Tough German Bailout Caps Bank Salaries

Bonuses, dividends also nixed for troubled firms' execs
By Jason Farago,  Newser Staff
Posted Oct 20, 2008 4:48 AM CDT
A broker watches as German finance minister Peer Steinbrueck is seen on TV at the stock market in Frankfurt, central Germany, Monday, Oct. 13, 2008.   (AP Photo/Michael Probst)
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(Newser) – The German cabinet approved the terms of a $645 billion bailout plan today—which includes a salary cap for top bank managers. Banks who take part in the bailout must cap managers' salaries at about $670,000 and withhold bonuses and dividends. Some of Germany's top banks have said they might not participate in the bailout under those terms, AP reports.

The salary cap isn't the only tough measure in the German bailout. The government can also force participating banks to reduce or completely eliminate risky lending practices, and it will only buy a maximum of $6.7 billion in toxic assets. Several smaller banks in Europe's largest economy are eager to buy in immediately, but the CEOs of Deutsche Bank and Commerzbank have both said they probably won't participate.