Wall Street Compensation

[srblanco7]

US Regulators are contemplating limiting bonuses for Wall St. execs. Text from article (light on details) below:

April 19 (Reuters) - U.S. banking regulators are planning to revive a proposal that would require big banks to defer executive compensation and claw back more of their bonuses if losses pile up, the Wall Street Journal reported, opens new tab on Friday.
Six agencies, including the Federal Deposit Insurance Corp (FDIC) and the Office of the Comptroller of the Currency (OCC), are involved in developing the plan, the report said, adding that the measure could be proposed in the coming days.

If we're going to live in the era of "too big to fail", does the government (on behalf of the taxpayers) deserve a say?

Not intending this to be a political topic, but rather feedback regarding Wall St compensation.

[Fishindude77]

Horrible idea allowing the government to have a say in how much private firms can pay their team.
This overreach could trickle into other businesses as well.

Let them fail if they don't run their business properly.

[ua_guy]

"Too big to fail" is real. And that is private enterprise's doing. Because they've created the liability, they should not be immune to regulation or the harm they cause others from their own mismanagement. These businesses have long had the opportunity to come up with a solution, but they didn't.

The slippery slope of this trickling to other businesses is erroneous and fear-mongering. Legislation where legislation is needed isn't a bad thing.

[disneysteve]

Horrible idea allowing the government to have a say in how much private firms can pay their team.
This overreach could trickle into other businesses as well.

Let them fail if they don't run their business properly.

We're not talking about private firms. We're talking about big banks, publicly traded companies. They operate under a wide variety of regulations, as they should. Would you trust your money to an unregulated bank? I sure wouldn't.

That said, even private firms have to comply with numerous laws and regulations. Labor laws, safety laws, etc. Or would you prefer to go back to sweatshops and child labor and dangerous working conditions like in the 1800s?

[bjl584]

People will be compensated, just via some other means. If bonuses are restricted, then base salaries and stock options will rise. If not, talent will go elsewhere to work.

[disneysteve]

People will be compensated, just via some other means. If bonuses are restricted, then base salaries and stock options will rise. If not, talent will go elsewhere to work.

I do not work on Wall St but even at my job, we had a bonus that was spelled out in our contract. They were obligated to pay it even if the company had a bad year. It wasn't tied to the company's financial performance in any way. A few years ago, they ditched the bonus structure entirely and just raised our base salaries, so pretty much exactly what you are talking about.

[FrostedMoose]

We're not talking about private firms. We're talking about big banks, publicly traded companies. They operate under a wide variety of regulations, as they should. Would you trust your money to an unregulated bank? I sure wouldn't.

That said, even private firms have to comply with numerous laws and regulations. Labor laws, safety laws, etc. Or would you prefer to go back to sweatshops and child labor and dangerous working conditions like in the 1800s?

The issue isn't dangerous working conditions, but rather placing caps on employee compensation. In a free market economy, publicly traded companies have shareholder-elected boards that approve compensation. If I own stock in Nvidia, I want it to make money, and a lot of it. If that means paying bookoos of cash to the top executives, so be it.

We have a movement afoot away from a free market economy to more of a European style socialist economy. Instead of taking care of ourselves, we want the government to look after us, because they know best. Four-day work weeks, high minimum wages, caps on employee salaries, "guaranteed" healthcare (haha). All of this will result in 1) Higher unemployment, 2) Significantly lower standard of living for 98 percent of the population, 3) Lower productivity, and 4) Rationed, and reduced quality, medical care.

We are full-steam ahead toward a Euro-style economy right now.

[Fishindude77]

The issue isn't dangerous working conditions, but rather placing caps on employee compensation. In a free market economy, publicly traded companies have shareholder-elected boards that approve compensation. If I own stock in Nvidia, I want it to make money, and a lot of it. If that means paying bookoos of cash to the top executives, so be it.

We have a movement afoot away from a free market economy to more of a European style socialist economy. Instead of taking care of ourselves, we want the government to look after us, because they know best. Four-day work weeks, high minimum wages, caps on employee salaries, "guaranteed" healthcare (haha). All of this will result in 1) Higher unemployment, 2) Significantly lower standard of living for 98 percent of the population, 3) Lower productivity, and 4) Rationed, and reduced quality, medical care.

We are full-steam ahead toward a Euro-style economy right now.

This pretty much summarizes my opinion as well.

Banks are highly regulated as is. The majority of banks are well run and have plenty of government oversight to deal without piling more on them. More government oversight forces banks to add staff, increase overhead, cuts into margins, leaving less profit, less $$ for shareholders, etc. It could also force some of the smaller institutions out of business.

The majority of banks aren't "big banks". Where are they going to draw the line at who they impose this new oversight on?
Don't think this won't soon start trickling over into other types of business.

[LivingAlmostLarge]

This pretty much summarizes my opinion as well.

Banks are highly regulated as is. The majority of banks are well run and have plenty of government oversight to deal without piling more on them. More government oversight forces banks to add staff, increase overhead, cuts into margins, leaving less profit, less $$ for shareholders, etc. It could also force some of the smaller institutions out of business.

The majority of banks aren't "big banks". Where are they going to draw the line at who they impose this new oversight on?
Don't think this won't soon start trickling over into other types of business.

probably should let the free market go wild and see what happens.

[ua_guy]

In reality the banks will find a way around any regulation anyway, they typically do, and when they're caught they just deny it. It's like when you talk to anyone other than a teller at a bank, they're a VP/Vice president of something, SVP, DVP, AVP, EVP, blah blah blah. Everybody's a VP! It's because of regulation around compensation and authority, so banks up-level titles and VP is the title that is needed to satisfy the regulated level of authority needed.

People who touch money for a living don't deserve an elevated level of trust, and that's why regulation and oversight is needed.

[james.hendrickson]

Horrible idea allowing the government to have a say in how much private firms can pay their team.
This overreach could trickle into other businesses as well.

Let them fail if they don't run their business properly.

Yep - isn't this effectively a way of implementing wage controls?

[bjl584]

Yep - isn't this effectively a way of implementing wage controls?

Minimum wage laws are a form of wage controls, just on the other end of the spectrum. One could argue for or against, but by definition, it is the government telling private business the minimum they can pay an employee.