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Limits on Wall Street Pay Are Back on Regulators’ Agenda - ABI

Long-dormant efforts to restrict Wall Street pay are back on the agenda as regulators turn to unfinished business left over from the 2010 financial overhaul, the Wall Street Journal reported. Banking regulators are discussing reviving a proposal that would require big banks to defer some compensation for executives and to take back more of their bonuses if losses pile up at a firm. The talks are in early stages and involve top officials from at least three bank regulators: the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Federal Reserve. The rules are required by the 2010 Dodd-Frank financial law, a fact bank regulators have pointed to as they begin work on a new rule. Twice proposed during the Obama administration, they weren’t completed earlier in part because of industry pushback. The industry had opposed the scope of the latest proposal from 2016 — which extended to rank-and-file employees — saying it should have been limited to top executives. Banker pay became a lightning rod during the financial crisis. Critics blamed executives’ upfront cash bonuses for encouraging risky, short-term bets that contributed to the crisis. President Obama called the billions in bonuses that firms paid in 2009 shameful. The Dodd-Frank law, passed a year later, mandated new rules to limit payouts and more closely align them to firms’ long-term financial health. Pay fell sharply in the post-crisis years, in part because of this backlash and in part because bank profits sank.

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