December 11, 2009

Better to be a banker in New York than Europe this bonus season.The leaders of Britain and France are embracing a one-time tax on fat bonuses paid by bailed-out banks — a restriction that goes far beyond what's being considered in the United States.Still, anger over lavish Wall Street pay is forcing some U.S. banks to take pre-emptive action. Goldman Sachs, the elite investment bank that repaid its $10 billion in bailout funds earlier this year, said Thursday it won't give cash bonuses to 30 top executives. Instead, they'll be paid in stock that can't be cashed in for five years.

Given Goldman's influence on Wall Street, its action will put pressure on other top U.S. banks to adopt similar measures. But it's unlikely to dampen what's shaping up as a blowout bonus season thanks to swift recovery by big banks in the U.S. and Europe.The banking industry argues that bonus taxes and other restrictions could cause its most talented employees to defect to banks in other countries that don't limit pay.