The announcement this week by Goodman Sachs that it has set aside $13.1 billion for its pay and bonus pool is simply obscene.

This is the same company that engaged in ‘betting’ on a collapse in the sub prime market in 2007-2008 putting in place the structure for the beginning of the Global Economic Crises.

The same company decided in 2008 to pay 1556 employees bonuses of at least $1million each using TARP funds. (TARP funds are monies utilized by the United States Treasury during the 2008 financial crisis in an attempt to stabilize the American economy. These funds were used to rescue financial institutions which were deemed “too big to fail,” out of concern that failure of major financial institutions could plunge the American economy into a depression.)

In other words they used American taxpayers money to pay their executives bonuses for helping create the financial crises.

Sure the company repaid the TARP funds in 2009 using profits made during the GEC. In fact the US Government is prosecuting Goodman Sachs for one such ‘deal’ where they colluded with a hedge fund to stuff a mortgage-backed security package with specially selected, doomed home loans. For this kind of activity they pay bonuses?

The bonus allocation at Goodman Sachs equates to roughly 43% of its total revenues. Now that is not profit we are talking about but revenue.

Banks are meant to support society, but instead taxpayers\’ support guarantees that whatever happens to the economy banks will continue to pay gigantic bonuses.

Have the investment banks learned nothing from this last speed bump in their desire to rewards themselves so grandly. At the peak of global greed many of the rescued financial institutions were paying bonuses on revenue generation and not profit. Now in simple terms it meant that it did not matter if a particular product was profitable let alone risky just as long as it produced increased revenue. Try and run your household in that manner!

The FBI has increased its interest in alleged criminal activities related to foreclosures in the US. It seems that employers were acting as ‘robo-signers’ -blindly signing off on important documents in thousands of files per month — rather than reading and reviewing the paperwork for accuracy as required. I dare say these same employees were paid significant bonuses as well.

If we wander across the Atlantic we see even more examples of the greed and obscenity of the banking industry.

RBS or as it was once known, Royal Bank of Scotland, is now 84% owned by the United Kingdom Government. Yet here is this ‘taxpayer owned’ bank charging its customers 19.1% for overdraft interest. That is despite the same bank paying its customers the princely sum of 0.5% for savings and deposits.

Recently Eddy Weatherill, of the Independent Banking Advisory Service, said banks are \’fleecing their customers\’.

One thing for certain is that the more things change in the financial markets the more they remain the same.

The continued abuse of the financial sector in the western world and the emerging ‘super bonus’ cult in the Asian financial sector simply confirms that ‘things remain the same.’

Is this sustainable? Well as long as the financial institutions have simpletons like us of course they will survive. They can simply charge us more for doing less with an attitude of ‘where else can you go?’ Take the ATM fiasco in Australia where the average mug is charged $2 every time he/she wants to get some of their own money- if they use another institutions ATM. I vividly recall seeing for the first time the ‘Free Money’ sign over an ATM in the UK. I thought my luck had changed.

Is it ethical? I suggest not. My belief is that profits generated by financial institutions should be first directed to their shareholders not the paid employees. It is the shareholders that own the company not the top Executives.

Should the CEO of the Bank of America be paid 131 times the average salary for the bank’s staff? Is the CEO of the Commonwealth Bank in Australia worth $16 million per annum? I don’t believe so.

Search for sustainable banking and you will see that there are very few retail banking solutions offered. Search for ethical banking and the options are of a similar nature.

Surely the time has come for society to demand a less obscene abuse of the financial system. Jeuken and Bouma in their article “The Changing Environment of Banks’ 1999 suggest “banks may be able to support progress toward sustainability by society as a whole—for example, by adopting a ‘carrot-and-stick’ approach, where environmental and social front-runners would pay less interest than the market price for borrowing capital, while environmental laggards would pay a much higher interest rate.”

Perhaps we can use the same ‘carrot-and-stick’ approach to banking executives – the carrot being they keep their jobs if they provide a reasonable return to the shareholders and the stick being they lose their job if they don’t. Sounds to me very much like being involved in a start up.

What do you think about the banking industry?