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Forget about bankers’ bonuses
Bank bonuses have been a red herring of the financial crisis, repeatedly deflecting attention from deeper problems. So it is disappointing that the leaders of the G20 nations propose to squander yet more time on the subject in Pittsburgh.
While the French may have recently watered down their proposed curbs on bonuses, their voter-pleasing plans still look likely to be at the heart of the meeting. Worse, they seem to be pushing aside the United States’ sensible proposals for tougher capital rules for banks.
Even so, there is a way of turning the tables on the French. Obama should make a powerful case for capital rules as a tool of social justice, which would moderate princely bank pay while shielding the taxpayer.
Curbs on bank bonuses are intended to serve two purposes. The first is to remove incentives for traders to take reckless risks in expectation of a lavish year-end payout. The second aim is social catharsis — to reduce overall compensation to more acceptable levels. The French plan would achieve neither.
from Paul Taylor:
What is Juncker’s game?
What on earth is Jean-Claude Juncker up to? The veteran Luxembourg prime minister keeps dropping hints that he is fed up and wants to stand down as chairman of the Eurogroup of euro zone finance ministers, then pulling back.
The latest hint came when Juncker said during an election campaign meeting this week that he wants to hand the finance portfolio over to his presumed heir, Luc Frieden, after Sunday's general election in the Grand Duchy. Since he is a member of the 16-nation Eurogroup by dint of being finance minister, the immediate assumption was that Juncker would stand down as its long-term chairman, well before his third term expires at the end of 2010.
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The Wall
