The House Financial Services Committee is considering a bill that would give government more oversight on how top financial executives are paid. Connecticut Congressman Jim Himes says the new plan will prevent the financial system from getting out of control.
The Committee's chairman is Massachusetts Senator Barney Frank. This week, Frank announced plans to limit cash incentives that encourage financial executives to take big risks.
Before running for congress, 4th District Representative Jim Himes worked on Wall Street for 12 years, as a vice president for investment firm Golman Sachs.
Speaking on WNPR's Where We Live, Himes says the new bill will give government more oversight rather than power and control.
"What this compensation does at its heart, is it says that if you are a regulated entity, if you're a broker dealer or a bank, that is regulated by whichever entity that regulates you, you will on an annual basis, present your compensation plan to your regulator, and the regulator will make a judgement about whether that plan is inclining your business to take on too much risk that ultimately could leave our tax payers holding the bag," said Himes.
Earlier this month, president Obama proposed legislation that would give company shareholders a non-binding vote on executive pay.
Frank pushes the president's plan further, requiring financial companies to disclose incentive-based compensation, and also bans compensation that leads to excessive risk-taking.
Himes says more scrutiny and more requirements on capital gains is a better bet than having government slim-down and restructure big financial firms like they did in the collapse of the 1930s.
"You know, walling-off activities has some merit to it, but in a sort of very inter-connected global world, trying to do that, which I'm not sure government would do terribly well, could put our financial services industry at a dramatic competitive disadvantage to the rest of the world."
Chairman Barney Frank says the House is expected to vote by the Fall.