House panel supports restrictions on executive pay
WASHINGTON -- A House panel voted Thursday to prohibit financial firms from offering corporate pay packages that encourage executives to take big risks, going further than what President Obama wanted to curb excessive salaries and bonuses on Wall Street.
Lawmakers, including Republicans who opposed the proposal because they said it went too far, said they were under tremendous pressure from constituents.
"Politically, it was very difficult for my members to stand up and fight this legislation," said Rep. Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee.
The committee's 40-28 vote paves the way for a vote by the full House on Friday. Aware of its populist appeal, Democratic leaders left the legislation as one of their final acts before breaking for a month-long recess.
Four months ago the House tried to claw back $165 million in bonuses that American International Group paid its employees after accepting more than $180 billion in federal aid.
While the initiative lost momentum after Obama warned against vilifying Wall Street, the fires were stoked again this week with reports of a top Citigroup trader pressing the troubled bank to make good on its promise to pay him $100 million.
Rep. Barney Frank, chairman of the House Financial Services Committee, said the system of hefty bonuses doesn't make sense.
"You get hired for this very prestigious job and you get a salary, and now we have to give you extra money for you to do your job right?" asked Frank, D-Mass.
Obama's approach would attempt to rein in excessive pay by giving shareholders a nonbinding vote on compensation packages and diminishing management's influence on pay decisions. Under his plan, members of compensation committees could not have financial relationships with the company and its executives.
Obama has appointed Kenneth Feinberg, a lawyer who oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks, to oversee compensation at firms that have accepted large federal bailouts. Feinberg has the power to reject pay plans he deems excessive.
