Goldman boss speaks up for bonus culture

LORD Griffiths, the vice-chairman of investment bank Goldman Sachs, has put his head over the parapet after claiming the public should tolerate bumper City bonuses for the good of the UK economy.<br /><br />Griffiths, a former special adviser to Margaret Thatcher, said he was not &ldquo;ashamed&rdquo; of the generous reward policy at Goldman, which last week inflamed the bonus debate by revealing it is on track to hand out a record $22bn (&pound;13.2bn) to staff at the end of the year.<br /><br />Speaking at a debate on regulation and ethics in financial services at St Paul&rsquo;s Cathedral on Tuesday, Griffiths said the public should &ldquo;tolerate the inequality as a way to achieve greater prosperity for all&rdquo;.<br /><br />&ldquo;I believe that we should be thinking about the medium term common good, not the short term common good,&rdquo; he added. &ldquo;We should not be ashamed of offering compensation in an internationally competitive market which ensures that businesses stay here and employ British people.&rdquo;<br /><br />Griffiths&rsquo; comments came after Credit Suisse on Tuesday said it would hike the base salaries of its executives to compensate for new regulatory limitations on bonuses.<br /><br />Financial Services Authority chairman Adair Turner, who was also speaking at the debate, said the new G20 guidelines on compensation would make some difference but would not be &ldquo;a magic panacea or silver bullet&rdquo;.<br /><br />&ldquo;When you have irrational exuberance, even people who are paid in a deferred fashion with clawback believe their own propaganda,&rdquo; Turner said.<br /><br />All of the major UK banks and international investment banks have now signed up to a Treasury agreement to implement the G20 reforms, which include deferring bonuses over a longer period, paying a proportion of them in shares and subjecting them to clawback measures.