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Financial reform kabuki

The big banks aren't broken up; no CEOs in orange jumpsuits doing the perp walk; no mention of accounting control fraud. The same people who caused the last crash are still in power, still doing the same thing, and it's all going to happen again. And then there's this little detail:

In a response to a public outcry over bank bonuses and multimillion-dollar compensation packages, the legislation also gives shareholders the right to cast nonbinding votes on executive pay packages.

Well, that's certainly responsive to populist outrage. Seriously, what do these people want?

The Fed would set standards on excessive compensation that would be deemed an unsafe and unsound practice for the bank.

Fox, meet henhouse.

Seriously, if the banksters aren't out on the window ledges and threatening to jump, then the bill's too weak. Heard any screams of pain from Obama's "savvy businessmen"? No? Then the bill is a sham. Quelle surprise.

NOTE And, oh yeah, the Consumer Finance Protection Agency is under the Fed. Great.

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beowulf's picture
Submitted by beowulf on

The Supreme Court looks to be ready to strike down Sarbanes-Oxley because it violates the Separation of Powers and the Appointments Clause with its creation of a Public Company Accounting Oversight Board.

If the Government wins that case (or loses on narrowly decided grounds of the Appointments Clause only, the CFPA avoids S-O's defects there) then the CFPA will clearly withstand judicial scrutiny. However, if Scalia and his crew get Kennedy on board to use Separation of Powers to expand the President's unitary executive power, then Katy bar the door. Every independent agency, not just the CFPA but even the Federal Reserve itself will face legal challenge that its too independent of the President's executive power.

I'd trade losing an independent FCPA for a non-independent Federal Reserve any day. So I hope, in this one instance, that all of Scalia's dreams come true. :o)

Submitted by MontanaMaven on

And ways to control it can vary. Other countries tax the wazoo out of CEOs and many do not let them wriggle around it with stock options taxed at lower rates.

In the good old days, a company pumped its profits back into the company in the form of higher wages for their employees and even expanding the number of employees. They used profits for more research and development. Danish companies still do this. Denmark is a rich country and at the same time has the least disparity between the lowest and the highest paid workers.

But the 1980s changed all that. Speculation driven by weird new tax laws allowed predators to take over a company, strip it of its assets, sell them off and leave it in debt and bleeding to death. No more loyalty to employees and no more forced loyalty by unions which were losing power.

It's the inequality, stupid! And that is why CEO compensation is a big deal.