Discuss this article at First Drafts, Prospect’s blog; and read James Alexander’s companion piece on banking’s bonus culture here
We are fascinated by what other people earn. But in recent months natural snoopiness has turned into political outrage. Taxpayers in many countries have seen funds that their governments have been forced to push through the front doors of banks, to save them from self-inflicted collapse, slipping out of the back door in big bonuses.
President Obama has introduced stringent limits on bonuses for executives of companies receiving federal aid. Governments across Europe have also responded to the popular mood with restrictions on executive pay as a condition of bank bailouts. The British government is steering an uncertain course between urging pay restraint and leaving management to run the banks that are now at least partly owned by the state. It has also announced a review of pay and risk management, chaired by David Walker, a City grandee.
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