NEW YORK – U.S. regulators proposed new rules on Thursday to overhaul the way Wall Street executives are paid, addressing years of complaints that excessive bonuses and salaries helped lead to the 2008 financial crisis.
The proposals are aimed at ensuring executives don't make risky bets to boost their pay and then walk away with a large bonus before the consequences become clear. Under the proposed rules, for example, the nation's largest banks would have up to seven years to "claw back" an executives' bonuses if it turns out their actions hurt the institution.
The regulations are one of the last uncompleted provisions of 2010's financial reform package approved by Congress, known as Dodd Frank, and one of its most controversial. A team of regulators, including those from the Securities and Exchange Commission and the Federal Reserve, initially proposed limits to pay and bonuses given to top executives at financial institutions in 2011.
But critics pounced on the proposal as weak, noting that it did not address the compensation of traders who can draw some of the biggest bonuses.
[Why $ 146,200 is a terrible bonus for Wall Street]
It has taken five years for regulators to emerge with a new proposal and it only comes after they received pressure from the White House to complete the task before the end of President Obama's tenure.
"It has been a long time in coming, because on this controversial issue, it is challenging to develop a rule, which both meets the mandate of the law and at the same time is focused and fair," Debbie Matz, chair of the National Credit Union Administration, one of the agencies involved in developing the rules, said in a statement.
[7 years after Lehman failed, this trader still wants his $ 83 million bonus]
Bonuses are a central part of Wall Street culture and industry executives have been anxiously awaiting the new rules.
The proposed rules arrive at a time when Wall Street has become stingier with its bonuses amid an industry slowdown. The average bonus tumbled by 9 percent to $ 146,200 last year, according to the New York State Comptroller's Office.
A rebound in oil prices added to optimism sparked by earnings reports that beat low expectations, lifting stocks just a couple percentage points away from record highs. (Reuters)
Renae Merle covers white collar crime and Wall Street for The Washington Post.
No comments:
Post a Comment