Germany and France declare war on banker bonuses

[WillieW]

http://www.guardian.co.uk/business/2009/sep/01/france-germany-demand-bonus-sanctions

France and Germany declare war on bankers' bonuses• European heavyweights back radical hardline measures

• US and UK likely to oppose proposals at G20 meeting

Phillip Inman guardian.co.uk, Tuesday 1 September 2009 20.02 BST Article history

Merkel and Sarkozy at the G20 London summit in April. They are as one on curbing bankers' bonuses. Photograph: Rex Features/Sipa Press

France and Germany are squaring up for a fight with Britain and the US over bankers' bonuses after President Nicolas Sarkozy and the German chancellor, Angela Merkel, agreed a hardline stance before the G20 finance ministers' meeting this weekend.

France and Germany will seek widespread agreement for proposals that will limit bonus payments and the risks taken by banks. The proposals are aimed at preventing a repeat of the financial crisis.

The French administration plans to ban banks from winning government contracts if they fail to agree to limits on bonuses, while bonuses must be deferred for at least four years under rules being considered by Merkel's cabinet.

However, the Obama administration is expected to say tomorrow that it wants the summit to focus on getting the world economy back on its feet and promoting financial stability.

Tim Geithner, US treasury secretary, is due to set out his views before the meeting, where he will sit down with the UK chancellor, Alistair Darling, and finance ministers from the G20 including Australia, Argentina, Saudi Arabia, Russia and Brazil. Geithner will agree with comments by Gordon Brown that the finance industry must be prevented from taking risks that destabilise the world economy and limits on bank bonuses must be part of that debate. His comments will fuel doubts that the Obama administration, which faces an uphill struggle to pass healthcare reforms through congress, wants to tackle the fiercely guarded bonus culture on Wall Street.

Geithner has appointed a high profile lawyer to check on bonus payments, but he refused earlier in the year to endorse proposals to tax bonuses paid by banks in receipt of government support.

The New York attorney general Andrew Cuomo said he preferred that the banks fix compensation plans that offer guarantees or encourage excessive risk taking.

Gordon Brown said in an interview with the Financial Times that he wanted to concentrate on kickstarting the global credit markets and promoting growth. He distanced himself from proposals put forward by Lord Turner of the Financial Services Authority for a tax on deal-making in the City to limit profits and bonus payments.

He also rejected the hard line adopted by President Sarkozy last week when he warned French banks they will be barred from lucrative French government mandates if they fail to abide by guidelines on pay.

Sarkozy said measures aimed at tightening French rules on banking pay and improving the disclosure of bonus payments would provide a platform for a more stable financial sector.

His plans included deferring traders' bonuses for three years, paying one-third of awards in shares and imposing strict long-term performance criteria in order to receive full payment. The government has also appointed bonus watchdogs at banks that have received state aid.

[Deja Q]

1. Were they the ones who made the 29% APR Big Box credit card available to people?

At 29% APR, and didn't another DUer post - a few days ago - how ancient Rome was far less taxing with usury but I digress, do they really deserve raises for killing the people that take out the loans to begin with?