'Across the USA, and indeed the rest of the world, the banking crisis has been one of the most closely watched and hotly debated issues of our era.

But as the debate rages across the political parties of the US, and the proposed concessions - from capping executive pay to taking a stake in the banks which benefit from the bail-out - begin to run to many pages, it is amazing that one significant element to the solution does not seem to have yet been raised.

Reports indicate that the original proposed bail-out equals about $5000 for every taxpayer  in America. So why has no one apparently considered how much that could be brought down if those irresponsible directors of the major banks had their bonuses clawed back to put into the funds ?

In one year alone, reports have stated that the very top bankers earned in excess of $100m each. If just ten directors returned their bonuses, then, this would account for $1billion of the desperately needed funds.

And that's not even to consider previous years' bonuses or the bonuses of so many second tier directors, whose bonuses go into $10million or more. If all 07 / 08 bonuses were returned, how much could the rescue package be brought down by? 10% ? 20% ? And if the directors aren't prepared to invest their cash, why on earth should the American people?

Large banks such as Goldman Sachs, JP Morgan Chase and all the other major players have enjoyed an unprecedented 15 years of growth on the back of mergers and acquisitions, so much so that it is questionable whether these much heralded 'Masters of the Universe' ever deserved their bonuses in the first place, or whether they've simply ridden too long on the back of economic growth.

The bail-out is only acceptable as long as this is not one rule for Wall Street and another for ordinary businessmen. For any other business in the US or UK, the only solution would be bankruptcy and loss of assets. The fact that no assets appear to be clawed back is surely an example of how far the banks and the US government are prepared to go to protect each other.

The banks who have developed ill-structured products should feel the repercussions of this bail-out as the death knell to remove irresponsible and greedy men who held such underserved positions without any credence. It's time they were held accountable and weeded out of their positions of power.

As Vito Tanzi, ex-director of IMF Fiscal Affairs Department, put it so well, "I feel very uncomfortable with using that amount of money to rescue the same guys that created the problem. This will create enormous moral hazards and definitely will put a black mark on the market economy and the free enterprise system'.

David Collett is CEO of Green CO₂ Plc (www.GreenCo2plc.com) an energy services company.

Green CO₂  plc was established in March 2005 with the mission statement to remain committed to supporting environmental initiatives to reduce carbon emissions, and to provide the EPC assessors and logistical services required to implement Government legislation.

Reader Comment:

1. 'Unfortunately, I think Mr Collett misses the point - the so-called 'Masters of the Universe' were usually paid most of their spectacular bonuses in company stock, not cash, which was locked in for a number of years. Hence if these directors repaid the bonuses now, then the sum of the repayment would have a value far short of that when originally awarded. In other words, a substantial amount of the value of those bonuses has been lost through poor performance, which seems equitable if the award was made for creating value in the first place'.

2. 'Great idea in principle, except most of these bonuses are in shares which are close to worthless, as buyers are scarcer than rocking horse dung. I still find it ironic that the rescue deal of $700bn was turned down, yet the stock market proceeded to lose almost $1 trillion in one day instead'.

3. 'And of the bonuses that were paid in cash, respective governments have likely taken a large percentage in tax already'.

4. 'Another important point this gentleman (and many others) are missing, is that the investment banks were 'merely' the liquidity providers for the primary market. The mortgage brokers, mortgage lenders and commercial banks are equally responsible for what happened. And let's not forget the regulators. Perhaps they should all give up some of their pay ?'

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