Warning over bonus crackdown

Plans to pay AIG traders $165m in bonuses after the company received $160bn of taxpayer funds sparked outrage

Plans by US lawmakers to curtail big Wall Street bonuses may have adverse effects on government rescue plans aimed at restarting consumer lending and resolving the toxic asset overhang.

In particular, private investors such as hedge funds and private equity groups may be less likely to take part amid concerns of government scrutiny and fears that profits may be clawed back in the future.