WASHINGTON, July 31 – The week ended with a one-two punch to Wall Street and its high rollers.
On its last day before August recess, the House of Representatives passed historic legislation that would rein in those Wall Street practices which reward high-risk, short-term gains.
The Corporate and Financial Institution Compensation Fairness Act of 2009, introduced by House Committee on Financial Services Chairman Rep. Barney Frank (D-MA), passed by a vote of 237 to 185 on Friday.
Based on the “Say-on-Pay” legislation that passed the House in 2007, the law increases shareholder oversight and expands regulator oversight.
“Rewarding reckless, risky behavior incentivized Wall Street to gamble with the retirement, investments and savings of millions of taxpayers. While these families may never be made whole, at least Congress is attempting to address this twisted system to prevent it from happening again,” said Nicole Tichon, U.S. Public Interest Research Group Tax and Budget Reform Advocate.
The high-rolling bankers took another hit late this week when New York State Attorney General Andrew Cuomo released his No Rhyme or Reason: The ‘Heads I win, Tails You Lose’ Bank Bonus Culture report, slamming the bailout-recipient banks who paid out $32.6 billion in bonuses in 2008.
U.S. PIRG has repeatedly called for strict executive compensation restrictions for bailout recipients and applauds Rep. Edolphus Towns (D-NY), Chair of the Committee on Oversight and Government Reform, for announcing he will hold hearings in September on the implementation of executive compensation reforms.
“The news of these multi-billion dollar bonuses amounts to a slap in the face to taxpayers who’ve invested billions to keep these banks (and A.I.G.) afloat. It’s clear that as Wall Street bankers self-destructed and took us all with them, they paid themselves generously,” Tichon commented.
U.S. PIRG’s recent Bailout Report Card noted that the bailout rules limited bonuses to executives to one-third of their compensation, but allowed banks a free rein when it came to traders.
“Past experience suggests that companies will do whatever it takes to get around these compensation rules without strong oversight,” Tichon noted.
U.S. PIRG urges the Senate to step up to the plate in the Fall and join their House colleagues in reining in Wall Street excesses.
U.S. PIRG resources
U.S. PIRG Bailout Briefing #1: Rewarding Failure
http://static.uspirg.org/consumer/archives/bailoutbriefing1.pdf
U.S. PIRG Bailout Briefing #6: Taxpayers are Last in Line
http://www.uspirg.org/news-releases/product-safety2/product-safety-news2/bailout-briefing-6-aig--taxpayers-are-last-in-line
U.S. PIRG Bailout Report Card on Transparency and Accountability
http://www.uspirg.org/uploads/Om/NP/OmNPEnyFQImtJpzZUCNwBQ/USPIRG_BailoutReportCard_6_22_09.pdf
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U.S. Public Interest Research Group, federation of state Public Interest Research Groups, is a non-profit, non-partisan public interest advocacy organization. For more information on the Reining in Wall Street program, click here.
