BRUSSELS, Feb. 28 (UPI) -- The European Union could adopt a banking law that would put a cap on bonus pay for bankers starting in 2014, a top-ranking finance official said.
Irish Finance Minister Michael Noonan said in a statement he would present a proposal for bank capitalization to finance ministers at the next meeting of European Union finance ministers next week. That proposal includes a stipulation that would restrict bank bonus pay to no more than the size of a banker's salary, The New York Times reported Thursday.
Huge bank bonuses have been frequently cited as the underlying cause for the risk taking that led to the financial crisis in 2008 and 2009, which in turn triggered a nearly global economic slowdown.
Details of the proposal have yet to be finalized but the goal is to "limit bankers pay while maintaining a competitive European banking sector," Noonan said.
The bonus pay cap would be part of a set of banking laws known as Basel III that would require banks to beef up their capital holdings as a cushion against any future crisis in the banking industry.
The goal for that law is to "make sure that banks in the future have enough capital, both in terms of quality and quantity, to withstand shocks," Noonan said.
The bonus pay cap would apply to employees of European banks who are working abroad, in New York City, for example, the Times said. It would also have a clause allowing lawmakers to rescind the measure if it causes harm to Europe's banking industry.
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