New rules proposed by regulators on Thursday would curb Wall Street execs' pay, and could impact tens of thousands of people at financial institutions.
By putting in place clawback provisions on bonuses, the proposed rules target the kind of risk-taking by bankers that's perceived as having helped lead to the financial crisis, writes the Washington Post.
Under the new regulations, a part of Dodd-Frank, banks would have seven years to "claw back" executives' bonuses if it becomes apparent that an exec's actions actually harmed the financial institution. At the largest institutions, at least half of each bonus payment would also have to be deferred for four years.
President Obama hosted financial regulators at the White House last month and called for them to complete the exec comp rules before he leaves office. The rules should discourage "big, reckless risks."
Back in 2011, regulators came up with a proposal for limits on pay and bonuses to top financial institution execs. That was declared weak by critics, and the new proposal has taken the past five years.
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"It has been a long time in coming, because on this controversial issue, it is challenging to develop a rule which both meets the mandate of the law and at the same time is focused and fair," said a statement from the chair of the National Credit Union Administration, one of the six agencies that helped develop the rules.
NCUA has approved the exec comp rules; the five other agencies (including the SEC and the Fed) have to approve them before they become binding. [WaPo][WSJ]
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