Not a bad idea (and it remains shocking that neither Bush nor Obama even tried something like this) though admittedly, the devil is in the details. Being able to understand some of the contracts that promote excessive risk is probably about as difficult as understanding the complex rubbish the bankers have been selling. Either way, there always should have been the full authority to rip up contracts the moment the government stepped in. Somehow it still looks a little too convenient when they say the pace was too hectic and they urgently needed a deal to save the system. Anyone who has negotiated anything knows what a bogus story that is. That was precisely the time to inject such authority.
City regulators are to be given powers to tear up individual bankers' contracts that place too much emphasis on rewards for risk-taking.
Lord Myners, the City spokesman, revealed the plan today, trailing one of the headline measures in Wednesday's Queen's speech designed to contrast Labour's vision of a smart state with Conservative leader David Cameron's laissez-faire proposals.
Regulators previously only had the power to intervene against a general bonus scheme by requiring banks to increase capital ratios. This reform goes further by giving the Financial Services Authority (FSA) the power to rewrite individual contracts – and not just in banks in which the government has a stake.
