Last month, the Dutch government deployed what some see as the nuclear option in efforts to tame banking compensation culture - bonus caps. Its new banking code will restrict bonuses for Dutch bank directors to the equivalent of a year's salary. Pay may not be the most important bit of banking in need of reform, but it is the most visible and most immediately vulnerable to political action.
Given wholesale banks' reluctance to move boldly on pay by themselves - indeed, with evidence of their slipping back into the old ways - such action is starting to warm up. Tougher capital requirements and prudential regulation are more likely to prevent a repeat of the banking crisis. But the item topping the agenda at the G-20 Pittsburgh banking summit (yet to take place as this issue went to press) was 'corporate governance and compensation practices'. Governments know that acting on bonuses offers their best chance of a quick win for electoral consumption.
