Strict law prevents bankers from taking home more than 30 per cent of bonuses
Today the European Parliament adopted legislation that will prevent bankers from taking home more than 30 per cent of their bonus in cash starting next year. The strict crackdown will also ensure that the banks set aside extra capital if they don’t ensure that the salaries of their biggest earners aren’t cut. The EU’s move is thought to be in direct response to the U.S.’s failure to take action and penalize its risky bankers (large cash bonuses have shouldered some of the blame of the financial crisis because they encourage very risky behavior). The law was passed by a vote of 625-28 and it is supposed to take effect on January 1, 2011.