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Opinion

Renumeration: The US pay-cuts fiasco

The US authorities’ approach to curbing bankers’ remuneration is ill-judged and inequitable.

Should bankers be paid less? President Barack Obama’s pay tsar, Kenneth Feinberg, can’t seem to make up his mind. After cutting total compensation at the seven largest recipients of US taxpayer money in October, he has now said he might reconsider that move if talent at the firms affected walks out the door. Well of course they will. There are only two banks on the list – Citi and Bank of America Merrill Lynch. Cutting the salaries there will, without any doubt, push staff into the hands of JPMorgan, Morgan Stanley and Goldman Sachs. As part of the pay assessment, Feinberg is cutting the total compensation for the top 25 executives at Citi and Bank of America Merrill Lynch, and is now reviewing the salaries of the other 75 top-paid executives at the two firms. Citi’s Vikram Pandit offered to take a $1 salary for 2009, while Ken Lewis of Bank of America has just been told by Feinberg that he won’t be receiving a salary at all this year. Compare that with JPMorgan’s Jamie Dimon, who has an annual base salary of $1 million. Goldman Sachs’s Lloyd Blankfein’s $600,000 and Morgan Stanley’s John Mack’s $800,000.

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