EU regulator: Obama not doing enough to curb banker bonuses
"I think you agree with me that 'bankers' bonuses' is a matter that continues to cause public outrage," he, wrote to US Treasury Secretary Timothy Geithner. "Getting this matter right is key to restoring our citizens' confidence in the financial system – and ultimately – their confidence in the public authorities regulating the financial institutions."US bankers on Wall Street have been criticized for receiving lavish compensation and bonuses after being bailed out by the government as Middle Class Americans continue to suffer a faltering economy. Wall Street insiders have received millions of dollars in bonuses, even the executives of failed or failing companies received record compensation. US taxpayer rescued firms made billions and paid their executives more after being propped-up by the government – yet most Americans cannot afford homes, are out of work and are struggling to buy food and other necessities. In the EU, the Commission restricted cash bonuses to executives to curtail over excess and lavish rewards for failing business practices. The US has however instituted no such policy. Instead tax payer dollars were handed to failing companies with few restrictions on how it be spent or repaid. The Financial Times recently asserted that US regulators are giving Wall Street "too much latitude" allowing them to “circumvent globally-agreed principles”At the G20 summit in Pittsburgh two years ago, leaders agreed to enact restrictions on executive bonuses. While the EU moved forward, the US approach has been delayed and lackluster at best. US regulators have spent time considering rules without presenting new ones or moving forward on agreements made at the summit. Most of the rules currently in place date back to 1995. New proposed rules in the US would attempt to restrict bonuses some, but not much. New rules aim to restrict excessive pay, not by dollar amount, but by analyzing whether an excessive bonus “could lead to material financial loss" or be deemed an “unsafe and unsound.”In Europe, banks are restricted on how much money can be doled out for bonuses and how it can be paid. About half of the pay to executives must be in the form of shares – not cash. Rules of this nature do not exist in the US. "Up front cash bonuses that are based on expected rather than actual performance are a key driver of excessive risk taking," the European Parliament has argued. "Staggering payments over time and linking them to the bank's health and actual performance should ensure that these risks are tackled."