Learn more about our policy experts.

Media Contacts

Angela Bradbery, Director of Communications
w. (202) 588-7741
c. (202) 503-6768
abradbery@citizen.org, Twitter

Barbara Holzer, Broadcast Manager
w. (202) 588-7716
bholzer@citizen.org

Karilyn Gower, Press Officer
w. (202) 588-7779
kgower@citizen.org

Ben Somberg, Press Officer (regulatory matters)
w. (202) 588-7742
bsomberg@citizen.org, Twitter

Other Important Links

Press Release Database
Citizen Vox blog
Texas Vox blog
Consumer Law and Policy blog
Energy Vox blog
Eyes on Trade blog
Facebook/publiccitizen

Follow us on Twitter

 

July 21, 2011 

Report: Wall Street Tries to Opt Out of Dodd-Frank Pay Rule

Financial Sector Inundates Agencies With Requests for Exceptions to Rule

WASHINGTON, D.C. – As the first anniversary of the Dodd-Frank financial reform law passes, Wall Street is pressing to excuse itself from a rule specifically designed to address one the main causes of the financial meltdown: inappropriate incentive compensation packages.

A report released today by Public Citizen analyzes the comments of 24 financial services companies, trades associations and allied groups on the proposed rule pertaining to Dodd-Frank Section 956, which requires large financial institutions to report their incentive-based pay arrangements to federal agencies and prohibits pay formulas that “encourage excessive risk.” The report, “Just Not Us,” is the second installment in Public Citizen’s “Two Cents” series examining Wall Street’s efforts to weaken regulatory implementation of key Dodd-Frank provisions.

In addition to the 24 companies that filed formal comments, six more met with regulators during the comment period to lobby on the rule. The 30 industry organizations covered in the report have spent $242.2 million to deploy 712 lobbyists to influence the government on financial services matters and other issues since the beginning of 2010. These companies also made $15.6 million in federal political contributions.

Industry comments on the proposed rule centered on a common theme: More than 70 percent of commenters asked to be partially or entirely exempted from the rule. Some also asked for whole classes of jobs or for types of pay to be excluded. For example, a large trade association for the banking industry asked for companies’ subsidiaries to be exempted and for the rule’s requirements on incentive-based pay to be limited to pay specifically labeled as an “annual bonus,” and not, for instance, multi-year bonuses.

“Wall Street is asking the regulators for exemptions that would defy the clear language and intent of Dodd-Frank,” said David Arkush, director of Public Citizen’s Congress Watch division. “The history of financial crises shows that if we carve out any significant portion of the financial sector from key rules, we can expect the exempt firms to balloon and become the locus of the next financial crisis.”

Aside from seeking exemptions from the rule, commenters sought to weaken it with pleas to increase deference to companies’ boards’ and management teams (even though the proposed rule affords exceedingly broad discretion already), to downgrade the proposed rule to a guideline or to scuttle a provision in the rule that would require brief deferral of a portion of the incentive-based pay for top employees of the largest financial institutions.

Substantive criticisms were largely limited to complaints that the rule would limit Wall Street’s ability to recruit talent or that the rule was “burdensome,” too “prescriptive” or amounted to a “one-size-fits-all” solution.

“It’s outrageous that the public’s voice would ever be deemed less important than industry dollars,” said Public Citizen researcher Negah Mouzoon, a co-author of the report. “It’s time for federal agencies to acknowledge that Main Street’s two cents should weigh more than Wall Street’s $243 million.”

###
Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C. For more information, please visit www.citizen.org.

Copyright © 2014 Public Citizen. Some rights reserved. Non-commercial use of text and images in which Public Citizen holds the copyright is permitted, with attribution, under the terms and conditions of a Creative Commons License. This Web site is shared by Public Citizen Inc. and Public Citizen Foundation. Learn More about the distinction between these two components of Public Citizen.


Public Citizen, Inc. and Public Citizen Foundation

 

Together, two separate corporate entities called Public Citizen, Inc. and Public Citizen Foundation, Inc., form Public Citizen. Both entities are part of the same overall organization, and this Web site refers to the two organizations collectively as Public Citizen.

Although the work of the two components overlaps, some activities are done by one component and not the other. The primary distinction is with respect to lobbying activity. Public Citizen, Inc., an IRS § 501(c)(4) entity, lobbies Congress to advance Public Citizen’s mission of protecting public health and safety, advancing government transparency, and urging corporate accountability. Public Citizen Foundation, however, is an IRS § 501(c)(3) organization. Accordingly, its ability to engage in lobbying is limited by federal law, but it may receive donations that are tax-deductible by the contributor. Public Citizen Inc. does most of the lobbying activity discussed on the Public Citizen Web site. Public Citizen Foundation performs most of the litigation and education activities discussed on the Web site.

You may make a contribution to Public Citizen, Inc., Public Citizen Foundation, or both. Contributions to both organizations are used to support our public interest work. However, each Public Citizen component will use only the funds contributed directly to it to carry out the activities it conducts as part of Public Citizen’s mission. Only gifts to the Foundation are tax-deductible. Individuals who want to join Public Citizen should make a contribution to Public Citizen, Inc., which will not be tax deductible.

 

To become a member of Public Citizen, click here.
To become a member and make an additional tax-deductible donation to Public Citizen Foundation, click here.