McKenzie blog

U.S. set to curb bank bonuses, part of global move

WASHINGTON (Reuters) – U.S. regulators on Monday are expected to make their most forceful attempt yet to clamp down bank bonuses since the 2007-2009 financial crisis, but the proposals pale in comparison to harsher restrictions already set in Europe.

The Federal Deposit Insurance Corp plans to propose that executives at the largest financial institutions have half of their bonuses deferred for at least three years, according to two people familiar with proposal.

Yet the U.S. plan is markedly softer than the European Union, which in December set guidelines that top bankers be limited to receiving 20 percent of their annual bonuses upfront in cash, with some exceptions.

Massive cash payouts that reward bank executives and traders for short-term returns, without regard to long-term risk, have been blamed by international regulators as a factor in the recent financial crisis.

The FDIC plan responds to both the Dodd-Frank financial overhaul law of 2010 that directed regulators to curb pay plans that encourage excessive risk-taking and principles agreed in 2009 by the world's group of 20 leading economies (G20).

Many Wall Street firms have already spread out their bonus payments in response to the impending rules.

"This has all been kind of baked into people's plans and thinking today," said Alan Johnson of the compensation consulting firm Johnson Associates, about the FDIC's proposal.

But there are signs that in both the United States and Europe that there is upward creep in total compensation figures that offsets the curbs.

Goldman Sachs Group revealed last month that it tripled Chief Executive Lloyd Blankfein's base salary and awarded him $12.6 million of stock, even after the bank's net income plunged last year.

And earlier this month, Citigroup's board approved a base salary of $1.75 million for CEO Vikram Pandit. Pandit had vowed in 2009 to receive an annual salary of $1 until Citigroup returned to sustained profitability.

In Britain, banks such as HSBC and Barclays have raised the fixed part of bank pay in what they say is an essential move to retain staff.

NO GLOBAL LOCKSTEP

The FDIC's proposal would tackle pay for top executives at financial companies with $50 billion or more in assets such as Bank of America Corp, JPMorgan Chase & Co, Goldman Sachs and Morgan Stanley.

How much of the deferred pay an executive could receive would be tied to the performance of the company based on decisions made by the executive during the period covered.

After three ars, the bonus pay, or incentive-based compensation, could not be doled out all at once, rather an executive could receive no more than one-third of the deferred amount in one year, according to one person familiar with the proposal.

The G20's regulation task force, the Financial Stability Board, found in a study last year that implementation of pay reforms has been patchy and it will do another review soon.

While Asia avoided the worst of the financial crisis, China, Hong Kong and Singapore have all introduced rules or guidelines that aim to put the G20 agreement into practice.

(Reporting by Dave Clarke in Washington, Huw Jones in London and Rachel Armstrong in Singapore, Editing by Tim Dobbyn)

Erding double keeps PSG on Lille's tail

PARIS (AFP) – Paris Saint Germain, who were last crowned French champions back in 1994, kept up the pressure on leaders Lille with a 2-1 win over bottom club Arles-Avignon on Saturday.

PSG moved to within one point of Lille, who later extended their cushion to four points with a 1-0 win over Lens in a match staged in sub zero temperatures.

Lens held their illustrious hosts at bay until the 68th minute when a well-worked attack culminated in Brazilian striker Tulio De Melo slotting the ball past Lens' Croatian keeper Vedran Runje.

Earlier Turkish striker Mevlut Erding, PSG's top scorer last season, ensured the points for the capital side with goals in either half, with Senegelese midfielder Deme Ndiaye grabbing only Arles-Avignon's 11th goal of the campaign on the hour mark.

PSG coach Antoine Kombouare said: "The win was very important, we were waiting for that, and if things hadn't gone our way then it would have proved complicated.

"As for Erding, his double was extremely satisfying. It was becoming urgent for him to score, I felt he was getting anxious. But he was patient and his efforts were rewarded.

Erding said: "I wasn't feeling any additional pressure as the team was performing well, even if I hadn't been scoring.

"I had the confidence of the coach. For me all I had to so was remain concentrated and I knew the goals would come eventually."

The loss anchored Arles at the foot of the table on a mere eight points, a massive 12 adrift of second from bottom Monaco who host champions Marseille on Sunday.

Multiple former champions Lyon came away from their trip to Valenciennes the 2-1 losers but still leap-frogged Rennes on goal difference to take third after the Brittany side's 5-1 drubbing at mid-table Sochaux.

A brace from Modibo Maiga and contributions from Marvin Martin, Nigerian Ideye Brown and Ryad Boudebouz's 74th minute penalty earned Sochaux the win, with Rennes' solitary riposte coming from Razak Boukari.

This was a chastening experience for Rennes who started the match with the best defensive record in the league.

To add insult to injury goalkeeper Nicolas Douchez was given a red card.

Lyon, hustled out of the French Cup last weekend by Nice, came unstuck courtesy of a 51st minute spot kick converted by Valenciennes' Serbia midfielder Milan Bisevac, with Gregory Pujol doubling up seven minutes later.

Michel Bastos gave Lyon hope in the 71st minute but the hosts held on gamely thanks in no small part to the sterling efforts of goalkeeper Nicolas Penneteau.

Lyon president Jean-Michel Aulas hailed Penneteau's exploits in denying Lyon an equaliser.

"There was a 20 minute period when it was a miracle we didn't get back level as a result of two fine saves by Penneteau. Valenciennes know how to motivate themselves against the big teams," he noted.

Elsewhere, Bakary Sako scored twice to earn Saint Etienne a 2-1 win over Toulouse, Caen moved out of the relegation zone after a 2-0 win over Auxerre and Lorient came out 2-0 victors in their midtable clash with Brest.

Aside from the south coast clash between League Cup finalists Marseille and Monaco, Sunday's programme features troubled Bordeaux against Nice and Nancy hosting Montpellier, Marseille's opponents in the League Cup final.

NBA suspends Bobcats G Stephen Jackson 1 game

CHARLOTTE, N.C. – When the NBA announced before the season it planned to crack down on complaining by players toward officials, Charlotte Bobcats guard Stephen Jackson played a starring role in a video sent to teams showing behavior that would no longer be tolerated.

Now the volatile Jackson is serving as a costly example of just how serious the NBA is on the matter.

The league suspended Jackson for one game without pay on Tuesday for verbally abusing referee Eli Roe and failing to leave the court in a timely manner following his ejection from Saturday's loss to Milwaukee.

The suspension — to be served Wednesday when Charlotte visits New Orleans — will cost Jackson about $103,000 based on his $8.45 million salary this season. It comes on top of the $50,000 fine Jackson received earlier this month for verbally abusing officials after a loss at Detroit.

Jackson, averaging a team-best 18.1 points, left the practice court Tuesday before reporters were allowed in and before the suspension was announced. He told a group of reporters a day earlier he gets singled out for his direct personality.

"When things are not fair, I speak my mind," Jackson said. "I've never been a guy not to speak my mind and I guess people don't like that."

Jackson has been called for six technical fouls this season, not counting one that was later rescinded. That's tied with Orlando's Dwight Howard for the most in the NBA. Players serve suspensions once they reach 16 technical fouls on the season.

Jackson received consecutive technicals by Roe midway through the first quarter against the Bucks as he complained of being held and grabbed. Teammates Gerald Wallace and Nazr Mohammed had to usher Jackson off the court.

Referee Steve Javie hit Jackson with a technical foul on Nov. 5 against the Pistons and the league said he then shouted at the officials after the game, leading to his first fine.

"If you all saw what happened, $50,000, that's a lot of money. But welcome to the life of Stephen Jackson," he said after the fine was announced Nov. 6.

Jackson, acquired by Charlotte from Golden State before last season, has had trouble controlling his temper throughout his career. He was involved in the infamous Pacers-Pistons brawl in 2004, has clashed with coaches and served a one-game suspension while with the Warriors in 2009 when he reached 16 technical fouls.

The suspension will leave Charlotte short-handed against the Hornets, but Wallace said Tuesday despite a bruised left elbow that knocked him out of Saturday's game.

D.J. Augustin (sinus infection) also said he'll play after missing practice Monday.

Fears grow over length of US jobs crisis

WASHINGTON (AFP) – The latest snapshot of the US labor market due Friday was expected to show painfully high levels of unemployment persisting, in more troubling news for President Barack Obama.

Economists expect the November report will show a jobless rate stuck at 9.6 percent for the fourth consecutive month, as millions of Americans struggled to get back to work.

Analysts believe the private sector created around 140,000 jobs in November after a strong showing in October, when 159,000 jobs were added. But this growth is unlikely to dent the stubbornly high jobless rate.

With the employment market unable to untether itself from recession, the jobless rate has remained above nine percent for the last 18 months.

While that high rate of joblessness is a constant worry for the eight-plus million Americans who lost their jobs during the crisis, policymakers are increasingly concerned about how long the trend has persisted.

Massive government stimulus plans, while alleviating the worst ravages of the downturn, have failed to bring unemployment levels into line with those seen over the last decade.

During the 2000s, unemployment rates largely bounced between four and six percent until the Great Recession.

Federal Reserve Chairman Ben Bernanke this week warned that entrenched high levels of unemployment could have a "very long-term effect" on the US economy.

Job creation, he said, is "probably the most important economic issue facing America today."

With nearly 40 percent of the jobless unemployed for more than six months, fears are growing that high jobless rates may be more than a temporary result of a brutal recession.

"This is very unusual and very worrisome," Bernanke said, warning workers could become detached from the workforce, skills could erode over time and firms become more skeptical about the unemployed.

"This could have a very long-term effect on people's wages, on their employability," he added.

Economists say Bernanke is right to worry.

"We expect the unemployment rate to average 9.7 percent through the first quarter of 2011," Macroeconomic Advisers recently told clients.

Outlining its projections for 2011, Swiss bank UBS saw "only a slow drop in the unemployment rate to 9.0 percent by the end of 2011."

But there are a few reasons for optimism.

"The data over the last month have solidified the notion that labor demand is slowly but surely perking up," said Stephen Stanley, chief economist at Pierpont Securities, pointing to a drop in new claims for unemployment benefits and growth in the factory and service sectors.

"The worst days, from both an economic and a policy standpoint, are past," he added.

On Wednesday, payrolls firm ADP reported US private sector employment saw strong gains in November, with payrolls expanding by 93,000 -- the largest jump in three years.

The 10th consecutive month of gains offered some hope that the jobs sector is slowly on the mend, but it is unlikely to be quick enough.

"Employment gains of this magnitude are not sufficient to lower the unemployment rate," ADP warned.

With Congress frozen by partisan politics and gripped by fears about US debt levels, Obama has hoped to lower the unemployment rate by clinging on to what government stimulus still exists.

The White House warned that Congress's refusal to extend unemployment benefits would damage the economy as two million Americans will see their incomes slashed.

"Extending this support to those hardest hit by this crisis is not only the right thing to do, it's the right economic policy," said top Obama adviser Austan Goolsbee.

"Letting millions more Americans fall into hardship will hurt our economy at this critical point in our recovery and immediately undermine consumer spending."

There are also fears that cuts to federal, state and local government funding could raise unemployment.

"There has been concern in the market that weakness in hiring at the state and local level could be a big depressant on the economy going forward," said Deutsche Bank analysts.

"State and local government workers currently number approximately 19.4 million."

Wal-Mart plans first stores in Washington, D.C

NEW YORK (Reuters) – Discount retailer Wal-Mart Stores Inc (WMT.N) said it plans to open its first four stores in Washington, D.C., its latest effort to boost its presence in major U.S. cities.

Wal-Mart said it plans to open the smaller format stores in the District of Columbia in late 2012 and said its plans have popular backing. It also said it would create 1,200 jobs in the city.

The retailer said a poll of 800 locals it commissioned found nearly three-quarters of Washingtonians favored Wal-Mart coming to the city.

Wal-Mart has sought to convince city governments to allow it to open stores. Earlier this year, it won approval from the Chicago City Council to open two additional stores there, although it still has no stores in New York City.

A Wal-Mart spokesman told Reuters the retailer would need city permission to open one of the stores, but was free to open the other three.

Wal-Mart shares were up 60 cents, or 1.1 percent at $54.37 in midday trading.

(Reporting by Phil Wahba; editing by Andre Grenon)