US plans banker bonus crackdown

US regulators are set to make their most forceful attempt yet to clamp down on bank bonuses. The Federal Deposit Insurance Corp plans to propose that executives at the largest financial institutions have half of their bonuses deferred for at least three years.

Yet the US plan is markedly softer than the European Union, which in December set guidelines that top bankers be limited to receiving 20 per cent of their annual bonuses upfront in cash, with some exceptions.

Massive cash payouts that reward bank executives and traders for short-term returns, without regard to long-term risk, have been blamed as a factor in the recent financial crisis.