Europe gets tough on pay. U.S.? Not so much.

NEW YORK (CNNMoney.com) -- As public outrage over Wall Street bonuses fades a bit in the United States, the European Parliament on Wednesday approved tough new rules that limit bankers' bonuses and align compensation with long-term financial performance.

The new rules are more rigid than any steps the U.S. has taken to regulate pay practices within the financial industry and highlights a growing divide between U.S. and E.U. policy on this key issue.

Under the new rules, upfront cash bonuses to European bankers will be capped at 30% of the total bonus, and 20% for "particularly large" bonuses. The rules also require that up to 60% of any bonus be deferred for at least three years and allow for part of it to be recovered if investments underperform. At least half must be paid in "contingent capital" and shares.

The rules are subject to a vote by the European Council and would go into effect next year. They would apply to U.S. banks based in Europe as well.

"These tough new rules on bonuses will transform the bonus culture and end incentives for excessive risk taking," said Arlene McCarthy, a British member of the European Parliament who championed the rules. "Since banks have failed to reform we are doing it for them."

By contrast, the financial reform bill passed by the House last month does not contain provisions that would cap bankers' bonuses. President Obama is expected to sign the bill into law this month assuming it also passes in the Senate.

The bill does require industry regulators to draft their own set of rules aimed at eliminating risky pay practice among banks and other financial firms. The Federal Reserve, in conjunction with other regulators, has already issued guidance along those lines.

In addition, the bill would impose new rules for how all publicly-traded companies pay top executives. Shareholders will be given a nonbinding advisory vote on how top executives are paid while in office. Shareholders also get a nonbinding advisory vote on executives' outsized severance payments, or so-called "golden parachutes."

Critics say more needs to be done to limit the size of Wall Street bonuses, arguing that skewed compensation practices helped bring on the financial crisis.

"The problem isn't only how pay is structured," said Sara Anderson, an executive compensation expert at the Institute for Policy Studies. "It's the size of pay that is still an issue."

Scott Talbott, head lobbyist for the Financial Services Round Table, supported steps to limit excessive risk taking, but said imposing uniform caps on bonuses across the industry is a mistake.

"Placing a hard cap on compensation is the wrong approach. The problem is that each employee and each company is different," he said. "One size doesn't fit all. U.S. policymakers are right on this."

He added that many financial services companies in the United States and abroad have already taken steps to ensure that compensation practices are aligned with the interests of customers and shareholders.

Still, the piecemeal approach to regulating Wall Street bonuses in the United States is surprising given the wave of public anger that developed in the wake of the financial crisis.

The issue came to a head in March 2009 after AIG (AIG, Fortune 500) paid employees a total of $165 million in bonuses despite the fact that the giant insurance company had to be bailed out by taxpayers.

But the groundswell of anger and frustration gave way to a sense of "disempowerment" as the debate over Wall Street reform dragged on, Anderson said.

In addition, the health care reform bill and the massive oil spill in the Gulf of Mexico has also diverted some public rage from the financial services sector.

That could change, Anderson said, as the economic recovery falters and the gap between rich and poor Americans continues to widen.

"With the increasing disconnect between the people at the bottom and the people at the top, the public outrage factor could increase," she said.