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EU Parliament Votes To Cap Banker Bonuses At Half Salary
In another unpleasant development for European bankers, the European parliament has proposed to cap bonuses at half the base compensation. In a business where bonuses traditionally run many multiples of the base salary in exchange for providing "financial innovation" this will surely force yet another round of racketeering from the industry, which will now claim that absent proper incentivization, the entire world will surely end. Furthermore, the proposal aims to cap salaries at bailout recipient firms at €500,000 and at
least 40 percent of any bonus would be deferred for five years. If this law does pass, and if attempts at scaring the world at the horrendous consequences of this action fail, expect to see boats full of Hugo Boss-clad 22 year old swaption traders to weigh anchor at the Battery Park City marina and flood new york with even more investment "professionals" even as the London City becomes a ghost town.
From Bloomberg:
“If bankers and traders want to leave and go to other jurisdictions, it just shows that they do not have confidence in their own performance,” Sharon Bowles, chairwoman of the committee, said in an e-mailed statement today. “To those that would leave I say good riddance.”
Lawmakers around the world have blamed bonuses for the excessive risk-taking that contributed to the worst financial crisis since World War II. Sweden proposed laws last year that would force bankers in Europe to defer part of their bonus for three years and receive at least 50 percent in shares.
The plans for bankers’ pay will be voted on by the whole EU Parliament in July. The measures are proposed changes to draft rules on bank capital published last year by the European Commission, the 27-nation EU’s executive body.
Sure enough, local bankers are less than ecstatic about this:
“I think it’s extremely short-sighted,” David Buik, a market analyst at inter-dealer broker BGC Partners in London, said in a telephone interview today. “I understand the political expediency, I’m quite happy with capital requirements, but don’t kill off invention and innovation.”
Presumably "invention and innovation" are code words for a timeshare in a left bank chateau, a vineyard and a third Murcielago, these days.
Yet all that will really happen is to polarize society even more, with the bulk of European employees falling under the auspices of wage-cutting austerity, even as Wall Street and its transatlantic equivalents prepares for another year of record bonuses as HFT 3000 takes the Dow to 1 quadrillion on 2 SPY blocks.
“The public won’t accept, in the era of austerity, people to make such huge amounts of money,” Peter Skinner, a U.K. Labour member of the EU parliament, said in a telephone interview today. “I saw people in the middle, left and right support it,” Skinner said.
Alas, in a world in which the laws are determined by the financial inventors and innovators, this law has a virgin's chance at a Goldman elf party in passing.
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Just plug the damn hole!
Fine, let's go a few years without a single new financial invention or innovation. I'd be willing to risk it.
Annnd ... we have a winner, folks.
Dude, that's just crazy talk.
Since they burned through the actual fuel source many years (decades?) ago if you remove the lighter fluid (aka "invention and innovation") the fire's going to be extinguished rather quickly. You don't expect these guys (and gals) to work for salary, do you? How do you budget for those large purchases without that massive bonus at the end of the year? :>)
Bonuses? Bankers can have bonuses...How about 500,000 coffee enemas?
As I see it, they wont quit inventing or innovating.
In the world of hustling, you need to come with new tricks or refresh forgotten ones if you want to keep conning people.
Tough rule but the rule.
Once in position in the US, they wont be able to stop what they need to do to live.
The good point is that they will be there on a revenge and will use the US monetary means to punish Europe.
financial invention? Is that like "financial innovation" like "its too complicated just send a check to your broker" like "only computers can do this math this fast" complicated?
I call bullshit.
“If bankers and traders want to leave and go to other jurisdictions, it just shows that they do not have confidence in their own performance”
Wait, so if I leave to get more incentive based compensation, I have less confidence in my performance abilities?
No if you leave, we who pay you have no confidence in you since you failed at your last job.
This is how it works on the front lines: you fail you get fired. Unions are protected species and do not count other than to be yet another contingent representative of extortion.
Dude are you still in the 70's?? Unions have been beaten down so much these days you need to update your hate meter
au contraire
Obama's $59 billion giveaway to unions:
http://www.washingtontimes.com/news/2010/jan/18/obamas-59-billion-giveaw...
Obama & Unions:http://www.ecoworld.com/government/obama-unions.html
"Wait, so if I leave to get more incentive based compensation, I have less confidence in my performance abilities? "
That is exactly the way I read the nonsense. Stay and get paid like the receptionist, or leave and take your chances. Receptionists seem to stay until their hearing fails. Productive sales employees will take their chances. As will the successful money runners.
Will they apply the same salary caps to footballers? Slow right backs will be pleased.
I think most people here understand the principle that you can't fix a problem of too much debt with more debt.
Well, you can't fix a problem of too much government intrusion into the economy (central banking, TBTF, bailouts, perverse regulations and incentives, perverse tax codes, stimulus, inflation, etc.) with more government intrusion into the economy (limits on compensation).
It used to be that one's pay was not subject to the public's acceptance. Today, apparently people on the Left, Middle, and Right all agree: your life, liberty, and property are all subject to the public's fickle whims.
It's no whim that the these supposed geniuses have tanked global economy and then have to have the government (the people, where I come from) bail them out. If they get bailed out they damned well deserve no bonuses, pay cuts would be more apt.
That they get even 500,000 euros is a disgrace.
Yes. The lending officers should not have ever trusted that any government loan would be repaid. Lending deposited citizens money to governments should be criminalized as it only leads to bailouts.
Half off of obscene is still outragous!
Yes, it's the Road to Serfdom where the "planners" ruin everything.
Hopefully the 2nd American Revolution will come soon enough to reset things back to how they should be.
Some of our enemies might come from England, but they won't be wearing red coats this time.
Further, we have every bit as much likelihood of infighting and descending into chaos as we do unifying against a common enemy. This thing plays itself out before we get the chance to mobilize. It ends with regional robber barons and a massive whittling of government aid as well as a complete demolition of rudimentary protections from robber barons. Meet the new boss...
My suggestion is to start making your back strong and calloused to the whip.
The day that I get a tax rebate, in the mail, the funds from which come from a retroactive clawback of all bonuses paid in any firm that received direct or indirect bailouts, I will happily agree with you.
Until that day, the public's fickle whims absolutely matter.
Have you considered the natural response to hubris?
There has to be a way to make a joke about this 50% haircut which includes the phrase "how the other half lives."
Soooo....shall we set up a few pillboxes at the Battery Park marina?
I'm all for playing the part of ze Germans in a re-enactment of The Longest Day...except this time, Robert Mitchum will NOT be saying "OK, run me up the hill, son..." at the end...
Yes well that's been the problem all along, hasn't it. There is just no money to be had in simply doing honest business that doesn't burn everything up in a fit of greed.
Give them each 5 acres and a shovel. Let them grow their own food. I'm sure their big, big brains can "innovate" and leverage soil & vegetables into a small fortune in less than two seasons... without farm subsidies.
BTW, the only 22 yr. old whiz kids working in the EU are americans. European kids linger at university for 5-6 years, minimum... there's no hurry to 'innovate' when you have cradle-to-grave promises from the nanny state. Oh, how things are going to change...
Tim Geithner will never allow this to happen!
'Cause if it does happen, then banksters won't be able to threaten the dimwits in Congress that if Congress busts up the too-big-to-fails, they'd jsut pick up and move. Move where? Andorra? isle on no-Man? To the People's Republic? go ahead!
No problem, just increase the salary on paper, agree that you won't get paid that much but your bonus is equal to half of the "On Paper" salary. I mean, what's paper after-all, but paper.. /end sarcasm
why bother with paper.. just give them all AMEX black cards tapped into the FED & IMF
..and Hedge Funds? Shelf-Cos that are subs ... CTAs that are dressed up? Its unpolice-able. (why not create an energy trading Co instead, then buy and sell derivs as an offset vs. the instruments you really want to deal in. This is going to be the easiest thing in the world to go around. One things for sure - Andy Hall ain't takin' no 50% of base... hahahaha
As governments exist in the present period as unknowing functional appendages of Banks, sometimes one (government) goes rogue and must be spanked.
As the flash crash was a warning of a possible spanking, one wonders what is in store in the case of a real spanking.
We await the unfurling and descent of the mighty Banker hand onto the pristine pink buttocks of the UK.
The screaming shall deafen us all.
http://www.youtube.com/watch?v=DtcSYPjJbgg
God's work is never done!
Bankers distaste of public whims affecting their utterly undeserved bonuses, ignores the fact that the bonuses are coming from the public trough and not from any "innovation".
An evidence that people cannot self limit.
Somehow, they called it on themselves.
They could have as well noticed they were graced over their mistakes and failures and kept a low profile. They could have rejected their bonuses as they did not deserve them.
They did not and prefered to consider the bail out money as a reward for successful efforts.
This is why I am against regulation.
Regulate and you wont see that people blaming regulation on a wrong basis are wrong. Dont regulate and it comes blatant that the absence of regulation does not solve the stuff some claim it would.
Where the f*** did these idiot bankers ever get the idea that people in financial services are supposed to be "innovative"?
Has "innovation" in this context ever meant anything more than creative accounting, i.e. fraud and shortsighted kick-the-can-down-the-road bubble / Ponzi scheme creation?
Back in the early 20th century, the USA used to have creative innovators in technology and boring, honest, completely uncreative people in finance. How did we get it the other way around?
If you thought that US politicians were incompetent in understanding financial matters, compared to the Europeans they look like geniuses...
The biggest innovation taking place at the banks right now, at this moment are all the lame excuses for not having to caping pay and bonuses.
I support this fully. Financial sector workers are compensated far in excess of their social and economic utility.
You shouldn't be among the richest people on the planet for shaving pennies off of the interactions of people in the real economy.
Their compensation doesn't represent capitalism at its best. It represents the monopolistic nature of the big financial players, and the taxpayer backstop they enjoy.
Get these "best and brightest" out solving real problems and working on real innovation. Fuck everyone on Wall Street. Period.
But ... wait. Without abundant bankers, what are we going to eat?
There are potatoes in kiev, but the people in stalingrad will starve. Once pay becomes derived from a centrally planned "societal value," get ready to starve.
It's also farily tenuous of an argument to say that the dollar does not represent society's value. It may not coincide with yours, but thankfully the market is larger than your sphere of influence. I agree that employees of TARP banks taking gigantic bonuses are... asking to be castrated. But, ultimately, it was our congress that enabled them. The congress we elected.
In other words, it's also necessary for you to argue that our entire democracy has been usurped and is currently only functioning in a state of [insert catch phrase here](fascism/farcism/feudalism/socialism).
That may be... but, simply put, society's concept is that you get paid what you're worth. Any other argument is going to require layers of prefacing and foundation.
In societal terms, people are always paid what they are worth. Including in the comment you answered to.
I dont understand the meaning of your post.
I agree. It was in response to Chet's post: "Financial sector workers are compensated far in excess of their social and economic utility."
still no action against the banksters that f***ed up (past tense).
Easy work around, instead of a "bonus" they will be working on "commission". There, now it is business as usual.
Ctrl+ Alt + 655-876>>332 typed in the machine will delete this issue and erase it from the memory of man and Markets. Rally on my fine Buck.
but what will we do without more innovation?? I mean don't we love paying more for each coffee and sandwich for our Keep the Change account so the bank matches it a year later after forcing us to pad their balance sheets so they can get more return from the FED???
Bankers all shit simultaneously, e-mail resumes to Citi, JPM, GS etc. etc.
Whatever you regulate, you will have less of. I guess the EU wants less banking, or at least less private allocation of capital. This is not a problem... they can just print all the money they need to finance their respective countries. No civilian bankers are needed in a command economy.
Democracy could ‘collapse’ in Greece, Spain and Portugal unless urgent action is taken to tackle the debt crisis, the head of the European Commission has warned.
In an extraordinary briefing to trade union chiefs last week, Commission President Jose Manuel Barroso set out an ‘apocalyptic’ vision in which crisis-hit countries in southern Europe could fall victim to military coups or popular uprisings as interest rates soar and public services collapse because their governments run out of money.
The stark warning came as it emerged that EU chiefs have begun work on an emergency bailout package for Spain which is likely to run into hundreds of billions of pounds.
Read more: http://www.dailymail.co.uk/news/worldnews/article-1286480/EU-chief-warns-democracy-disappear-Greece-Spain-Portugal.html#ixzz0qwrTswX3They left out a critical category:
Reduce salary and institute clawbacks for non-performance by all central bankers, too! I think they share as much if not more of the blame than the ordinary rent-seekers.