European Parliament Tosses Plan to Cap Bankers' Bonuses
Concerns about response being reactionary
The European Parliament threw out a proposal Wednesday that would have extended a recently-agreed clampdown on bankers' pay to fund managers, amid concerns that the move could harm savers and pension funds.
European lawmakers in Strasbourg narrowly overturned the proposal, which would have capped fund managers' bonuses at 100% of their salary, and required that half of the bonus be paid in units of the fund the manager runs.
"We have to be proportional, not reactionary, when it comes to regulating the financial markets," said Sharon Bowles, chairwoman of the Parliament's economic affairs committee, who voted against the plan.
Rules restricting bankers' pay shouldn't be extended to the rest of the financial industry because banks alone have a monopoly on liquidity and lending, "both of which are ultimately provided at public expense," Ms. Bowles said.