Obama Administration to Regulate Pay

From The New York Times

The Obama administration has plans to cap the pay of corporate executives even if they're not receiving federal bailout money.

The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.

Officials said the proposal would seek a broad new role for the Federal Reserve to oversee large companies whose problems could pose risks to the entire financial system.

The administration has been considering increased oversight of executive pay for some time, but the issue was heightened in recent days as public fury over bonuses spilled into the regulatory effort.

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could go beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on company boards to tie executive compensation more closely to corporate performance and to take other steps to ensure that compensation was aligned with the financial interest of the company.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission.

Long before he became Treasury secretary, Mr. Geithner sought broader authority for the government to resolve problems at financial institutions not under bank regulators’ supervision.

France and Germany especially have suggested that the better response is not more government spending but tighter regulation.

Representative Barney Frank, the Massachusetts Democrat who heads the Financial Services Committee, said he believed giving the government new authority to take over troubled companies could be adopted by the House relatively quickly, particularly after the furor over the A.I.G. bonuses.

“This would give the government the same powers that you would get as if the company were in bankruptcy,” Mr. Frank said in an interview shortly after meeting with Mr. Geithner on the plan.

But Mr. Frank and other lawmakers said other elements of the plan could take more time, like expanding the authority of the Federal Reserve to become a systemic regulator.

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Next?... oil companies, drug companies, your company. I'm afraid that if this kind of regulation and taxation continues corporations will abandon The Peoples Republic Of America and move to more capitalist friendly nations - like China.

"Never allow a crisis to go to waste, they're opportunities to do big things” - White House chief of staff Rahm Emanuel