Governor finds bank’s hesitation depressing

LONDON - Reuters

Bank of England Governor Mervyn King said yesterday it was “depressing” that banks like Goldman Sachs were planning to delay paying bonuses this year until after a drop in income tax rates.

Goldman Sachs is considering such a delay in Britain until after April 6, when the top rate of income tax falls to 45 percent from 50 percent.

“I find it a bit depressing that people who earn so much seem to think that it’s even more exciting to adjust the timing of it to get the benefit of the lower tax rate,” King told a panel of U.K. lawmakers when asked about Goldman’s plan. He said while this was not unlawful, the delay was being done at a time when the rest of society was suffering most from the consequences of the financial crisis. Britain had to shore up and nationalise banks during the 2007-09 financial crisis, sparking public anger over bonuses when the government is freezing public pay and cutting expenditure. “I think it would be rather clumsy, lacking in care and attention to how other people might be,” King told parliament’s Treasury Select Committee.

“And in the long run, financial institutions, like all large institutions, do depend on good will and the rest of society. They can’t just exist on their own.”