Brown to announce plan to make bankers bonus illegal

UK Prime Minister Gordon Brown’s government will next week announce plans to make some bankers’ bonuses illegal as it tries to clamp down on the excessive risk- taking that helped stoke the financial crisis.

Regulators will be given “powers if necessary to tear up contracts that would result in payments being made that would cause instability,” Chancellor of the Exchequer Alistair Darling told the Sunday Telegraph. Speaking on Sky News, City Minister Paul Myners said “if those contracts are written, they will be voided under law.”

Brown, who has trailed in polls for almost two years and must call an election by June, will set out his goals for the next session of parliament with the Queen’s Speech on Nov. 18. The proposals will also reverse a plan to cut a tax break on childcare, allow consumers to make class-action lawsuits against lenders and require banks to have a plan for winding down operations if they run into trouble, The Sunday Times said.

 

Brown¿s Labour Party will have about five months to pass the legislation before the election interrupts Parliament. The Queen¿s Speech will last about 20 minutes, half the length of last year¿s address, the News of the World reported today.

Myners said that he is ‘sure’ the financial services bill will be passed.

“We¿re not seeking to cap absolute levels of bonuses,” Myners said. “We want to make sure that bonus arrangements no longer contribute to excessive risk-taking¿ and that ¿we have a framework in which the taxpayer will never again have to step in and provide capital to support the banking industry.”

Bankers’ Warning
The British Bankers¿ Association warned Brown that new proposals shouldn¿t discourage banks from coming to Britain to expand or set up business.

“We clearly need to see the detail of these proposals but we would be wary of any actions which set the UK at a disadvantage, discourage international businesses from coming here and make it more difficult to attract, reward and retain high quality staff,” according to an e-mailed statement.

The opposition Conservatives increased their lead to 14 percentage points from 11 points a month ago, according to a YouGov Plc poll published in the Times today. The Labour Party had the support of 27 percent of Britons, the Conservatives had 41 percent and 18 percent of voters backed the Liberal Democrats.