Be careful what you wish for

Banks, like any other business, try to attract the best talent available by offering the best conditions, usually the higher pay and bonus. By limiting the bonus they can pay to their employees, the Government limits the talent they can attract and makes it difficult for the banks to repay government money.

Bonuses is a flammable subject and the Government is trying to get some votes out of it but the politics of envy are hard to manage: you cannot generate just the "right" level of anger before everything gets out of control. And anger spreads quickly.

Banks should be able to pay whatever bonuses they want. The problem is that they should have never been bail-out in the first place. Socialising the loses and privatising the profits generates envy, and envy takes us one step closer to socialism. Norther Rock and RBS should have never been rescued by the taxpayers. The consequences of that are only now starting to appear.