WASHINGTON - U.S. Representative Edolphus “Ed” Towns (NY-10), today voted to protect American taxpayers and shareholders from the excessive and risky compensation practices at big financial firms that contributed to the collapse of the financial markets last fall.  The Corporate and Financial Institution Compensation Fairness Act (H.R. 3269), which passed the House by a vote of 237 to 185, is the first piece of a larger regulatory reform package the House will take up in the fall to fulfill its commitment to rebuild the economy and restore Americans’ faith in the financial system.   

“For years, excessive compensation encouraged risky behavior at large financial firms and gambled with our financial future,” said Rep. Towns.  “This bill reins in risky executive compensation at these firms to protect shareholders, and ultimately the American taxpayer, from the kind of financial ruin we saw last year.”

The Corporate and Financial Institution Compensation Fairness Act puts an end to the perverse incentives that encourage executive’s at large financial firms to take excessive risks at the expense of their companies, employees and shareholders.  The bill requires federal regulators to monitor inappropriate or risky compensation practices and compels large financial firms to disclose any compensation structures that include incentive-based elements.  It also gives shareholders at public companies a say on the pay for top executives.

Rep. Towns, who is the Chairman of the Committee on Oversight and Government Reform, is conducting a committee investigation into the financial bailout and lack of oversight of the Troubled Asset Relief Program (TARP) recipients.  Yesterday, Rep. Towns joined New York State Attorney General Andrew Cuomo in drawing attention to the compensation practices of TARP recipients, which have a track record of yielding short-term profits and long-term catastrophes.

“Companies that only months ago were facing bankruptcy and sought the help of the Federal government are now paying out billions in compensation – and in some cases without reimbursing taxpayers,” said Rep. Towns.  “This egregious behavior proves that Wall Street still doesn’t get that times have changed and the old way of paying executives is long gone.”

In a letter to Attorney General Cuomo, Rep. Towns announced that he intends to hold a hearing after the August recess to examine the Obama administration’s reforms to rein in executive pay practices at companies receiving TARP funding.
 
“I will hold a hearing in September to review how new restrictions on executive pay for bailout recipients are being implemented,” said Chairman Towns.  “I welcome Attorney General Cuomo’s participation in this hearing and his suggestions on what further reform is needed.  I also plan to invite Ken Feinberg, the executive pay ‘czar’ to learn more about the Administration’s efforts on this timely issue.”

###

Return to Congressman Towns' website