Posted by The finance ministers of the 20 major industrial and emerging countries meet today, Friday, in London to prepare for the world financial summit in Pittsburgh at the end of the month. Topics on the agenda include controversial bonus payments for bankers. In a letter to the Swedish EU Council presidency Germany, France and the UK have called for stricter regulations for the financial sector.
Les Echos – France | 04/09/2009
Shortly before the G20 summit, the UK has decided to go along with the reform proposals put forward by Germany and France on salaries and bonuses in global finance. The business paper Les Echos comments:
“In plain language, Europeans will be unanimously demanding strict regulations for calculating and allocating bonuses for traders at the G20 summit in Pittsburgh. Of course this is excellent news, because the inflationary rise of bonuses was one factor that pushed the financial industry to take excessive risks in the last few years. This undeniable success of the French-German tandem also comes as a big surprise. But it is still somewhat early for rejoicing. First of all because even if bonuses are capped, that alone won’t guarantee that finance is permanently back on the path of virtue.
… Now the US will have to be convinced of the wisdom of the move, failing which it will have to be scrapped. The reason is simple: it is impossible to impose restrictive rules … on the European finance sector if its American counterpart will have nothing of them.”
NRC Handelsblad – Netherlands | 04/09/2009
The key issue for the finance ministers to address in preparing for the G20 summit is the controversial bonus question, writes the liberal daily NRC Handelsblad:
“Clearly, international agreement on bonuses will put the same requirements on everyone and allay fears that activities will migrate to countries with slacker rules.
Putting these requirements into place will take time, however, and that can take its toll on the impetus behind them. A financial sector that has recovered and won new self-assurance has more chance of influencing this process. Pressure on the bonus dossier can mean that the search for speedy international consensus may lead to minimal regulation. And that would set an unfavourable precedent for other measures that could prevent a recurrence of the crisis.
… There is still much to be done. The bonus question will be the litmus test for the international community’s capacity to act in this area.”
Le Temps – Switzerland | 04/09/2009
The daily Le Temps would like to see Europeans take to heart the lessons of the past at the G20 summit in Pittsburgh: “The central problem is getting worse:
… the bankruptcy of Lehman Brothers almost a year ago set in motion a shift towards consolidation that has produced bigger and more independent banks. The series of bank rescue operations aimed at keeping the financial world going has made a fiction of the bankruptcy. History gives us clues for how to reform the financial system.
Why not do what was done in 1933 when the United States banned a number of bank activities deemed responsible for causing the crisis, … bank activities which were allowed again in 1999? The banks, profitable and powerful once more, are digging in their heels against any type of far-reaching reform.
… The G20 must prove their courage at their next summit at the end of September and assume their ‘historical’ responsibility.”
The Independent – United Kingdom | 04/09/2009
As the G20 finance ministers meet today, Friday, in London, the liberal daily The Independent comments that vast bonuses for bankers are unwarranted:
“On bankers’ remuneration and regulation, the robust attitude of most European nations, however, makes more sense than our own Government’s more timid stance.
While the investment banking arms of several banks are turning a profit, this is in large part because extraordinary help from the authorities has driven down the cost of their capital. This assistance is necessary for the good of the wider economy, but there is no justification for investment banks paying vast bonuses to their staff while they receive this special help, especially while non-financial sectors of the economy are still suffering.
Moreover, France and Germany are right that there needs to be a fundamental shift away from the reckless model of lightly-regulated high finance, which did so much to generate the crisis. And, since flows of capital and bank employees are global, there needs to be global co-ordination to deliver this.”
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