President Biden has the power to crack down on executive excess by imposing new CEO pay and buyback restrictions on federal contractors.
As we reach the fifth anniversary of the Dodd-Frank Act, the Obama administration’s thunderous attacks on Wall Street bonuses seem a distant memory.
“I’d like to throw these guys in the brig,” Vice President Joe Biden fumed when the big banks kept doling out large bonuses after the 2008 crash. “They’re thinking the same old thing that got us here—greed.”
With only slightly less vitriol, President Obama blasted Wall Street pay practices for contributing to a “reckless culture,” while his Treasury Secretary at the time, Timothy Geithner, declared “We have to end that era of irresponsibly high bonuses.”
A new era was supposed to begin under Section 956 of the Dodd-Frank financial reform legislation. Within nine months, regulators were to ban large financial institutions from offering incentive pay that encourages “inappropriate risks” by providing “excessive compensation.”
Dodd-Frank turns five on July 21 and that deadline will be 1,555 days in the past.
What’s the hold-up? With seven regulatory agencies tasked with implementing Section 956, there’s endless opportunity for passing the bonus buck. And with congressional oversight committees now chaired by men who opposed Dodd-Frank in the first place, no one’s hauling these foot-dragging regulators to Capitol Hill to sweat before the klieg lights.
Meanwhile, the Wall Street bonus bonanza continues. New York-based securities-industry employees hauled in a combined $28.5 billion in end-of-the-year payouts for 2014, the largest since the financial crisis.
To read more, go to CNBC where this piece originally appeared.
Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.