Germany, Iran and banks

The English-language financial press is occupied this week with the upcoming German elections and Mahmoud Ahmadinejad's swearing-in as president of Iran, as well as the controversial topic of bank bonuses.

Sensible politics?

While Chancellor Angela Merkel is hiking in northern Italy, Frank-Walter Steinmeier, her Social Democratic rival in September’s general election, has the greater mountain to climb, writes the Financial Times.

... Mr Steinmeier is to be admired for returning his party to the centre. His promise not to ally himself with the Left party in Berlin is not only sensible politics ... it is also right. But there are signs he will now run a negative campaign against the CDU/CSU and their preferred partner, the liberal FDP. A coherent alternative would be better. …

A Tsar’s chance

US banks paid huge bonuses last year despite losing billions. Citibank, for example, paid $5.33 billion in bonuses, while losing $27.7 billion and receiving $45 billion from the government's Troubled Asset Relief Program (TARP). Kenneth Feinberg, the “compensation Tsar” appointed by Barack Obama to manage the pay of top executives of companies receiving TARP, will make decisions on pay this month. He should reject requests for big bonuses, writes The New York Times.

... In principle, one would like to see firms pay executives as they saw fit. But banks are different. They gamble with ordinary people’s money. They have proved they can do it extremely destructively. … Bankers’ compensation must be aligned with the performance of their strategies over the entire period in which they put their bank’s capital at risk. ...

Sham elections

Mahmoud Ahmadinejad has been sworn in as Iran’s president in an election that's been called a sham. Now is the time for President Obama to denounce the “Stalin-style show trial of some 100 leading reformists accused of of seeking to overthrow the regime,” writes The Wall Street Journal.

...Iran was always going to accuse the West of meddling no matter what Mr. Obama said. But a regime that will purge and imprison so many of its own elites for the crime of demanding an honest election is not one that an American President can charm into giving up its nuclear ambitions....