The House voted Friday to slap restrictions on how Wall Street executives are paid after nine banks that took government aid rewarded thousands of their employees with bonuses topping $1 million each.
Bowing to populist anger and defying President Obama's suggestion that government rely on incentives instead of intervention to curb excessive salaries and bonuses, the House passed the bill on a 237-185 vote.
"This is not the government taking over the corporate sector.. .. It is a statement by the American people that it is time for us to straighten up the ship," said Rep. Melvin Watt, D-N.C.
The vote advances the first piece of Obama's broader proposal to increase oversight of financial institutions. The Senate was expected to take up the package after Congress returns in September from its summer recess.
The House bill includes Obama's suggestions of giving shareholders a nonbinding vote on compensation packages and prohibiting directors on compensation committees from having a financial relationship with the company and its executives.
The bill goes farther than Obama wanted by prohibiting pay incentives that encourage employees to take financial risks that could threaten the economy or viability of the institution.
Obama said giving shareholders a "say on pay" and diminishing management influence on pay packages would go far in curbing the lavish pay seen at some banks.
But Rep. Barney Frank, D-Mass., who sponsored the bill, said the extra regulation is necessary to ensure bankers and traders aren't rewarded only if they take big risks. Under the provision banning risky incentive-based pay, regulators would be given nine months to dictate precise guidelines.