SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
"Widespread dissatisfaction" ... protesters dressed as bankers mock the financial industry's resistance to capping the "dangerous" bonus structure they currently enjoy. Outsized bonuses have been part of the modern culture of financial giants around the world and are largely credited--by fostering perverse incentives on behalf of bank executives--with setting the stage for the economic collapse of 2008. (Photo: AP)
Bankers Cry as EU Deal Aims to Cap Bonuses for Financial Industry
'There will be no exceptions' says minister following agreement in Brussels
Feb 28, 2013
Once again proving more adept at reining in the financial sector than its US counterpart, the European Union's parliament on Thursday approved a plan for new restrictions on banks operating on the continent that would cap bonuses for financial executives and bankers.
Outsized bonuses have been part of the modern culture of financial giants around the world and are largely credited--by fostering perverse incentives on behalf of bank executives--with setting the stage for the economic collapse of 2008.
The new rules would keep bonuses in Europe strictly tied to base pay that could not exceed a 1:1 ratio without shareholder approval, and even then could only be increased to 2:1.
Investment bankers and financial elites predictably bemoaned the decision, but critics of Wall Street hegemony took that as a sign that the EU plan was at least on the right track.
As Reuters reports, the deal finalized in Brussels on Wednesday would apply new rules
to Europe-based employees of any bank, as well as to staff of European banks wherever they are based. That means a Deutsche Bank employee working in New York or Tokyo would be subject to the limits, as would a Goldman Sachs banker posted to London, although that provision may later be reviewed.
The Associated Press adds:
Some details for the corresponding legal texts -- the package is more than 1,000 pages thick--still have to be hammered out, but the final approval by parliament and government leaders of the package is expected to be a formality, ensuring the laws come into force next year.
One sticking point is that under the provisional agreement, the bonus cap will also be mandatory for European banks' employees overseas, for example in New York -- a point that particularly irks Britain, which is home to Europe's biggest financial industry.
That provision is said to be under ongoing review, but Othmar Karas, the Austrian lawmaker who helped negotiate the deal, was clear in saying, "There will be no exceptions."
"It goes for all banks inside and outside the European Union and for all foreign banks inside the European Union."
______________________________
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, The U.S. is on a fast track to authoritarianism like nothing I've ever seen. Meanwhile, corporate news outlets are utterly capitulating to Trump, twisting their coverage to avoid drawing his ire while lining up to stuff cash in his pockets. That's why I believe that Common Dreams is doing the best and most consequential reporting that we've ever done. Our small but mighty team is a progressive reporting powerhouse, covering the news every day that the corporate media never will. Our mission has always been simple: To inform. To inspire. And to ignite change for the common good. Now here's the key piece that I want all our readers to understand: None of this would be possible without your financial support. That's not just some fundraising cliche. It's the absolute and literal truth. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. Will you donate now to help power the nonprofit, independent reporting of Common Dreams? Thank you for being a vital member of our community. Together, we can keep independent journalism alive when it’s needed most. - Craig Brown, Co-founder |
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Once again proving more adept at reining in the financial sector than its US counterpart, the European Union's parliament on Thursday approved a plan for new restrictions on banks operating on the continent that would cap bonuses for financial executives and bankers.
Outsized bonuses have been part of the modern culture of financial giants around the world and are largely credited--by fostering perverse incentives on behalf of bank executives--with setting the stage for the economic collapse of 2008.
The new rules would keep bonuses in Europe strictly tied to base pay that could not exceed a 1:1 ratio without shareholder approval, and even then could only be increased to 2:1.
Investment bankers and financial elites predictably bemoaned the decision, but critics of Wall Street hegemony took that as a sign that the EU plan was at least on the right track.
As Reuters reports, the deal finalized in Brussels on Wednesday would apply new rules
to Europe-based employees of any bank, as well as to staff of European banks wherever they are based. That means a Deutsche Bank employee working in New York or Tokyo would be subject to the limits, as would a Goldman Sachs banker posted to London, although that provision may later be reviewed.
The Associated Press adds:
Some details for the corresponding legal texts -- the package is more than 1,000 pages thick--still have to be hammered out, but the final approval by parliament and government leaders of the package is expected to be a formality, ensuring the laws come into force next year.
One sticking point is that under the provisional agreement, the bonus cap will also be mandatory for European banks' employees overseas, for example in New York -- a point that particularly irks Britain, which is home to Europe's biggest financial industry.
That provision is said to be under ongoing review, but Othmar Karas, the Austrian lawmaker who helped negotiate the deal, was clear in saying, "There will be no exceptions."
"It goes for all banks inside and outside the European Union and for all foreign banks inside the European Union."
______________________________
Once again proving more adept at reining in the financial sector than its US counterpart, the European Union's parliament on Thursday approved a plan for new restrictions on banks operating on the continent that would cap bonuses for financial executives and bankers.
Outsized bonuses have been part of the modern culture of financial giants around the world and are largely credited--by fostering perverse incentives on behalf of bank executives--with setting the stage for the economic collapse of 2008.
The new rules would keep bonuses in Europe strictly tied to base pay that could not exceed a 1:1 ratio without shareholder approval, and even then could only be increased to 2:1.
Investment bankers and financial elites predictably bemoaned the decision, but critics of Wall Street hegemony took that as a sign that the EU plan was at least on the right track.
As Reuters reports, the deal finalized in Brussels on Wednesday would apply new rules
to Europe-based employees of any bank, as well as to staff of European banks wherever they are based. That means a Deutsche Bank employee working in New York or Tokyo would be subject to the limits, as would a Goldman Sachs banker posted to London, although that provision may later be reviewed.
The Associated Press adds:
Some details for the corresponding legal texts -- the package is more than 1,000 pages thick--still have to be hammered out, but the final approval by parliament and government leaders of the package is expected to be a formality, ensuring the laws come into force next year.
One sticking point is that under the provisional agreement, the bonus cap will also be mandatory for European banks' employees overseas, for example in New York -- a point that particularly irks Britain, which is home to Europe's biggest financial industry.
That provision is said to be under ongoing review, but Othmar Karas, the Austrian lawmaker who helped negotiate the deal, was clear in saying, "There will be no exceptions."
"It goes for all banks inside and outside the European Union and for all foreign banks inside the European Union."
______________________________
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.