Say what you will about SEC Chairman Mary Schapiro but at least she is not, to date, actively bashing the firms she regulates on Wall Street as “socially useless” and agitating for a new multi-billion dollar tax on banks as a measure to curb large bonuses for banking executives. Yet that is just what appears to be happening in the UK.
Yesterday, Adair Turner, chairman of the Financial Services Authority, said he would support taxes on the financial sector to prevent bonuses for executives if they continued with “excessive risk-taking.” He also made sure to throw in his opinion that some activities of London’s financial sector were “socially useless” and questioned whether the sector has grown too large. “If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit,” Turner said. He added that if “increased capital requirements are insufficient I am happy to consider taxes on financial transactions – Tobin taxes” in an effort to cut banks’ profits and reduce the pool of money available for bonuses.
