European Parliament, to put a lid on bankers’ bonuses, try stop mistreating weaker bank borrowers

Sir, here is what I would say to the members of parliament in the Strangers’ Bar of the UK House of Commons, if there when as Martin Wolf describes them discussing the European Parliament’s efforts to cap banker bonuses, “The curious case of Brussels and the bankers’ bonuses” March 2. 

The main reason for high bankers’ bonuses is that they now do not have to share the revenues as much as they used to with shareholders, and the reason for that is that banks are now not required to have any substantial amounts of capital, that is as long as their exposures can be considered “absolutely safe”. 

And so I would ask the regulators to increase the capital requirements, especially for what is perceived as “absolutely safe”, because there, as we all know, is where also the dangers of any too dangerously high bank exposures are always to be found. 

But it seems the regulators do not want to increase those capital requirements, and the only possible explanation, besides of course that of them being daft is that they have been lobbied too generously by bankers and “infallibles” alike. 

But much worse than causing high bank bonuses, is the way how those capital requirements distort the markets; and how, by favoring lending to what is perceived safe, whether for real or only Potemkin type safe, discriminate so odiously against the bank borrowings of all others de facto classified as “The Risky”, no matter how decent and worthy. 

And so UK should state: We do not want to cap bankers’ bonuses the way the European Parliament currently suggests, because that just prolongs the distortion of the markets as well as the senseless regulatory favoring of the haves, the history, the old, “The Infallible”, thereby discriminating against the have-nots, the future, the young, “The Risky”. 

And then for good measure, the UK should also propose that as one should perhaps not go too fast on tightening the capital requirements, one can meanwhile put a cap on how much in annual total compensation per banker is allowed to be a tax deductible expense… and that would take care of solving a couple of problems, while even reducing the distortions.

And then to wrap it up, going for the killing, I would ask: “European Parliament, given how banks have profiting the last decades, is it really so smart to reduce banker´s bonuses only to increase the dividends per bank share? Is it the interests of bank shareholders you are defending?