S.E.C. Proposes Crackdown on Wall Street Bonuses

[ProSense]

S.E.C. Proposes Crackdown on Wall Street Bonuses

By BEN PROTESS and SUSANNE CRAIG

<...>

The agency on Wednesday proposed a crackdown on hefty compensation awarded at big banks, brokerage firms and hedge funds — a move intended to rein in pay packages that encouraged excessive risk-taking before the financial crisis.

<...>

The S.E.C.’s plan, which closely resembles regulations already floated by the Federal Deposit Insurance Corporation, is mandated by the Dodd-Frank financial regulatory law. The proposed curbs on compensation ultimately will span seven federal agencies that regulate a wide range of financial firms.

<...>

For starters, it would require brokerage firms and investment advisers that manage more than $1 billion to file annual reports about incentive-based pay.

The S.E.C. would then halt any extravagant bonuses that expose the firm to a “material financial loss,” according to a summary of the proposal. The S.E.C. would scrutinize bonuses doled out to executive officers, directors and lower-level traders and bankers.

Financial firms that have $50 billion or more in assets — like Goldman Sachs and JPMorgan Chase — would face even tougher pay restrictions. The rules would require executive officers at these firms to defer half of their bonus for three years. If a firm suffered losses, the bonuses would be clawed back.

[hatrack]

1. "Late to the party" doesn't even begin to describe this . . .

Fucking joke.

[ProSense]

4. Given the scope,

the implementation is moving along at an impressive pace.

From the OP article:

"The S.E.C. in January enacted “say on pay” rules that give shareholders a nonbinding vote on corporate salaries, bonuses and golden parachutes. The plan the S.E.C. announced on Wednesday goes even further."

Teamsters Applaud SEC's Navistar Decision Upholding Dodd-Frank

The law was signed in July 2010.

Dodd-Frank Act Regulatory Reform Rules

Better to get it right.

[karynnj]

2. Dodd/Frank is progressively more impressive as various provisions go into effect

It is very important that the republicans NOT be allowed to defund any of its provisions - especially as the net effect of the regulations will likely be to save more than they cost.

[ProSense]

7. Why would anyone oppose this? n/t

edited.

[karynnj]

8. Well, as my kids might have said years ago "because they are publicans"

Publicans is what the oldest heard when I explained to her that the people on TV speaking of the right to bear arms were "Republicans". My then 4 year old had just seen Bambi and had asked after seeing it "what animal killed Bambi's mom?" we explained that it was people - some people did shoot animals. A few days later she saw them on TV - and for several years she and her younger sister made "publicans" the bad guys in all their play.

[dkf]

3. FINALLY. Geez it took them this long to figure out they need to curb excessive risk taking?

What a bunch of morons.

[ProSense]

10. Finally?

Facts.

The rule is still being finalized. It will impact several agencies as the OP points out. The law was signed in July last year. It will take time to fully implement the law.

[jtrockville]

5. Maybe we should just stop socializing the risk.

The people who profit from taking risks should be responsible for (personally) funding the bailouts.

[ProSense]

6. Dodd-Frank:

PDF

SEC. 214. PROHIBITION ON TAXPAYER FUNDING.
(a) LIQUIDATION REQUIRED.—All financial companies put into
receivership under this title shall be liquidated. No taxpayer funds
shall be used to prevent the liquidation of any financial company
under this title.
(b) RECOVERY OF FUNDS.—All funds expended in the liquidation
of a financial company under this title shall be recovered from
the disposition of assets of such financial company, or shall be
the responsibility of the financial sector, through assessments.
(c) NO LOSSES TO TAXPAYERS.—Taxpayers shall bear no losses
from the exercise of any authority under this title.

[karynnj]

9. That it was the legislation did going forward - until Scott Brown demanded

that change to get his vote. He led to a change where returned TARP money - ie taxpayer money - was used to fund the reserve that will bailout any future failure rather than having it funded by a tax on the financial institutions. Coincidentally, he got about $140,000 in contributions to his campaign from financial institutions soon afterward.

[jtrockville]

20. karynnj, that differs from what Prosense posted.

Is the language you refer to, to appease Brown, in a different section?
:shrug:

[ProSense]

24. The issue with

Brown was a tax that would have been collected and used to bailout banks, call it self-funded. It isn't in the bill.

The current law simply liquidates.

[karynnj]

31. It is a different part

In addition to what Prosense posted, a fund was to be created funded by the financial institutions by a tax on them. Consider this like the fund that the FDIC has for banks failing - though in that case they also have the government standing behind it.

The things Prosense lists are to try to keep banks from engaging in reckless behavior. This is in essence to have a fund that can bail out a company that fails in spite of this. As they would have pre-paid for it, you could almost consider it as the industry insuring themselves. As a failure of one in this interconnected industry leads to failures of others, this fund is designed to prevent the government from having to come in and bailout the company that failed. It still works as that, but, thanks to Brown, we paid for it - not the financial institutions.

[elleng]

11. This isn't the issue, is it?

'The S.E.C. would then halt any extravagant bonuses that expose the firm to a “material financial loss.”'

We assume the firms take care of themselves, only too well. Its the flagrancy, and careless attitude about the rest of us in the 'market' that's of concern, imo.

[Blue_Tires]

12. Hard to take seriously after Taibbi's story a few weeks back:

http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216

[ProSense]

13. That's a separate issue, but

could be the cases are being made.

Hope so.


On edit: Here's another.

[Cali_Democrat]

14. A day late and a dollar short

The SEC is toothless and pretty much powerless under the grip of the Wall Street firms.

All Wall Street has to do in this case is provide a detailed account of the bonuses with the SEC. How is that going to stop them from paying out large compensation packages? It won't. It's just a little more paper work for their lawyers.

In fact, our whole government is under the grip of Wall Street.

In 5-10 years, I can pretty much guarantee you that there will be no change in the status quo when it comes to executive compensation and bonuses.

America is ruled by the wealthy.

We are a plutocracy.

[ProSense]

15. What do you propose?

The SEC is toothless and pretty much powerless under the grip of the Wall Street firms.

All Wall Street has to do in this case is provide a detailed account of the bonuses with the SEC. How is that going to stop them from paying out large compensation packages? It won't. It's just a little more paper work for their lawyers.

In fact, our whole government is under the grip of Wall Street.

In 5-10 years, I can pretty much guarantee you that there will be no change in the status quo when it comes to executive compensation and bonuses.

America is ruled by the wealthy.

We are a plutocracy.

Giving up? Doing nothing?

I'll take new rules, regulations and oversight. What do you propose?

[Cali_Democrat]

16. There's not much we can do at this point.

The Plutocrats have an iron grip on our media and the politicians in Washington. The politicians are beholden to their interests and not the interests of the people.

It will only get worse after the Citizens United decision. Even more cash will be flowing from Wall Street into the coffers of their whores in Washington. :(

[ProSense]

17. So give up? Let me quote

Robert Reich: "But to succumb to cynicism about the possibility of progressive change because of the power of those at the top is to give up the battle before it’s even started. Haven’t we had enough of that?"

The actions in the OP are positive steps. The SEC has the power of enforcement. All it has to do is use it.

I welcome rules, regulations and oversight that move in the right direction.



On edit: What's the point of rejecting progress only to advocate giving up?

[Cali_Democrat]

18. The proposed crackdown by the SEC is nothing more than window dressing

In reality, they are not positive steps. They're meaningless steps. The proposal really has no teeth and that's how the plutocrats want it.

Our only hope is figuring out how to get money out of politics. However, the recent Citizens United decision makes it even worse. Also, unions are currently being destroyed, preventing them from donating to political causes. All the money flowing into the coffers of the whores in Washington will come from Wall Street.

I'm not advocating giving up, I'm only describing our current situation and it ain't pretty :(

[ProSense]

19. "In reality, they are not positive steps. They're meaningless steps."

Oh BS.

That's like arguing that this person hasn't been indicted.

[vroomvroom]

21. Does anyone seriously think this will get anywhere besides just as a press-op?

[hulka38]

22. The SEC is a joke.

[ProSense]

23. Everyone who does anything positive is

Why is the SEC a joke?

[babylonsister]

25. Damned if they do... I rec'd fwiw. nt

[ProSense]

26. This is just one way

to negate any accomplishment: The agency is a joke. Wall Street reform is a joke (except for the CFPB)

The stimulus sucked until the provisions expired.

[amandabeech]

30. Why don't you read Taibbi's piece, cited above.

And then answer your own d----d question.

Really, your inability to actually engage other posters who don't see the world as filled with bunnies and kittens adversely effects your ability to convince anyone who is not a true believer of your positions.

I can only conclude that whoever is paying you isn't seriously interested in communicating with unhappy Dems and really isn't interested in us or our lives.

[ClarkUSA]

32. Not under President Obama. Proof: "SEC files in Goldman fraud case" (March 2, 2011)

Read the facts: http://www.journalgazette.net/article/20110302/BIZ/303029976/1031/BIZ

[hulka38]

34. The SEC is a captured regulatory agency.

This is common knowledge. Nobody knows it better than Wall Street because they made it happen. The result is the culture of fraud is rampant and common place. Major fraud occurs regularly because it pays. Wall Street has had no police for a long time. So now because the SEC files a fraud charge, it's suddenly free from capture by Wall Street? That's all the proof you need? I'm sure Wall Street is shaken to its core by this development. Did the SEC file no fraud charges between 2000 and 2008?

[ClarkUSA]

35. The OP and I just gave you proof positive that the SEC under Obama has CHANGED.

The past is what this administration is getting away from. Give credit where it is due, at least.

[amandabeech]

27. I'm a former securities lawyer and Taibbi is 100% right.

That you folks continue to post astonishingly naive articles day in and day out is unnatural.

But perhaps it is not unnatural to you. Perhaps you folks, like just the many every professionals at the SEC as Taibbi describes, are waiting for your NBA contracts.

You're not going to be hired by the big folks unless you promote what the big folks want us peons to believe, are you?

It certainly would explain your seeming inability to see what has to be done not only in the SEC, but in government as whole--Congress included--to make government work for the people.

Good evening.

[Keith Bee]

28. NOOOOOOOOOOOOOOOOOOOOOO!!!

We have to hang on to these geniuses! Otherwise, the Chinese and Indians will snap them up to wreck their economies!

[ClassWarrior]

29. self-delete... just read upwards a few posts...

Looks like "stopped" was too strong a word, Mark. See what happens?

NGU.

[ClarkUSA]

33. Only 5 recs? While OPs filled w/negative bullshit about Obama gets dozens...

That says alot about DU. What a shame.

BTW, this development is yet another reason why I am a proud Obama supporter.

All the lies cannot disguise the truth of this president's accomplishments nor the fact he represents real CHANGE from the past and HOPE for the future.