After a flurry of startling hypotheses erupted at the end of last week regarding derivatives and bank bashing, policymakers in the UK had the weekend to catch their breath and evaluate the relative merits of the arguments. Maybe this was the moment to consider that there might be at least some truth to the idea that there’s a downside to the constant vilification of anything even tangentially related to banks and bank compensation plans. Alistair Darling, please show us the middle ground we need to get to.

Chancellor of the Exchequer Alistair Darling, targeting what he calls “greed and recklessness” in Britain’s financial system, asked banks to curtail bonus pay and said the rich will pay more in tax.
“It is right that those who earn the most should shoulder the biggest burden,” the finance minister told the ruling Labour Party’s annual conference today in Brighton, England. “We will introduce legislation to end the reckless culture that puts short-term profits over long term success. It will mean an end to automatic bank bonuses year after year.”

And back to the new normal we go.
Darling Targets Bank Bonuses, Says U.K. Rich Will Pay More Tax [Bloomberg]

At some point, the war of words and early drafts of legislation are going to give way to politicians making real choices about the degree of new financial regulation in this country. The financial industry is increasingly fighting two uphill battles: defending itself from what happened and, increasingly, defending itself from defending itself. The newest outrage is centered on banks trying to make sure the regulatory pendulum doesn’t swing so far the other way that we don’t create a nation of banks in a catatonic state. The reports of multi-million dollar lobbying expenditures by the usual suspects have the regulatory crusaders back out on the front line and proving why some degree of legislative restraint is in order.

“They still retain an enormous amount of influence,” said Travis Plunkett, who lobbies for the Consumer Federation of America and said he has seen firsthand the influence of large banks. “What is surprising to me is that some members of Congress are letting them get away with flimsy arguments. They are using many of the same arguments that they were using before the financial crisis” – such as saying that new legislation would inhibit competition and consumer choice.

There are, undoubtedly, some activities that need to be curbed. But five years from now there are probably few out there who will want to recount the ways the economic recovery did not take place the way it could have while watching Populism: A Disaster Movie.
Bailed-out banks lobby hard to stave off limits [Boston Globe]

With the conclusion of the G20 summit, it’s time for the participating leaders to take a bow, high-five one another and bask in the glow of all that can be accomplished in a two day summit. We’ve got the whole bonus thing under control now. We all agree that we’re in this battle together. And then there was Tim Geithner’s revelation that some of the culprits for the past few years’ worth of pleasantness are now are on the straight and narrow.

After “a long period of time living beyond our means, you see people already changing behavior,” the Treasury chief said in Pittsburgh. “That’s one reason why we can stand here today and express some measured optimism about our capacity to put in place a more sustainable recovery.”

Indeed, this is nothing short of miraculous. Faced with an endless supply of federally created programs designed to get people to buy something, anything regardless of their current financial situation, the fact that an unemployment rate of (almost) 10% has scared a few more people into saving is a landmark victory.
G-20 Plans to End ‘Financial Balance of Terror’ After Summit [Bloomberg]

Banks Pull Back From Acorn Work (Reuters)
Apparently Bank of America doesn’t want to be associated with a group that gives prostitutes and their pimp boyfriends loan advice.
The Madoff Scam: Meet The Liquidator (CBS)
Irving Picard on Andy and Mark Madoff: “Whether or not they have a criminal problem, we will pursue them as far as we can pursue them. And if that leads to bankrupting them, then that’s what will happen.”
Phone Calls Add To Din Over Loans (WSJ)
Countrywide recorded phone conversations “in a controversial mortgage program that included public officials” and then destroyed the tapes. Is that a crime?
Goldman Sachs Launches Recruiting Drive (FT)
Hiring up to 200 in asset management and “moving back on the offensive,” according to Marc Spilker.
Zoellick Favors Power For Treasury, Not Fed (WSJ)
“It will be difficult to vest the independent and powerful technocrats at the Federal Reserve with more authority,” the World Bank President said. “My reading of recent crisis management is that the Treasury Department needed greater authority to pull together a bevy of different regulators. Moreover, the Treasury is an executive department, and therefore Congress and the public can more directly oversee how it uses any added authority.”
Is Jeff Macke Broke? (WCV)
This guys says yes.
Citi may not forgive debt by EMI (NYP)
All you need to know about the story is that it was the basis for this graphic:

$$$ Feds Eye Cassano [NYP]
$$$ Another UBS Client Pleads Guilty To Tax Evasion [NYT]
$$$ BofA responds to SEC complaint over bonuses [BW]
$$$ Job of the Week: Morgan Stanley needs a VP of investment banking. You. [DBCC]
$$$ AIG’s Plight: Too Big to Fail, but Shrinking [WSJ]

There is a decent chance that Ken Feinberg’s model results will be enough to drive some people to the brink of seriously considering other ways to make a living. But life at the top of a large financial services company can be pretty good and the perks can go a long way towards cushioning the blow from substandard paydays. So if you’re going to make a move, you better make sure the perks can justify the potential hit to income.
Academia has its high points: flexible schedules, casual dress, no annoying regulators. And one more thing.

Dr Terence Kealey from Buckingham University, for instance, finds curvy female students an attractive element of his total reward package.
In a light-hearted, albeit rather frank, article penned for the Times Higher Education magazine, Dr Kealey said female students who flaunt their curves are a perk of the job and should be enjoyed.
The article read: “Most male lecturers know that, most years, there will be a girl in class who flashes her admiration and who asks for advice on essays. What to do? Enjoy her! She’s a perk.”

So eye candy should be included in total comp calculation. Interesting theory professor. Anything else you care to add on what to do with the curves being thrown in your face?

“Which you should admire daily to spice up your sex, nightly, with the wife. As in Stringfellows, you should look but not touch.”

Probably still a bit irritated that invitees to the party currently taking place in Pittsburgh require a valid membership ID to the G-20 and not the G-200, the Cayman Islands and Bermuda sounded off on the recent round of persecution against them.

“It’s not fair,” said McKeeva Bush, political leader and Minister of Financial Services of the Cayman Islands…It’s the fault of the onshore centers who taxed their own people … money is running away from them now,” Bush said.

That may be, but we’re way past playing the blame game for indiscretions in the past. The world is in recovery mode now and the last thing we want to do is bicker about who was right and who was wrong. We’re moving forward and we want everybody’s input- regardless of size.

Bermuda’s finance minister, Paula Cox, also suspects the world’s richest states may be seeking “extra-territorial solutions to their economic, fiscal and financial challenges.”
“There is now a strong suspicion that the G20 has an undisclosed agenda item to drive forward a global corporate tax policy, which may fly in the face of a nation’s sovereign right to set down its own tax policy,” she said.

On the other hand, the more things change, the more they stay the same.
Tax havens talk back against G20 “finger pointing” [Reuters]

1. He won’t be releasing anyone’s names when he makes bonus rulings, so don’t worry about being harassed (or pitied). 2. No comp caps!

But Feinberg ruled out capping pay, saying he is building “models” which he believes will set a precedent for government agencies and companies tackling the controversial issue of executive compensation.
The model he is building, Feinberg said, is complicated by the fact that “avoiding excessive risk means different things to different people in different situations.”

Sign up for the Brian Hunter 3000 model and we are good to go.

US pay czar Feinberg using forumals, not caps [Reuters]