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April 25, 2012 at 05:39 AM
Banks in the European Union could soon find themselves regarded in much the same way as power or water companies: entities that keep society functioning but pretty much stay in the background. That is, if lawmakers have their way about new proposed amendments to the draft law prepared by the Basel Committee on Banking Supervision. At stake are not only bankers’ bonuses, but their entire culture.
Bloomberg reported Wednesday that among the amendments proposed are rules that would forbid bonuses that exceed the salary a banker draws. That rule is actually tougher than the one originally proposed by its originator, Othmar Karas, an Austrian Christian Democrat lawmaker who is leading work on the draft rules in the European Parliament.
Karas had originally proposed capping bonuses at double a banker’s fixed pay, but the tougher measure, according to Philippe Lamberts, a Belgian who’s representing Parliament’s Green group in the negotiations, has cross-party support.
A vote on that measure, and numerous others, is scheduled for May 8. The Basel bank capital rules will become law in all 27 E.U. nations on Jan. 1.
According to Michel Barnier, the financial services commissioner of the E.U., some banker pay is beyond “all reason, common sense and morality.” While Barnier, who is responsible for draft legislation, has said he will consider additional rules governing bonuses, Parliament may not wait for him, insisting that the restrictions belong instead in the Basel law. The basic purpose of that law, lawmakers point out, is to shut down excessive risk taking and push banks into more responsible foundations for the economy.
