The AIG-inspired plan to tax bonuses at bailed-out firms is stalling quickly in the Senate, but the House Financial Services Committee is pressing ahead today by taking up a bill that would freeze existing bonus contracts and require the Treasury Department to produce its own executive-pay standards.
But the measure, sponsored by Reps. Alan Grayson (D-FL) and Jim Himes (D-CT), doesn’t leave the thorny decision on appropriate Wall Street pay to the Treasury alone. After Secretary Tim Geithner makes the call on what constitutes “excessive” compensation, the bill would require him to secure the approval of other financial regulatory agencies.
The House bill’s limit on Geithner’s ability to control the pay standards is admittedly slight, but it reflects a growing shift in the capital away from consolidating power in the hands of Treasury and the Federal Reserve.
The Obama administration’s proposal to give the government takeover powers at non-bank financial institutions is likely to involve a partnership between Treasury and the FDIC, as the Washington Business Journal reports this morning.
Similarly, Congress is leaning towards spreading the power to regulate overall financial risk among several agencies, shifting away from the original plan to give that power solely to the Fed.
After the Financial Services panel takes up the Grayson-Himes executive pay bill, it will tackle a Republican “resolution of inquiry” that would compel Geithner to release documentation of his contacts with AIG.
Late Update: During an appearance this morning at the Council on Foreign Relations, Geithner was asked about Congress’ reticence to spending more money on direct bailouts for Wall Street. Here’s how the exchange began:
Q: If — if Congress were asked to vote on [more TARP money] today, I don’t think it would be …
GEITHNER: Overwhelming support.
(LAUGHTER)
QUESTION: It would probably be as close as you’d like.
(LAUGHTER)
