you make much, much less money than bankers. You are likely aware of, or even angry about, this. But you are perhaps unaware that bankers feel almost as badly about it as you. Almost.

In a new survey of United Kingdom financial-services employees by the Chartered Institute of Personnel and Development, a human-resources trade group, 75 percent of them agreed that some of their colleagues are paid too much. Even two-thirds of senior managers -- those colleagues most likely to be overpaid -- agree with that complaint.

What's worse, about two-thirds of the financial-services employees surveyed said that high pay was encouraging risky behavior. In other words, absolutely nothing has changed since the financial crisis, which happened in part because of bankers taking big risks to chase more pay.

“For too long, many of our financial institutions had been built on cultures that encouraged and rewarded excessive risk taking and singular focus on short-term financial gain," Peter Cheese, the deliciously named chief executive of the CIPD, wrote in a press release introducing the survey.

"The survey suggests we still have a long way to go in transforming culture in the banking and financial services sector," the CIPD added in the release.

About two-thirds of those the CIPD surveyed said they had no idea why some of their colleagues got paid what they did, and a similar percentage said that pay at the top of their industry's heap was a particular source of mystery. More than half of those top employees apparently shrugged and said, "Yup, that's right, we have no idea how we get paid, either."

This is not the first-time bankers have expressed sympathy for the idea that they get paid too much. Former Morgan Stanley CEO John Mack admitted it last year, as did current Morgan Stanley CEO James Gorman.

So far there have only been half-hearted stabs at reining in pay. The European Union last month announced its plans to impose a cap on the bonuses of the best-paid, riskiest bankers -- although that could have the perverse effect of simply driving salaries through the roof, some regulators warn.

In the United States, the 2009 Dodd-Frank law gave bank shareholders the right to say yea or nay on executive pay. So far, not much has come of that, beyond the splashy downing of former Citigroup CEO Vikram Pandit's 2011 package.

Though bankers acknowledge they are getting paid too much, and that their overcompensation could well result in another financial blowup, they don't want to be punished too harshly in the event such a thing does happen. Only 29 percent of those surveyed think top bankers should be sent to jail for "gross negligence or misconduct."

Encouragingly, a large percentage of employees did say that, since the crisis, their firms have done more to encourage ethical behavior and being kind to muppets, or "customers." But zero percent of employees said their bonuses had shrunk, and another zero percent said they were being paid more of their bonus in shares instead of cash.

Less than half of the employees surveyed consider customers their most important stakeholder. And 17 percent said they had felt bullied or pressured to do things that were unethical, or not in the best interests of the muppets.

About a third of the bankers surveyed said they thought public anger at the banking industry was overblown by the media. But as long as they keep getting paid too much, taking wild risks and fleecing customers, that anger will only grow.

And it is justified.

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