EU Moves To Curb Bank Bonuses That Fuel Risk

Law360, New York (July 13, 2009, 12:00 AM EDT) -- The European Commission proposed new rules Monday on capital requirements for banks, including penalties for bonuses that might encourage excessive risks and standards for how banks assess risks associated with securitization.

The rules, which must be approved by the European Union Parliament and member states before they become law, would require national regulators to review banks' bonus plans and impose sanctions if they were found to provide “perverse incentives” for reckless behavior, according to the commission.

The proposed rules would also restrict banks' investments in complex...
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