WASHINGTON — The House voted Friday to slap restrictions on how Wall Street executives are paid after nine banks that took government bailout money rewarded thousands of their employees with bonuses topping $1 million each.
Bowing to populist anger and defying President Barack Obama’s suggestion that government rely on incentives instead of intervention to curb excessive salaries and bonuses, the House passed the bill on a 237-185 vote.
“This is not the government taking over the corporate sector. It is a statement by the American people that it is time for us to straighten up the ship,” said Rep. Melvin Watt, D-N.C.
Although the bill doesn’t give Obama exactly what he wanted, it advances the first piece of his broader proposal to increase oversight of financial institutions. The Senate was expected to take up the package after Congress returns in September from its summer recess.
The House bill includes Obama’s suggestions to give shareholders a nonbinding vote on compensation packages and prohibit directors on compensation committees from having financial ties to the company and its executives.
But the bill goes farther than Obama wanted by prohibiting pay incentives that encourage employees to take financial risks that could threaten the economy or viability of the institution.
Rep. Barney Frank, D-Mass., who sponsored the bill, said the extra regulation is necessary to ensure that bankers and traders aren’t rewarded only if they take big risks.
If a bet goes wrong, “the company loses money and the economy may suffer, but the decisionmakers do not,” he said.
