Europeans Ask Geithner About Wall Street Bonuses
In a global economy, the world’s central banks have become increasingly intertwined and interdependent. This often creates interesting confrontations, especially when they are public. This is what makes this Bloomberg news article interesting. Since this article was published in June 2011, Europeans have imposed some salary caps on their top CEOs, yet that discussion has not reached the U.S.
“Geithner to Be Confronted by EU’s Barnier on Lack of Bonus Rules,”
By Ben Moshinsky, Bloomberg
June 1, 2011
“Michel Barnier, the European Union’s financial services commissioner, will confront U.S. Treasury Secretary Timothy F. Geithner over the lack of American rules to restrict bonuses for financial-services workers.
The absence of binding laws regulating bankers’ pay in the U.S. means lenders can avoid curbs envisaged by the Group of 20 Nations in Pittsburgh in 2009, Barnier will tell Geithner when they meet in Washington tomorrow.
Only the EU has imposed such rules and the U.S. approach ‘to go for non-binding measures leaves too much latitude’ for banks and ‘allows them to circumvent the principles set out in Pittsburgh,’ Barnier’s spokeswoman Chantal Hughes said in an e- mail about the meeting.”
Under EU rules, “60% of a bonus payout for risk-takers and senior managers must be deferred for at least three years, and half of the remaining amount must be in the form of shares.”
This reduces the emphasis on short-term gambles and gives the trader a serious interest in long-term results.
Source: “Geithner to Be Confronted by EU’s Barnier on Lack of Bonus Rules.”
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