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One of the most senior investment bankers in London has weighed in on the controversy over pay in the industry, attacking City and Wall Street employees as “greedy” and “inept”.
Bill Winters, the co-chief executive of JPMorgan's investment banking arm, laid the blame for the financial crisis squarely on the shoulders of his fellow bankers.
“The crisis is about the collapse of the integrated wholesale banking system. The primary culprit was a wholesale banking market where borrowing was made to the wrong people at the wrong price,” he told a debate hosted by the Investment Management Association.
Winters, an American who is seen as being close to JPMorgan boss Jamie Dimon, is regarded as a likely future leader of the Wall Street bank.
He said the banking crisis was caused by “greedy bankers, investors and borrowers” and “inept risk managers who relied on the rating agencies”.
His comments come as world leaders from the G20 move closure to agreeing collective legislation that would outlaw bonuses seen as excessive.
UK Chancellor Alistair Darling is also likely to push for greater transparency on pay, demanding the names of top earners are disclosed.
Winters's remarks follow a speech by Goldman Sachs chief Lloyd Blankfein three weeks ago in which he said multi-year guaranteed bonuses should be banned, while the clawbacks to recoup bonuses from loss-making deals should be introduced.
Blankfein said that much recent “controversy and anger” over the size of bankers pay is “understandable and appropriate”.
However, a survey of bankers out today shows they are sceptical that the G20 proposals will make the financial system any more stable. A report from jobs website eFinancialCareers.com shows that 47% of bankers think the reforms won't have any effect. The bankers surveyed agree pay will have to come down, but don't expect their own rewards to be reduced this year, with 88% saying that any impact will only become apparent in 2010.
John Benson, founder and chief executive of eFinancialCareers.com, said: “Financial professionals in Londonat present are split as to whether the proposed changes can make the banking system any more stable in the future. Likewise, few see any immediate impact on their own compensation levels in the coming months.”
Darling will ask bankers to crack down immediately on bonuses, rather than waiting for legislation to be brought in.
In a speech to this week's Labour Party conference in Brighton, Darling will say: “Let me assure the country — and warn the banks — that there will be no return to business as usual for them. In the next few weeks we will introduce legislation to end the reckless culture that puts short-term profits over long-term success.”
Reader views (27)
Mr Bill Winters is being punished by Mr Jamie Dimon for speaking the truth. Even when he made the right calls for shareholders. Banking relies on reputation and with some bankers lying about assets when selling them has hurt free markets. Being economic with the truth came mainly from New York and Mr Dimon has handled this badly. Investors should follow Mr Winters new career. Who is the link in JP Morgan for the FSA?
- Andrew, London
All very interesting. Bill Winters shows an admirable appreciation of society's general revulsion of the preposterous bonus payments made to those who speculate with other people's money and get away with it, at least for long enough to secure their families financial future for a generation. However sensible his comments, they were entirely unacceptable to JP Morgan's CEO, who felt obliged to sack Winters without warning the very next day.Winters may have told the truth about greedy bankers, but his colleagues have no intention of allowing that kind of truth from one of their own.
JJ
- Jj Breeze, London
When any of you ignoramus' have any clue what you're talking about you should waste your time leaving comments such as the ones above. None of you have any idea how hard all these bankers have worked all their lives and how they have done their best from saving the entire market from going into complete meltdown. Furthermore, just incase any of you didn't know, neither Bill Winters or any of his team received any form of bonus this year. He sacrificed it so that others would be able to get one.
- Alexander, London
JP Morgan - widely known to pay and treat its staff worst out of all big investment banks in the City now finds another way of cutting its staff's pay and a 'valid reason' for not paying its staff bonuses for a 3rd year running - by jumping on the Labour bandwagon of banker-bashers! What a rip off! My condolences to all the unfortunate people still working for the mighty JPM and doing 'first class business ina first class way'. LOL
- Panzerfaust, London, UK
If wages for working folks weren't so depressed, the interest rates need not have been lowered to the point that made all these 'investment bankers' salivate. Low interest rates may have stimulated home purchasing as intended, but the same could have been accomplished if real wages would have risen. I don't blame the consumer, I blame the corporations and the artificially low wages. Interest rates could have been left as they were. Now we're left with a shrinking consumer pool which will cause a further slowdown in manufacturing. We could be in for a real death spiral if wages don't increase.
- Phillip, St Paul, MN, US
@ carl, good question !
- John, Paris, France
A lot of these so called evil "bankers" get up at 5am, work all day, eat lunch at their desk and get home when their kids have been asleep for hours. They have nothing to do with the institutions responsible for the credit crunch and have played no part in the decision making process to lend money to people who could not afford it. They often work on low basic salaries and in turn receive bonuses for performance related profits. If we are going to demonise all bankers, lets make a start on the footballers. The trouble is that most people are happy for footballers to earn a huge wedge because they understand what they do for a living, unfortunately most average Joes don't understand at all what happens in the city and how it affects their lives ultimately. The earlier comment was correct. Cut the bonuses and the tax revenue comes tumbling down
Debbie, Surrey
- Debbie, Reigate, Surrey
Quote; Freddy, London. Greed is part of human nature.
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Only for some, Freddy; many people are not greedy at all.
I personally think, it is better to give, than to receive.
I get great joy and pleasure out of giving away, and helping people; after all, once you have all your basic needs; the rest is just greed and miserly.
Life is short; so why waste it gathering more than you will ever need?
The most valuable thing we all have is time; once it has gone, it is gone forever; and so are we.
Generosity and compassion are also other parts of human nature; just as love and hate are also.
Humans pick what type of human character they want to be; they do not need to be greedy etc; that is their choice alone.
- Mickinlondon, london
Having worked at JPM, I respect Mr. Winters but he falls woefully short. He and the other leaders within the financial industry may be able to 'grasp the obvious' problems which led us into this crisis but where are they as far as providing real solutions. Perhaps he, Mr. Dimon, Mr. Blankfein et al can work hard to address the questions embedded in this commentary, then he and his colleagues may be able to regain a degree of credibility and respect.
- Larry Doyle, Greenwich, CT, USA
Agree on the comments on borrowing and lending money to people they knew was not able to afford. but Mr Winters and Mr Black also are motivating his traders to take more risk and pressure them to make more money. Look where the money is coming from on the JP Investment Bank Revenues.
Shearholders are guilty as well for allowing this people to make such a big money. 20 years ago a CEO used to make between 15 30 times what a regular employee made in one year. Today Mr Dimon and co makes in ONE DAY what a regular employee makes in a year !!! IS THAT LOGIC !!!!
- Hugo Rodriguez, Buenos Aires Argentina
If the people these banks employ are greedy etc, doesn't that show that their recruitment process is flawed?
- Philip, London, England
This is ridiculous. Just about everyone was "drinking the Kool-aid" that the US Housing Market would go up and up - risk managers, investors (foreign and domestic), borrowers, bankers, credit enhancers, rating agencies, politicians, you name it. There is no single culpable party at which one can point a finger.
- Gary Miller, New York, USA
Those who want to know where Mr. Winters is coming from. and why he speaks as he does, should read the recent book "Fools Gold". He was not in favor and did not allow his department to willingly participate in the eazy Mortgage proliferation.
K.G.
- Kazimir Golac, Vancouver, B.C.
Will the press please distinguish between types of bankers. This mess is directly attributable to mortgage bankers who originated consumer loans and investment bankers who pawned them off on the world. Traditional commercial bankers should not be put in the same pot.
Investment bankers made the big bonuses - several times their salaries!
- Cjames, New York, USA
As Tony Blair works for the same institution does he include for former PM in his description of greedy and inept?
- Carl, London
I wonder if he includes himself in this "greedy" group of bankers. Forbes has his total annual compensation for 2007 as $21 million. Nice work if you can get it.
- Pc, London
Spot on Bill Winters. Time and again we hear that we should be blaming the consumer, they shouldn't have borrowed so much.
No they shouldn't have but the banks know that a large % of the population are economically illiterate and still gave them the money. The blame is firmly at their door.
- Nick, London
The Rating Agencies, whose very existence depended on the "Bank products" they were rating, willingly connived in the fraud of selling lemons to you and me (investors according to Winters, simply because we had money in the now destroyed pension funds and the like). The spivs in the Al Capone suits are also blamed. The government, and the Chancellor who praised them to high heaven, now wash their hands off, of the affair. When kicked out they will seek solace in the same "banks" at grossly inflated salaries, with guaranteed bonuses.
- Ram2009, Reading, UK
The govermnt don't want to stop them because of the tax it generates, If the banks charged less to there customers it means less tax to the goverment.
- Richard Edmunds, Rayleigh UK
What an idiot
He sets the contracts they sign and I am sure joins the recruitment panels.
The shareholders should rethink who should control their company.
- Alan, Llandrindod Wells
An economy is a reflection of it's people. Bankers serviced a market as they are capitlists and that's what capitalists do. The market was created by inept regulation and the government.
The people voted this government in.
- Hansel, London
I wonder if Bill Winters includes himself in this assessment of bankers working in London - I am sure that as co-chief executive of JP Morgan Mr Winters has received the odd bonus in his time with the bank.
Is he saying that he is overpaid?
And...
Do the shareholders know this?
Joe
- Joe, Kiev, Ukraine
Greedy consumers should also shoulder as much of (if not more so) the blame as no-one forced them to fuel a debt ridden buy to let & negative equity credit boom did they!!
Bankers (yes some are greedy but no more so than many consumers) just responded to the demand which was a consequence of the monetary policies to stimulate economic growth by removing safety nets & or never having any in place to allow for such a meltdown!!!
- Pl, London, England
Bravo, eventually a banker speaks out about their greed and arrogance. Also is that true "if you cut our pay we'll go and find a another job that does pay us well", is it really that easy piggies? FYI im self employed and my govt contract has just finished, I am now having to prepare to be out of work for some time because of you lot.
- Dac - Ealing, London
Greed is part of human nature; a good system recognises this and harnesses it for useful ends. That's the whole point of the profit motive and free market capitalism.
If you want to pretend to do away with greed, why not just be honest and say you want to return to total state control of everything ?
And if Gordon's new laws mean that a banker will only get a bonus of $1mn instead of $2mn, does anyone really think that will change his behaviour ? He will still seek to maximise his bonus, no matter what size it is.
- Freddy, London
The hipocrisy of people like Bill Winters, Lloyd Blankfein, Myners and Turner is unbelievable.
They have made their fortunes from the relaxed financial regulation and bonus cultures in the US and UK, now they think they can pontificate on others who are trying to do the same. It leaves the suspicion that they are all only saying these things to benefit themselves somehow and ingratiate themselves maybe with a government, for their own gain.... whatever they say and whatever the rights and wrongs of bankers and bonuses ultimately these leopards do not change their spots.
- Rikrok, London
Yep, Bill Winters has got it pretty much spot on...greedy bankers, investors and borrowers and inept risk managers are to blame. Unfortunately greed is part of human nature and almost every recession starts with what is popularly called a 'credit crunch' - its nothing new and this will happen again in the next 15-20 years, albeit with a different flash point.
Bill Winters is not reported as mentioning the part that UK and US Governments played in pressuring for every 'underprivileged' citizen to get the opportunity to be given a loan to buy a home....not to mention the SEC and FSA's incompetence in overseeing the financial system. Bush Jnr and Brown have a lot to answer for...Bush has already left office as the most unpopular President for decades - Brown will follow him in 9 months time.
- Paddy, London
