For years the White House has pushed U.S. regulators to finish writing tough new rules that would restrict bonuses for Wall Street executives, one of the most contentious parts of the Dodd-Frank banking reform law. The chances of that actually happening are becoming slimmer by the day.
Bloomberg News reports that banking agency officials have privately conceded that finishing the sweeping changes to financial industry pay during Barack Obama’s presidency will be close to impossible for two reasons: opposition from a Republican board member at the little-known regulator of credit unions; and a bureaucratic quirk that gives the lone Republican commissioner at the Securities and Exchange Commission the power to block the rules, according to three people with knowledge of the matter.
The regulation was included in Dodd-Frank to prevent banks from offering incentive pay that encourages traders to take the kinds of dangerous risks that Wall Street critics say contributed to the 2008 financial crisis. Because Congress wanted the rules to apply to a wide swath of financial firms, lawmakers required six agencies overseeing everything from giant lenders to credit unions to fund managers to sign off on them.
The fate of the rules under the next administration is unclear. President-elect Donald Trump will have the opportunity to fill the vacancies at the NCUA, the SEC and other agencies. Though Trump hasn’t publicly commented on the pay rules, he has pledged to put a moratorium on new regulations and his advisers have said his administration will rip up parts of Dodd-Frank.
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