Firms Face New Curbs on Pay

Financial Services industry responds to US plans to expand $500,000 salary cap and UK’s new 50% bankers’ bonus tax. Have these investment bankers no shame?

WALL STREET JOURNAL, 10 Dec 2009: Authorities on both sides of the Atlantic are moving to enact tough curbs on pay, in an indication that governments are taking increasingly aggressive steps to rein in compensation after the financial crisis.

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The U.K. tax, unveiled as part of the government’s tax-and-spending, or pre-budget, report, is an effort by the ruling Labour Party to address public anger over bonuses before next year’s general election. It will also apply to the thousands of Americans employed by major U.S. banks that operate in London, such as Citigroup Inc., J.P. Morgan Chase & Co., Bank of America Corp., Morgan Stanley and Goldman Sachs Group Inc.

The U.K.’s announcement has already spurred employees of some U.K. banks to inquire about a temporary transfer to other offices through April, to avoid the tax, says one person close to the matter. When the news hit Wednesday, flurries of emails from colleagues in New York and elsewhere landed in the inboxes of bankers in London, expressing disbelief or offering sympathy over news of the bonus crackdown.

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