ONDON — Britain’s treasury chief says the government is ready to bring in laws to curb the sort of big bankers’ bonuses that helped trigger the global financial crisis.
Alistair Darling said in comments published Sunday he was prepared to legislate, although he did not specify any ideas for new laws.
“I’m quite clear that some of the problems we have today were caused by the fact that some traders were incentivized to take risks which neither they nor their bosses fully understood,” Darling was quoted as telling the Sunday Times newspaper.
“If we need to change the law and toughen things up, we can do that.”
Britain’s financial services watchdog has drawn up new rules on bankers’ pay, but critics say they are too weak.
The Financial Services Authority has outlined a code to stop bankers from getting bonuses at high multiples of their salary or bonuses guaranteed for more than a year. Banks that fail to comply could face higher capital charges or other punitive action. However, the authority backed away from imposing some new restrictions on the structure of bonus payments and reduced the range of financial institutions that the new code will cover.
That retreat followed industry warnings that the tougher measures would cripple London’s position as a financial center.
Darling said the new code “is only part of our approach” to preventing another banking crisis.
Despite the global push to reduce the risk-taking associated with big bonus pay, reports suggest that bankers’ bonuses are creeping up regardless.