Bankers crashed the economy six years ago. Congress approved reform exactly five years ago to deal with the fallout. Yet the Securities and Exchange Commission (SEC) and our other regulatory watchdogs have yet to erect many of the guard rails needed to prevent another calamity.
Title 9 of the Dodd-Frank Wall Street reform Act is focused on reigning in out of control Wall Street executive pay practices — those misplaced incentives that pushed bankers pursuing larger bonuses and rewards to take some of the riskiest gambles in the lead up to the crash. This reform made the SEC (and other agencies) responsible for creating a host of important corporate governance rulemakings — including disclosure requirements, clawbacks, changing the structure of bonus pay completely and correcting the system that incentivizes systemically risky behaviors with dangerous market consequences.
Unfortunately, we have seen stark delays in the bulk of these rulemakings, including some that seem to most to be outrageously simple. Chief among these is the long-delayed executive-compensation rule requiring that companies disclose the pay gap between chief executives and their employees. The agency proposed the rule in 2013 but has yet to complete it.
If you look at the numbers, in 2014, the SEC voted to complete seven rules, compared with an average of nearly 17 each year in the preceding decade.
This snail’s pace is unacceptable. To feel safe in the marketplace, Main Street investors and the public need to know that the protections passed into law five years ago are a reality, And businesses, for their part, need more regulatory certainty — i.e., finished rules.
We urge the SEC and the financial regulators charged with pieces of Title 9 to move the ball on these critical executive compensation rules for the sake of investors and financial safety.
To join the discussion about the delayed CEO pay rule on Twitter, use the hashtag #execpayfinally.
Lisa Gilbert is the director of Public Citizen’s Congress Watch division.