Wednesday, January 13, 2010

A Crumb of Good News onBig Finance from Britain While Obama Postures

In U.K. Bankers Give Up on Bonus Levy as Tax Rise Looms, Bloomberg gives us a rare bit of good news re Big Finance:

Banks in the U.K. will pay the one- time, 50 percent tax on bonuses levied by the Treasury rather than reduce compensation, according to accountants and lawyers who advise financial institutions. . .

Chancellor of the Exchequer Alistair Darling announced the tax on bankers’ bonuses last month. He said he introduced the measure, which covers payouts in cash and deferred stock, to encourage banks to build up capital, not raise revenue.

It may do the opposite. The Treasury, which initially said the tax would raise 550 million pounds, now estimates it may net as much as 2 billion pounds as banks opt to pay the tax rather than reduce bonuses, according to a government official who declined to be identified.

Meanwhile, the Obama administration has floated the general idea of raising 40 times as much, or $120 billion, via some sort of levy or levies on financial companies. Specifics are lacking. We shall see if this was just a news release equivalent of a photo op signifying nothing.

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