Frank wants more bank pay restrictions, and no private jets
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Getting help from the government? Prepare to give up your private jet.
Rep. Barney Frank, who heads the House Financial Services Committee, today listed the strings he wants to attach to the second installment of the $700-billion financial system bailout.
Here are some of the restrictions the Massachusetts Democrat would impose on banks that want to tap the next $350 billion in government funds to bolster their capital:
-- No payments or accruing of any bonus or incentive compensation to the 25 most highly compensated employees. So Frank now wants to limit pay far down banks’ chain of command. This is the same restriction imposed on the auto companies for the government help they got.
-- No compensation plans that would encourage manipulation of earnings to enhance compensation. Not sure how exactly they would even gauge this.
-- Private aircraft or leases would have to be divested. Bankers flying coach?? This rule was imposed on the auto companies as well.
-- No golden parachute payments as long as the bank has government capital. This one is a no-brainer with the public.
Frank also would authorize the Treasury to have an observer at board or board committee meetings of banks receiving government funds.
Read Frank’s full proposal here.
Let’s face it: None of this is likely to enhance the appeal of being a banker in America. Everybody hates bankers these days, but do we just make the credit crunch worse the more we tie their hands?
Maybe it’s no coincidence that financial stocks are once again leading the market lower this year: Of the 10 major stock industry sectors in the Standard & Poor’s 500 index, the financial group is down 6% year to date, the biggest decline of the 10 sectors. The next worst is telecom, down 3.6%. The S&P 500 overall is off 0.5%.
-- Tom Petruno