Merkel, Sarkozy push for exec pay cap
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Kai Ryssdal: Where does one start on a day like today? We could do the straight economic news that manufacturing has posted its first gains in a-year-and-a-half. And that there’s a glimmer of hope in housing. Yes, I know you’ve heard that before. Or we could go with the stock market. Traders knuckled under today on fears that the tear they’ve been on since March has been too exuberant, if I could coin a phrase. Or we could go to banks. Bank of America is said to be on the verge of paying back part of its $45 billion federal bailout today.
The Europeans are making some banking news, too. The continent’s two biggest economies want the rest of the developed world to join them in cracking down on what they call greedy bankers. German Chancellor Angela Merkel and French President Nicholas Sarkozy are calling on the G-20 summit in Pittsburgh later this month to cut the banking industry down to size. From the European Desk in London, Marketplace’s Stephen Beard reports.
STEPHEN BEARD: Chancellor Merkel and President Sarkozy want the G-20 summit to pass a raft of restrictive measures: limiting the size of banks, and above all, curbing bonuses. Not surprising that Brian Capon of the British Banking Association isn’t keen on the idea.
BRIAN CAPON: While we’re working in an international banking market, you have to pay the going international rate to get the best people and each country is going to want to employ those best people.
But Merkel and Sarkozy seem to believe they have a crucial ally in their fight. Britain has Europe’s biggest collection of banks, and Prime Minister Gordon Brown has been making anti-banker noises.
PRIME MINISTER BROWN: The short term bonus culture in banks has got to end.
A Franco-German-British alliance at the G-20 summit would be quite something. But Edward Haddas of the financial Web site Breakingviews, says there’s less to Brown’s threats than meets the eye.
EDWARD HADDAS: So far I think it’s a matter of courting headlines than actually doing anything.
He doesn’t believe the British and American leaders have any stomach for a crackdown on bankers.
HADDAS: They’re worried that the banking system which is still very fragile would get into another set of problems if they started to interfere too much with pay.
And he points out that both Sarkozy and Merkel have made it clear they won’t bash their bankers unless the U.S. and the U.K. do the same.
In London, this is Stephen Beard for Marketplace.
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