Wrangling in the European Parliament over proposals to rein in the pay of fund managers is making a strict banker-style limit on bonuses ever less likely.
A parliamentary panel called earlier this year for tighter control of fund manager pay. But more than three months later, lawmakers are still split over whether to demand that bonuses are capped at the level of salary. "A one-to-one pay-bonus ratio for fund managers is looking a bit less likely than it was earlier this year", Sharon Bowles, the head of the parliament's influential economic and monetary affairs committee, told Reuters.
Disagreement has led twice to the postponement of a wider vote in the European Parliament to spell out its demands - a sign that support for a clampdown is fading as legislators firm up their positions. Advocates of a fund manager payout cap argue that the same culture pervades fund management. Other lawmakers say any such rules should be tempered as fund managers do not pose the same threat to the stability of the financial sector as a bank.
Any change to fund manager pay would hit mutual funds, which have about €6 trillion under management. A cap would not affect hedge funds or private equity, but some analysts see it as a possible precursor to rules for those investors. The parliament cannot introduce any such reform into European law by itself and would also have to win over a majority of the 27 EU Member States.
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