Treasury Expects Congress to Act This Year on Pay, Regulation
The Obama administration expects Congress will act this year to strengthen financial regulation and rein in executive pay, the Treasury Department’s liaison to Capitol Hill said.
Kim Wallace, assistant secretary for legislative affairs, said he expects lawmakers will agree on a financial regulation plan by the end of 2009. The administration wants better oversight of consumer financial products and banks that pose the biggest risks to the financial system, while also giving the government new powers to dismantle such firms in a crisis.
“We still see a path to enacting that legislation before Congress leaves this calendar year,” Wallace said today at a conference sponsored by Interactive Data Corp. in Washington. “Whether that’s Dec. 23 or Dec. 24 remains to be seen.”
Wallace said he expects the regulatory package to make it through congressional committees by the end of October or early November. Its passage by the full House of Representatives and the Senate depends on how the issue fits in the calendar alongside the administration’s health-care agenda, he said.
The Treasury also wants to link bankers’ pay to long-term company performance, so that executives are motivated by shareholders’ best interests. Wallace said he expected Congress would go beyond legislation passed earlier this year that put curbs on pay at banks receiving federal bailout money.
“You’re likely going to get something on executive compensation, more than already has happened,” he said. “To the degree that there are holes that need to be closed, probably you’re going to see legislation that seeks to do that.”
Treasury Secretary Timothy Geithner has backed proposals to link banker pay to long-term performance and also allow pay “clawbacks” if financial gains prove short-lived. President Barack Obama will be pressing that agenda later this week when he meets with Group of 20 leaders in Pittsburgh.
“A challenge in making that process effective, in my view, will be internationalizing that process,” Wallace said. “Executive compensation will be one of the more hotly discussed, possibly debated, maybe even agreed-upon issues at the meeting.”
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