France and Britain find unity in banker-bashing
But there's no sign of the US following suit, despite polls showing anger at bank execs
France is set to follow Britain's lead in levying a 50 per cent tax on bankers' bonuses over €27,000. Chancellor Angela Merkel has also voiced her support for the measures, though it appears German bankers are likely to forestall any action by reforming rules on pay and bonuses themselves.
But crucially, neither the US nor Switzerland are showing any inclination to follow suit. The Swiss federal finance ministrycleverly ducked the issue, saying taxation in the decentralised country was largely up to Switzerland's 26 cantons.
In the US, talk of pay reform has died down after the initial anger at AIG and Goldman pay-outs. With the powerful financial services lobby committed against any measures to restrict compensation, there is little political will to challenge the status quo.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
"You'll see politicians talk about it, but they won't actually do it," Paul Miller, managing director of mid-size investment bank FBR Capital Markets in Washington, explained in the New York Times.
But after weeks of evidently strained relations between Britain and France, Christine Lagarde, the French finance minister, did not begrudge Britain's lead in curbing banker pay - though noted it was a French idea. So there.
"We have been advocating this for a long time, and we are delighted to see that Gordon Brown is taking that stand," Mme. Lagarde said. "The president," she added, "thinks he is brave to take on the City."
Still, there are signs that the banks are going to act pre-emptively rather than allow themselves to be set on by politicians and treasury officials. Goldman Sachs announced its 30 top executives will get year-end bonuses in stock they can't sell for five years. Under the Goldman plan, the share allocations can be repossessed if the firm finds the recipient failed to gauge, analyse or warn of risk.
How effective the Goldman measure will be in curbing public anger at the "vampire squid" and its $16.7 billion 2009 bonus pool, remains to be seen. "They're trying to take the heat off the very large amounts of compensation they're going to pay," said compensation consultant Alan Johnson, who noted the value of Goldman bonuses was not being reduced, just carefully deferred.
While British and French bankers may legitimately feel picked on, American bankers may not be out of the woods. Two-thirds of Americans say they have an unfavourable view of financial executives and more than half say big financial companies are only out to enrich themselves, according to a Bloomberg poll.
With ratings like that, it may not be long before ambitious legislators make a move.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
'Brain drain' fear as record numbers leave New Zealand
Under The Radar Neighbouring Australia is luring young workers with prospect of better jobs
By Chas Newkey-Burden, The Week UK Published
-
Are we getting a 'hard landing' after all?
Today's Big Question Signs of economic slowdown raise concerns 'soft landing' declarations were premature
By Joel Mathis, The Week US Published
-
How the world economy learned to live with the drama
Under the Radar As economists predict a 'soft landing' after recent crises, is the global economy now 'oblivious to the new world disorder'?
By Elliott Goat, The Week UK Published
-
Could Fed interest rate cuts tip the election?
Talking Points The central bank could make interest rate cuts during a campaign focused on the economy
By Harold Maass, The Week US Published
-
How long can consumers keep the economy humming?
Talking Points Consumers boosted growth, defying recession warnings. The question is whether 2024 will be different.
By Harold Maass, The Week US Published
-
How did America avoid a recession in 2023?
Today's Big Question A downturn was inevitable. Until it wasn't.
By Joel Mathis, The Week US Published
-
Will the UK economy bounce back in 2024?
Today's Big Question Fears of recession follow warning that the West is 'sleepwalking into economic catastrophe'
By Chas Newkey-Burden, The Week UK Published
-
Inflation vs. deflation: which is worse for national economies?
Today's Big Question Lower prices may be good news for households but prolonged deflation is ‘terrible for the economy’
By The Week Staff Published