Congress will consider legislation to extend some of the curbs on executive pay that currently apply only to those banks receiving federal assistance, House Financial Services Committee Chairman Barney Frank said.
Congress will consider legislation to extend some of the curbs on executive pay that currently apply only to those banks receiving federal assistance, House Financial Services Committee Chairman Barney Frank said.
Mr. Frank said the compensation restrictions would apply to all financial institutions and might be extended to include all U.S. companies.
“There’s deeply rooted anger on the part of the average American,” the Massachusetts Democrat said at a Washington news conference today.
The provision will be part of a broader package that would likely give the Federal Reserve Board the authority to monitor systemic risk in the economy and to shut down financial institutions that face too much exposure, he said.
Also included in this proposal will be registration requirements for hedge funds to make their finances more transparent, and limits on conflicts of interest at credit-rating agencies such as Standard & Poor’s, he said.
The bill, which the committee is working on in consultation with the Obama administration, also will require financial institutions that bundle mortgages into securities to share in potential losses. This would give firms an incentive not to make bad loans, Mr. Frank said.
Institutions that securitize loans improperly will incur tougher penalties.
“There have been too few constraints on major financial institutions incurring far more liability than they could handle,” he said.
The committee hopes to have a general outline of the legislation by early April, Mr. Frank said.
It will be the panel’s first priority in its effort to restructure financial regulation in the wake of the worst economic crisis since the Great Depression.
