Reno Hayek Symposium

Ironic isn’t it that Barney Frank who almost single-handedly promoted the dramatic expansion of the sub prime market in Fannie and Freddie now wants to legislate compensation to avoid excessive risk. These Democrats will expand government until the economy fails!

July 28 (Bloomberg) — House Financial Services Committee Chairman Barney Frank said his legislation aimed at reining in pay incentives that lead executives to take excessive risks will probably reduce compensation “in bad times.”

“What it will mean is that the compensation is more likely to track the broad outlines in the economy,” Frank, a Massachusetts Democrat, said today in an interview with Bloomberg Television in Washington.

Frank’s panel is considering the legislation today and may vote on changes that would let shareowners hold non-binding votes on executive pay and direct regulators to write rules that will limit incentives that encourage excessive risk-taking.

Shareholders will help determine the compensation at their company, Frank said. “What we’re saying is however you pay the overall amount, don’t have a system that makes you take excessive risk,” Frank said.

The pay measure is part of an effort in Congress to overhaul rules that regulate Wall Street. Broad support has emerged for a regulator to monitor companies that pose a systemic risk to the economy, Frank said. Lawmakers are backing away from the Obama administration’s proposal to give such authority to the Federal Reserve, Frank said.

“There’s going to be some combination of existing regulators working together,” he said.

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net; Peter Cook in Washington at pcook6@bloomberg.net.

via Frank Says Bill May Lower Compensation ‘In Bad Times’ (Update1) – Bloomberg.com.