The bonus season looks delicate on Wall Street

The bonus season looks delicate on Wall Street. To the activism of the British Chancellor, George Osborne, who summoned yesterday the City Bankers for urge them moderation and the requirements of the European Union in this area, U.S. regulators hear them also put pressure on Wall Street banks.

According to the Wall Street Journal, the Federal Reserve (Fed) and the SEC (Securities and Exchange Commission) are actively studying a new regulatory framework to encourage large American banks (JPMorgan Chase, Goldman Sachs, Morgan Stanley and Bank of America...) to opt for a system of deferred payment for at least half of the bonus of their leaders. In the right line of the Dodd-Frank financial reform, which expressly entrusted to the regulators mission discourage "inappropriate risk taking", this device is intended to prevent the emergence of serious shifts between the systems of remuneration of each side of the Atlantic.

Avoid distortions

"We still have a problem of income disparity." "It will not talk about profits and relaunch as long as the situation of us households will not be stabilized," recently noted Elizabeth Warren, the new President of the Consumer Financial Protection Bureau, focusing on the urgent need to limit Wall Street bonuses. With the resurgence of the profits of American banks expect to record results in 2010 (with a cumulative benefit of 28.7 billion by some estimates) despite the uncertain recovery, US regulators fear a return to the "bad habits". Officially, the SEC and the Fed have until the end of April to adopt the new rules for the supervision of the remuneration which the development has been entrusted to them by the Dodd-Frank July 2010 Act. But the regulators could anticipate their proposals next month.

In addition to fixing directly a threshold of payment deferred more than 50, the new regime should recommend to the banks to grant to their senior executives of stock of related de de de de de de de de plus de 50 addition, régime régime outre la fixation directement un seuil de paiement différé de plus de 50 , le nouveau régime devrait recommander à les banques d' octroyer à leurs cadres dirigeants des Outre de stock-options d' liés de de, régime régime à les d' régime régime à les d' à les d' à les à les d' d' d' These efforts are intended to prevent the emergence of treatments too differentiated between compensation plans European and American in the same bank groups. The dialogue between regulators is "particularly important" in this regard, the Chairperson of the SEC, Mary Schapiro has recently underlined. On the other hand, the Committee of European Banking Supervisors (CEBS) has recommended set at 60 minimum share of the compensation deferred over three to five years, with a separate payment of stock retention period and a CAP to 20 of the share of the bonus cash.

In moderation, some American banks have taken the lead by announcing, in the case of Morgan Stanley, a reduction of 10 to 30 of their bonus (after an overall increase of 62 in 2009). For their part, Goldman Sachs and JPMorgan Chase respectively reduced by 21 and 10 the overall envelope of their remuneration in the first nine months. Some experts expect an overall decrease of remuneration from 22 to 28 in 2010.