Wage control

The Obama administration and congress are now looking into ways to regulate employee compensation in the financial industry, including firms that did not receive any TARP money.

'WASHINGTON -- The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money, according to people familiar with the matter.

The initiative, which is in its early stages, is part of an ambitious and likely controversial effort to broadly address the way financial companies pay employees and executives, including an attempt to more closely align pay with long-term performance.

Administration and regulatory officials are looking at various options, including using the Federal Reserve's supervisory powers, the power of the Securities and Exchange Commission and moral suasion. Officials are also looking at what could be done legislatively.

Among ideas being discussed are Fed rules that would curb banks' ability to pay employees in a way that would threaten the "safety and soundness" of the bank -- such as paying loan officers for the volume of business they do, not the quality. The administration is also discussing issuing "best practices" to guide firms in structuring pay.'

The politics of envy, triumphant?  It will be interesting to see how this works out in a world economy that has been turning away from central control, assuming Obama is able to push this scheme through.  If he is, will high powered executive talent be drawn to foreign companies to the detriment of the U.S. financial industry?  Will there be a recovery in the U.S. in the face of Obama's constant meddling in the market? 

Hoping that Obama fails is not the same thing as hoping that the U.S. fails.  In fact, it's quite the opposite.

Comments

[Leana]

Wow! The government can't control what it should be controlling, especially the SEC, and it's deciding to take on new responsibilites? Incredibly off track.

[Tom Bowler]

It is, unfortunately, nothing new.