April 15, 2019
Agenda – Election 2020 and Banker Pay
Regulators are finally closing the chapter on a nearly decade-long fight over how to limit banker pay, according to reports.
The delayed piee of Dodd-Frank has yet to be formalized, and financial regulators want to tie up loose ends before the topic is litigated from the debate stcage in the 2020 presidential election.
A report last month from The Wall Street Journal cites sources who claim “long-dormant efforts to restrict Wall Street pay are back on the agenda.”
Section 956, first introduced in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, has been tabled since its last revamp in 2016. It’s been waiting for six regulators — the National Credit Union Administration, Federal Housing Finance Agency, Federal Reserve System, Federal Deposit Insurance Corp., Securities Exchange Commission and Office of the Comptroller of the Currency — to agree on a solution.
“Everyone knew it was going to come out of hibernation,” says Alan Johnson, founder and CEO with compensation consultancy Johnson Associates. “It’s one of Elizabeth Warren’s favorite topics, so if you’re a regulator and she could become a presidential candidate, you better get going.”
In early 2009, shortly after taking office, President Barack Obama called Wall Street’s $18 billion in bonuses the previous year as the economy collapsed “shameful.”
“There will be a time for them to make profits and there will be a time for them to get bonuses; now’s not that time,” he said.
A decade later, bonuses on Wall Street are inching up again, with bonuses for professionals in the securities industry in New York receiving a collective $27.5 billion, down from $32 billion the year prior, according to New York State comptroller Thomas DiNapoli’s office.
The latest iteration of Section 956 was rolled out in 2016 before President Donald Trump, known for his ambitions to loosen regulations, was elected. The proposed rule sought to emphasize long-term pay and cut back on short-term bonuses.