Prime Minister Kevin Rudd's war on bankers' salary deals

[depakid]

BANKS that offer big financial incentives to executives to engage in risky practices will be targeted by Prime Minister Kevin Rudd as part of a broader plan to tackle "extreme capitalism".

Amid government bail-outs of insolvent banks in Europe and the United States, Mr Rudd yesterday flagged plans to rewrite the rules of banking and finance to avoid some of the excesses that have been blamed for the current crisis.

Under Mr Rudd's plan, which he hopes would be adopted by other countries, the legal capital adequacy requirements for banks and other big financial institutions would be linked to how they pay their executives.

Firms with executive pay packages that rewarded short-term returns or excessive risk taking would have to observe higher capital requirements under the Rudd plan. Addressing the National Press Club, Mr Rudd said the rules, to be developed with the Australian Prudential Regulation Authority, would operate "in a way that acts against excessive risk-taking in our financial institutions".

He denounced "the comprehensive failure of extreme capitalism" that caused the crisis and "now turns to government to prevent systemic failure".

"The champions of extreme capitalism have been found to have feet of clay," Mr Rudd said. "For the first time ever, our people are reading about, and my Government is participating in, decisions to inject trillions of dollars back into an international financial community which has become frozen by fear — fear of the unknown.

"When markets fail, governments must act, and that is the resolve of this Government.

"As a Government, as a nation, we must respond to the twin evils which are of the root of this malaise: greed and fear".

Mr Rudd, who in a recent speech to the United Nations called for global action on better financial regulation, said recent events must "galvanise us to act in the future that we never allow greed and lax regulation to put us in this position again".

More: http://www.theage.com.au/national/rudd-war-on-bankers-salary-deals-20081015-51jz.html
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I would like to see an Obama administration or the Fed adopt a similar rule.

[Robbien]

1. But Schumer and the Bush Dogs are against this

The free market lovers wing of the Democratic party do not go along with restricting CEO pay in any way.

There will be some tough fights ahead to get Dems to stop catering to the elite.