would be subject to a more restrictive regime of prior approval

Four days of the G20 in Pittsburgh, Washington made a step in the direction of the Europeans in the field of the bonus. Of course, it is always not matter of a generalized "cap" on the remuneration of the financial sector. But by proposing to the Federal Reserve (Fed) a new power control and framework of bonuses, the administration Obama shows that it is prepared to give the wages in the matter, even if cut grass under the foot of the Congress. Following a "leak" published by the Wall Street Journal, the Fed confirmed informally, this weekend, his intention of proposer, in the coming weeks, "guidelines" to submit the policy of the big banks pay for its prior approval, with the possibility to impose restitution ("clawing back") of some bonus for excessive risks taken.

Systems without qualms.

"The proposal would be to ensure that people are not paid to take too many risks and ensure that their remuneration is linked to long-term performance," explained to the "New York Times" the Secretary of the Treasury Timothy Geithner. Even if the initiative of the Fed not yet was officially "endorsed" by the White House, Barack Obama has made it clear understanding that it was going in the right direction. "We can no longer tolerate that unscrupulous causing rapid profits and systems lavish bonuses for leaders outweigh the security of our financial system in its entirety and leaves taxpayers the care of the problem", reaffirmed the US President Saturday, urging the g-20 partners to work towards common solutions. At a Conference on the reform of the financial regulation in Washington, his economic adviser, Larry Summers, he also argued for a "readjustment" of pay to avoid the return to risky behaviour that fueled the crisis.

Specifically, the proposal of the Fed, under reserve of its vote by the Board of Governors, would give it jurisdiction for review of the whole of the remuneration of banking leaders, but also frames and of traders. The objective is not to fix wages instead of banks or cap the bonus, but "to promote compensation practices that are consistent with good risk management principles", recently said Daniel Tarullo, Member of the Board of the Fed. A priori, this new jurisdiction of the Central Bank would apply to all of about 5.700 banking holdings already subjected to his authority and 862 regional banks ("state chartered banks"). But the 25 largest institutions (JPMorgan Chase, Goldman Sachs, Morgan Stanley...) would be subject to a more restrictive regime of prior approval.

"Pandora's box".

In the absence of more details on this plan, the initiative of the Fed was variously welcomed by parliamentarians and banking environments. While some bankers saw a way risky "open Pandora's box", others welcome this relatively painless way to encourage self-regulation in bonus. Barney Frank, President of the House of representatives financial services Committee, he welcomed the proposal of the Fed while clarifying that it does not provide the Congress to legislate on the matter, not what would be to remove any ambiguity on the jurisdiction of the Central Bank in this area.

On the eve of the G20, the initiative of the Fed could allow Washington to give the Europeans committed while maintaining his opposition to a "unworkable" the bonus level Cap. In the current state, the compromise in view would be that suggested by the financial stability Forum: linking the United States proposal on the strengthening of the theme of the pay equity by prohibiting undercapitalized banks pay bonuses too important.