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Hat's off to the Brits. Britain is the first country to adopt rules for bank bonuses.
What are these rules? Following a five month consultative period the Financial Services Authority published its final code which is effective January 2010. The codes are very simple and straightforward. They say that bank bonuses can be guaranteed for only one year and not be several times a banker's salary.
The regulator backed away from a proposal that would have required banks to defer bonuses over several years.
These rules will apply to 27 financial institutions with headquarters in Britain. The regulator exempted non British banks unless they were part of a group that contained British banks whose capital exceeded 1 million pounds or $1.6 billion dollars.
The regulator make it clear that it is not imposing a cap on bonuses or incentive pay. He said that such decisions would be left up politicians and "the society as a whole."
Is Wall Street next? There are proposals on the table by US Treasury Geithner to do something about the bonus question. The public at large is clamoring for some kind of resolution to the bonus question.
Do you believe that bank bonuses should be capped?
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Reader Comments (Page 1 of 1)
8-12-2009 @ 8:29PM
william lindblad said...
The "bonus" system it's self needs regulation or a basis of "reality" controls, not on a system of creating falsehoods to make the recipients appear worthy. The latter is the method that created the current mess. At one time banks were very conservative and did their own internal "policing", that is, until Glass-Stegal came along. It would appear that this is the starting point - the point at which commercial and savings banks also became pseudo investment banks. Without further elaboration, the U.S. business "bonus" model, from CEO's down thru the ranks can either clean up it's act with rewards based on merit and ability or look forward to government regulation. Given the present mood of public sentiment it is near certain that Congress is going to move on this subject in the near future. The U.K had similar problems like in Northern Trust and RBS that compare with AIG and Merrill. They also use a parliamentary system that is comprised of many parties and Gordon Brown has been walking on thin ice. Over here we are of the B.S. walks and money talks mentality while over there, it's more deeds speak! They have had their share of scandals too, and even the speaker of parliament got the axe, and that's a first.
8-13-2009 @ 7:18AM
P McBride said...
The government needs to get itself out of private business. Banks did not cause the problem we had with the banks. The government did and specifically those who are in the congress right now along with 2 or 3 democratic presidents who decided everyone should own a home even if they could not afford to. They took pretty much all the decision making away from the bankers (who tend to be conservative decision makers) and forced risky and riskier loans. To now have the same group making the rules for the banks they about destroyed is ludicrous.
Althought these folks in government are all about the blame game and pointing fingers, it is time for them to face the reality that they caused a world wide recession and did grave damage to our economy of a magnatude not seen since the great depression along with problems all over the world.