US banks' multimillion dollar bonus packages raise public ire; figuring out who caused the Great Recession; China now world's largest exporter, Germany second; North Korea proposes peace talks with US; Afghanistan to take over Bagram Prison; and more
Top of the Agenda: Banks Face Ire on Bonus Pay
U.S. banks face (FT) renewed public and political backlash as they prepare to announce multibillion-dollar bonus packages. Banks, under government pressure, say their bonuses will account for a lower percentage of annual revenues than in years past, but the sheer size could still provoke public ire. Christina Romer, head of the Obama administration's Council of Economic Advisers, said a new round of big Wall Street bonuses would be "outrageous" and would further motivate the administration on its financial reform package currently before Congress. Washington has yet to respond to the British government's supertax on bank bonuses. Wall Street's pay plans are unlikely to dissuade the Obama administration from its own efforts to curb compensation.
Banks and securities firms have told (WSJ) workers their bonuses will contain a bigger percentage of stock, which reduces employees' incentives to take too much financial risk. Employees say the shift to stock compensation could leave them short on cash to cover mortgages and school tuition, since stock is restricted in how it can be sold.
The commission appointed by Congress to examine the causes of the financial crisis hears testimony Wednesday (WashPost) from the heads of four of the country's largest banks. Philip Angelides, the Financial Crisis Inquiry Commission chairman, said he plans to hold public hearings on what caused the financial crisis as "a proxy for the American people, giving them the chance to ask what led this country to the economic precipice."
In Newsweek, Jacob Weisberg says it is time to figure out what caused the Great Recession and who is to blame.
In a CFR interview, Marc Levinson says efforts to curb banker pay or tie it to company performance aren't likely to be effective.
In the New Republic, Simon Johnson says Goldman Sachs should "come to its senses and pay no bonuses of any kind to anyone" and that the bonuses they announce "will become the rallying point for real reform."
This CFR Council Special Report examines major economic reform proposals to make the financial system more resilient.
PACIFIC RIM: China Overtakes Germany on Exports
China surpassed (WashPost) Germany as the world's largest exporter and is expected to surpass Japan as the world's second-largest economy this year.
North Korea: North Korea proposed (KoreaTimes) peace talks with the United States, either as part of the six-party dialogue on nuclear disarmament or in separate negotiations.