September Jobs Numbers Released
On Friday, the Department of Labor reported that the economy added 64,000 jobs but lost a net of 95,000 nonfarm jobs in September, the result of a 159,000 decline in government jobs. Of the loss in government jobs, 77,000 were temporary Census Bureau employees, 76,000 were in local governments, and 7,000 in state governments. The Bureau of Labor Statistics also released preliminary revisions to the model used to estimate job changes from month to month, indicating that the recovery has been even weaker than initially reported. The Bureau says it expects to revise down the level of employment in March 2010 by 366,000 jobs, which means jobs gains had been about 30,000 weaker each month over the 12-month period that began in March 2009.
New EU Regulations on Bankers’ Bonuses
On Thursday, the Committee of European Banking Supervisors (CEBS), which is made up of the twenty-seven member states of the European Union’s banking regulators, met in London to vote on proposed regulations on bank employees’ compensation. The preliminary rules released on Friday indicate that up to 60 percent of top bankers’ bonuses would be required to be deferred for a minimum of three years and as long as five years. However, the rules remain unclear on the precise duration of retention requirements. The preliminary rules will now be the subject of a month-long consultation process, with the final rules due to come into effect in January 2011. Other key new rules will be a requirement that banks and national regulators jointly impose a maximum multiple of salary that can be paid as a bonus to bankers. On the issue of deferral, the insistence that half of upfront pay be paid in shares, rather than cash, overrides an existing rule in the UK, where the Financial Services Authority regulations currently insist that total bonuses be share-based. The preliminary rules also clarify that deferral periods should typically extend over three years but must in any case be no shorter than one year. The rules also clarify that bankers will be barred from hedging the “claw-back” provision on deferred bonuses. The new rules will apply to EU banks’ operations globally, but only to the European arms of non-EU banks.
DOJ Settles with Visa and Mastercard
On Wednesday, the U.S. Department of Justice announced that Visa and MasterCard have agreed to a settlement concerning the Department’s antitrust civil suit. According to the terms of the settlement, Visa and MasterCard have deleted rules in their contracts that prevented merchants using their cards from encouraging customers to use other card brands carrying lower merchant inter-change fees. The settlement would allow retailers to offer rebates or discounts to consumers who agree to use their preferred method of payment. American Express, who was the third party to the Department’s civil suit, declined to settle and is still fighting the lawsuit.