Charles Dharapak/AP -
President Obama stands with Sen. Christopher Dodd (D-Conn.),
center, and Rep. Barney Frank (D-Mass.), right, after signing the
Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21,
2010.
The provision required companies to disclose how much more their chief executives made than other employees. All the agency had to do was write a rule telling firms how to comply.
Within six months of the law’s passage in 2010, SEC staffers had circulated an early blueprint for the pay rule. They set a deadline for completing it by the end of 2011. The public was outraged over runaway executive compensation, and the pay disclosure seemed relatively straightforward, at least compared with many of the law’s other requirements.
What the agency did not count on was the resistance mounted by big business. A lobbying campaign waged by business executives and the nation’s most prominent corporate associations undercut the momentum and effectively brought the agency’s work on the rule to a standstill, according to interviews with SEC insiders and others familiar with discussions about the requirement.
The efforts of business groups to influence the SEC’s work was especially effective because of their success in pressing a court challenge to another part of the financial overhaul legislation — in essence, an extension of their lobbying efforts. The threat of additional lawsuits has hung over the discussion between lobbyists and agency officials about the pay rule, and some opponents have warned that the agency could be sued again if it enforces it.
“I don’t think folks anticipated the complexity or controversy. . . . The corporate community pushed back,” said Scott Kimpel, former counsel to Republican SEC commissioner Troy A. Paredes and now a partner at Hunton & Williams. “The lobbying alerted [the commissioners] to the fact that there were issues and dissensions. . . . People back-burnered it.”
SEC officials, who had hoped the pay rule would be completed quickly, missed their 2011 deadline. Then they missed another self-imposed deadline a year later.
As the third anniversary of the financial overhaul legislation known as Dodd-Frank approaches this month, the fate of the executive compensation provision exemplifies the problems dogging one of President Obama’s signature accomplishments.
Designed to prevent a repeat of the 2008 financial meltdown, the law grants broad powers to federal watchdogs to rein in Wall Street abuses and other corporate practices. Yet the regulators who must enforce it are far behind. Federal agencies writing the specific rules to carry out the law have missed nearly two-thirds of the deadlines set by Congress, according to numbers compiled by Davis Polk, a law firm that represents many financial companies.
Dozens of provisions — pertaining to banking, trading in financial securities, mortgage lending and other areas — have run into delays for reasons that experts say include their complexity and understaffing at agencies.
No comments:
Post a Comment