Never let a good crisis go to waste

After largely escaping controls put in place by Britain\’s Financial Services Authority and European regulators on pay, managers now face rules on how and when bonuses are paid and more pay disclosure, according to the latest consultation paper on the Alternative Investment Fund Managers Directive (AIFMD), PwC said.

It\’s the same rules that bankers\’ bonuses are restricted by. Must be in stock at times, cash payouts delayed in large part for 3-5 years etc etc.

And of course these rules have absolutely nothing at all to do with making the system \”safer\”. Hedge funds do not have either the \”too big to fail\” guarantee nor to they have implicit or explicit government guarantees on depositors\’ funds.

So the arguments that were used to limit bankers\’ pay don\’t work for hedgies\’ pay. But they\’ll do it anyway simply because most European politicians (and all European bureaucrats) are simply horrified by this Anglo-Saxon capitalism shtick. You know, the idea that the workers might get a cut of the profit extorted from the sweat of their brows?

They\’re also, largely, privately held and so don\’t have any liquid stock that people can be paid in.

It\’s driven, quite simply, by a disgust for a capitalism not controlled by the politicians or bureaucrats. If they want to do that there then of course that\’s entirely up to the voters over there. But why in buggery we should put up with their preferences here I\’m not sure.

Perhaps we shouldn\’t eh?

 

8 thoughts on “Never let a good crisis go to waste”

  1. HF managers actually already tend to get the majority of their pay deffered. Most of the bonuses are forced to be paid into the fund the manager manages….with a 2-3 year lock in like all other customers.

    Which actually aligns the managers’ incentives even more so with those of his investors….so these new laws are already totally pointless and counterproductive.

  2. Hedgies need lines of credit from banks. That means speaking to bankers. Bankers are jealous people. The bankers aren’t going to lend to the hedgies if the hedgies earn vastly more than the bankers.

  3. Once again: it’s not “sweat of the brow”, it’s the ability to divert a small fraction of the capital flow through yourself and take a bit home.

  4. “Once again: it’s not “sweat of the brow”, it’s the ability to divert a small fraction of the capital flow through yourself and take a bit home.”

    What do you do for a living then, Pete?

  5. Hedge fund managers are the pre-eminent bureaucrats skimming revenue streams and not making anything .What is this thing with right-wingers that they can’t see bureaucracy in their favoured sector?
    When firms merge don’t they get rid of one of the paralllel mangement systems to save money?Rather proving Gillette’s contention that competition leads to firms being padded with useless office workers engaged only in competeting with the firm’s rivals..
    There is a strong argument for Socialism getting rid of bureaucracies.

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