From the TUC

Will it just be talk on bonuses?

09 Oct 2008, by in Economics, Society & Welfare

It looks like the government is off-loading all responsibility for curbing bank bonuses to the FSA. (Tom P has more on this at Labour and Capital).

This may well be the best way of dealing with the issue in the many city institutions (yes, there are quite a lot) who have not been part-nationalised. Though we should note that the fightback has already begun:

“The obvious concern is how they implement this system and still attract talent,” said Darren Fox, a regulatory lawyer at London-based Simmons & Simmons. While the FSA has the legal power to set limits on pay, “it may be too difficult to have prescriptive rules in place. My suspicion is that we may end up with vague statements, which isn’t too different from what exists already.” from Bloomberg

I must admit wondering about where all these bankers are going to rush for alternative jobs, but Mr Fox is no doubt speaking for the City when he hopes that nothing much will happen on bonuses. I take that as a challenge to all those wanting a fairer Britain to keep this issue on the public agenda.

But leaving bonuses entirely to the FSA won’t wash for banks that now have substantial state holdings. A large part of why we have got where we are is because the owners (ie the shareholders) have not exercised sufficient control over the companies they own.

The government will set a pretty poor example if it too refuses to be a responsible owner.