No doubt who the White House is working for its definetely not Mainstreet
U.S. Limits on Bank Pay, Bonuses Face Senate, Obama Skepticism
July 31 (Bloomberg) -- Restrictions on financial industry bonuses heading to a vote in the U.S. House may be rejected by the Senate and the Obama administration, which are reluctant to increase government’s role in deciding compensation.
The House, emboldened by New York Attorney General Andrew Cuomo’s report yesterday that showed nine banks getting U.S. aid paid $32.6 billion in bonuses last year, will probably pass a bill requiring regulators to ban pay practices that encourage “inappropriate risks.” A panel in the House, where Democrats hold a 256-178 advantage, approved it along party lines July 28.
The bill must pass the Senate and be signed by President Barack Obama to become law. White House press secretary Robert Gibbs, who hadn’t read Cuomo’s report, said yesterday the administration is concerned the measure may give regulators too much say on incentive pay. Michael Oxley, former chairman of the House Financial Services Committee, said senators are more likely to back the say-on-pay measure that gives investors a non-binding vote on compensation.
“It is difficult for me to believe that the Senate would be particularly interested in passing that version, despite the report,” Oxley, co-author of the Sarbanes-Oxley corporate governance law, said in an interview. “I don’t think it’s going to influence the Senate.”
The House in March passed a bill to set a 90 percent tax on bonuses at companies getting at least $5 billion in aid. The legislation, responding to public outrage over retention bonuses at American International Group Inc., died in the Senate after Obama said the U.S. shouldn’t “govern out of anger.”
Public outrage over Wall Street compensation reignited after Goldman Sachs Group Inc. set aside $11.4 billion for compensation and benefits for the first half of this year, a 33 percent rise from a year earlier and enough to pay every worker $386,429 for that period.
Cuomo analyzed 2008 bonuses at banks that received $175 billion in U.S. aid and found that 4,793 employees were paid more than $1 million in bonuses last year. The 51 members of Citigroup Inc.’s senior leadership committee got an average of $4 million each, according to Cuomo.
The report underlines “why we’re trying to pass this bill,” House Financial Services Committee Chairman Barney Frank said yesterday in an interview. “This is precisely the kind of thing that should be subject to legal restriction.”
Tougher to Stampede
The House measure goes further than administration proposals to regulate compensation. It bars incentive-pay plans that “could threaten the safety and soundness of covered financial institutions,” or that “could have serious adverse effects on economic conditions or financial stability.”
The Senate wouldn’t take up the measure until it returns from its recess, which begins Aug. 10 and ends Sept. 7.
“History teaches us that it is a lot tougher to stampede the Senate than the House,” said John Olson, a partner at the Gibson, Dunn & Crutcher law firm in Washington. “If Mr. Cuomo was playing federal politics and trying to influence the Senate, he would have released this report after Labor Day.”