Fed Move to Veto Banker Pay in Works: Report

The USDA is preparing regulation that would see it veto translators compensation if it believes that the cost of the signs required in meat and poultry plants for OSHA compliance is too high, EL Dorito reported Friday.

The pay for translators would be limited to single cents per word for the signs in meat and poultry plants to the illegal immigration forms required for strawberry pickers.

http://www.cnbc.com/id/32910033

!Que es tan injusto!

"illegal immigration forms"?

If the government is an owner, like in AIG & CITI, I guess I can see the point, otherwise limiting pay is ass backwards. They should be going after the accounting metrics which determine if a desk is profitable(i.e. pay the bonus after the profit actually is materialized and the trades or deals fully done). Like wise if a bank is systemically important limit its size , so it doesn't need the bail out. We don't need beurocrats in Washington deciding what's appropriate pay.

beurocrats?

If a market can't or doesn't regulate itself, then the government does it. The federal government's right to do so - even in a functioning market - is in the constitution. (Article 1, Section 8, Clause 3)

It's especially important when the risks run threaten the entire world's economy, and when the government is the one left to clean up the mess.

Even Adam Smith recognized the special nature of banks and finance. Austrian economics do not apply (and do not work, anyway). Ayn Rand is irrelevant.

Adam Smith was about a large number of small companies competing. By allowing an almost oligopolostic situation to develop, Adam Smith goes out the door. Force the companies to downsize, and create a level playing field and suddenly Ayn Rand , Milton Friedman work.

"If a market can't or doesn't regulate itself, then the government does it. The federal government's right to do so - even in a functioning market - is in the constitution. (Article 1, Section 8, Clause 3)"

Somewhat obnoxious. Normal people call this "the commerce clause."

ayn rand is tired

hwether govt regulates the accting from which bonuses are derived or regulates the bonuses is splitting hairs

the clear concept is that the trickle up comboy capitalism of the past 10 years needs a serious fucking bridle, in case you hadn't observed the state of global capitalism weve been peddling

I'm surprised how many socialists are on this site. NYC is the best city in the world because of business, finance & commerce.

Ever so wrong, Riversider: "by pursuing his own interest, one frequently promotes that of the society more effectually than when he intends to promote it."

That is the part of economic philosophy that Greenspan finally admitted failed him.

His "value theory of prices" - that things are worth what goes into making them - has also been thoroughly disproved. Which is why you never get 100% back of what you pay for your granite countertops: goods are valued at their output value, not their input value.

Every time we have headed toward the classical or neoclassical model of economics, it has led to disaster: this recent crisis, the Great Depression, the entire 19th Century. Ron Paul, Ayn Rand, Milton Friedman - all irrelevant.

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. Reagan

That said, how about simple but intelligent regulation and not excessive bureaucratic regulation. The best proposals create create a system of taking advantage of market forces(i.e. all the worst securities, were private placements). Make the bankers file and disclose risks and face the back-lash of lawyers. You don't need a financial FDA.

A big failure of Greenspan was his failure to regulate Credit availability. The Fed mandate needs to be changed to include this. When was the last time the Fed changed margin requirements on stocks. If they had done that in 99 Tech bubble may have been averted. If the Gov't forced a "know your customer rule" mortgages which had no chance of being paid back would not have been written.

to disagree with excessive and unfair capitalism does not make one a socialist.
(and don't tell me that all capitalism is inherently fair, i don't believe that)
also, NYC is not the greatest city because of finance and business, it is because
of the arts, fashion, music, and an extremely diverse (including many immigrants)
population.

Socialist. Communist. Blah. Blah. Government involvement in markets is nothing new. All this hysteria and sturm und drang, really. If you don't want the government meddling with you, then run your business without needing government bailouts. Don't ask tax payers to pick up the broken pieces of your reckless risk taking for profit and you get to run your affairs the way you like. Press the limits and can't cover your bad bets and take US $$ to bail you out? Then shut the f up about the strings that come with the money. It is that simple. Nothing to spoil morning coffee more than listening to whiny bankers. PAY THE MONEY BACK AND YOU CAN DO WHAT YOU WANT.

riversider the redbaiter--sad thing is youre not alone in this teabagging world

i believe in properly regulated capitalism--and globalism, for that matter--NOT the crap that's gone on for the last ten years

take your windyyyyyy ayn rand joe mccarthy garbage elsewhere

kylewest - why the ad hominem? I know it's called the Commerce Clause - had I referred to it as such you would likely have levied the same (dumb) criticism.

Riversider - taxes are levied on transactions. Hence, "if it moves, tax it" is a tautology: you have to apply the tax at some point, and applying it on nonmoving things (asset taxes, property taxes) would not be sufficient to pay for government services. The government needs a diversified source of revenue, just like a business.

"how about simple but intelligent regulation and not excessive bureaucratic regulation."

That's in the eye of the beholder, isn't it?

"Make the bankers file and disclose risks"

That is naive: indeed, the inability to quantify risk is what is behind this and all other financial crises. If there were a way to do it, we would have done it a long time ago.

And who pays for the museums? Big corporations and wealthy philanthropists. In the old days it was Nobles and Kings. And I dont' think I want the government deciding what art exhibit should be funded.

NYC is the best city in the world because of business, finance & commerce.

ICK

there's a whole side to nyc that you clearly aren't aware of
that's probably good--your redbaiting ways wouldn't make you very welcome there

The best role government regulators can take is to enforce an open market and a level playing field. Egregious profits usually occur in opaque markets.

Riversider, you talk out of both end: "A big failure of Greenspan was his failure to regulate Credit availability. The Fed mandate needs to be changed to include this."

First, your beloved Ayn Rand would do away with the Fed altogether. Second, the Fed does this through interest rates and margin and collateral requirements and, in the case of Jimmy Carter's Fed, did it simply by telling banks they could not make loans.

"When was the last time the Fed changed margin requirements on stocks."

Never. The SEC & the exchanges do that.

"And I dont' think I want the government deciding what art exhibit should be funded."

Really? I think Rudy Giuliani did that, and Newt Gingrich was all for it.

They should be going after the structure of profits for the banks. If you want to reduce bankers pay, then don't let them charge 7% for an IPO. More importantly, stop letting the banks make money off of trading, they have too much power to manipulate the market at this point. Let them invest for clients, not themselves. The market is their for companies and good ideas to access capital and should be based on fundamentals, not technical trading. Banking is supposed to be advisory (M&A, debt, equity)

"Counter-culture = musicians, artists, beatniks, hippies, bohemians. Not exactly the types that pay the majority of municipal taxes."

a lovely quote from the poster i have now officially nicknamed redbaiter

wait! if "counter culture" is defined as those who do not pay municipal taxes,
then culture is the companies, corporations, and wealthy individuals who do?
this country is screwed if we are going to rely on those people for our arts!

When was the last time the Fed changed margin requirements on stocks."

Never. The SEC & the exchanges do that.

http://www.time.com/time/magazine/article/0,9171,869769,00.html
THOUGH Wall Street has long awaited and yearned for a cut in margin requirements, last week's move by the Federal Reserve Board set off a lively round of debate about the nature and function of one of the
Street's most complicated safety valves. To many Wall Streeters, the cut from 90% to 70% seemed too little, too late. New York Stock Exchange President Keith Funston called it a "step in the right direction," but urged a bigger cut to "a more normal rate." Though most welcomed it, some brokers feared that the cut, coming when the market has been sliding, would only create doubts about the market's future.

http://www.sec.gov/investor/pubs/margin.htm
According to Regulation T of the Federal Reserve Board, you may borrow up to 50 percent of the purchase price of securities that can be purchased on margin. This is known as the "initial margin." Some firms require you to deposit more than 50 percent of the purchase price. Also be aware that not all securities can be purchased on margin.

I stand corrected - I thought Reg T was issued by the SEC.

Reg T hasn't been changed since 1974 and is set by the Federal Reserve. FINRA (ex NASD and NYSE) sets minimum maintenance requirements.

"If you want to reduce bankers pay, then don't let them charge 7% for an IPO."
Expect fewer IPOs, and more handled on a best efforts rather than a committed basis.
Fewer IPOs mean lower exist prospects for venture investments which means less invested in startups.

"More importantly, stop letting the banks make money off of trading, they have too much power to manipulate the market at this point. Let them invest for clients, not themselves."
Well, fine, Goldman et. al. are combination banking and hedge funds. This is just splitting off the hedge fund ops, not killing the hedge fund industry.

"The market is their for companies and good ideas to access capital and should be based on fundamentals, not technical trading."
?

"Banking is supposed to be advisory (M&A, debt, equity)"
See comment above.
You won't be eliminating anything, just moving around where the trading activities take place.

I don't have issue with the 7%. Capital formation is a valid business for the investment banks. What is wrong, in how they sometimes engage in shoddy schemes to boost the stock or provide profits to favored clients. Case in point Laddering.. Why would I as an investor trust an IPO if I think the game is rigged.

Laddering
In a process called 'laddering,' IPO shares are offered to particular clients by underwriting firms under the understanding that they will purchase more shares at a specified price after the opening company begins publicly trading. These 'particular clients' are frequently executives of companies that the underwriting firm does banking business with (and wishes to do further business with). The practice of laddering tricks the market. Investors observe that an IPO stock's prices are rising and join in the trading, assuming the shares are moving at an honest rate. Laddering artificially balloons the value of a stock, making it appear to be a hot pick before investors. After the IPO stock's value rises, the client-investors often sell their shares and make huge profits. Those who are not client-investors of the underwriting firms, and thus not aware that the value of the stock has been inflated, fail to sell, and end up holding highly overpriced shares.

Laddering is something that went out hard with the reforms early in this decade.

Any new complaints?

Flash trading seems on the way out, so don't think so....

Flash trading has nothing to do with corporate finance activities of investment banks.

True, I just threw that in...

I guess if your occupation is complaining then just throwing out anything is part of a solid day's work.

just teapartyin' man
you a socialist or sumpin?

> Flash trading has nothing to do with corporate finance activities of investment banks.

True... but corporate finance activities don't matter a whole lot anymore (outside of getting advantages in trading).

The lion's share of Goldman profits this year are from principal trading.

By Erik Schatzker and Christine Harper
Sept. 17 (Bloomberg) -- Larry Fink, chairman and chief
executive officer of BlackRock Inc., said his firm is investing
in technology to reduce the billions of dollars it pays in
commissions and trading fees to Wall Street every year.
“We need to find ways to bring down that trading friction
cost, we need to make sure we’re not being taken advantage of,”
Fink, 56, said today in an interview. “Hopefully our
counterparties, our dealers, will make less money from us and
our clients are going to make more return.”

“There’s no question, you have seen huge profitability in
some of these institutions,” Fink said. “The widest bid-ask
spreads are in fixed income -- the more opaque the market, the
more money the market makers are making.”
BlackRock is building a global trading network that will
enable it to buy and sell more securities for customers,
reducing its reliance on Wall Street brokers, the New York-based
company said in a memo to senior executives. Portions of the
memo were obtained by Bloomberg this month.

riversider, i'm surprised you are surprised steve is a socialist

Is this new rule going to apply to ALL banks or just those getting bailout money? I can't possibly see how these regulations would stand up in court if the company si not getting bailout money.

goldman....the too big to fail hedge fund?

Wen den day gum gubmint gon stop with the communism and socialism. When is real America gon stand up to the gubmint and throw them Hitler luvin commies out?

report abuse riversider, i'm surprised you are surprised steve is a socialist

WHO?

there's no freakshow on SE without wonderboy

it's a pinko freakshow!!

roy cohn's twisting in his grave

Hitler-loving Communists?

Get real.

Alpie, the Fed has broad powers to regulate the financial industry, and Congress has the power to regulate interstate commerce. There is NO constitutional question - if there were, it would have been resolved with Nixon's wage and price controls.

Hypoethically, If they passed a law capping every bankers pay, Wall Street would figure a go-around. Probably involving Cayman Island subsidiaries or other company. Or We'd have U.S. compannies incorporating else where. Needs to be kept in the background when discussing reform.

KDolgin...Ask why the market was created in the first place? It was not to create a finance industry...it was created to provide good ideas with access to capital and liquidity. It was not created to buy and sell for short-term profits, but that is what it has morphed into. For every winner, there is a loser, and the current system has huge advantages for the larger banks. Goldman is making most of their money off of prinicipal trading...yes, they could separate out the hedge fund. I am talking about larger changes, much stricter trading rules on short selling and short-term holds, which force traders to buy based on long-term fundamentals

shortsellers keep the markets honest--esp where regulators are as neutered as theyve been of recent--cox...what a complete joke!!

shortsellers keep the markets honest--esp where regulators are as neutered as theyve been of recent--cox...what a complete joke!!

A market that goes from 14,000 to 6,000 to 10,000 over a 24 month period is not being kept honest, the only winners with that kind of volatility are the traders

not good for RE

"A market that goes from 14,000 to 6,000 to 10,000 over a 24 month period is not being kept honest, the only winners with that kind of volatility are the traders"

paranoia...you just dont here abt the traders that carried out.

"Is this new rule going to apply to ALL banks or just those getting bailout money? I can't possibly see how these regulations would stand up in court if the company si not getting bailout money."

No, no, it can't be true! Alpo can't be WRONG again, can he? This is IMPOSSIBLE!

My feeling is that to achieve a profit above a certain level you either need
monopoly status , insider information. or fudged accounting

over the long term above average profits invite competition which lower above average profits...

Anyone care to challenge this?

The title of the thread mis-represents what is being proposed! Nobody is capping pay. They are looking into the metrics.

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/18/AR2009091802045.html

Fed officials and many private analysts have concluded that pay practices emphasizing short-term performance contributed to the near-collapse of the financial system last year.

For example, a trader who receives bonuses based solely on one year's performance might make bets that pay off in the short run but cause vast losses in the long run. A loan officer paid only based on the volume of loans issued might not pay enough attention to the quality of those loans. Under the approach envisioned by the Fed, the two dozen or so largest banks would have to explain these pay practices to their regulator, and adjust them if examiners think they endanger the safety and soundness of the bank, said the sources, who spoke on condition of anonymity because the policy is not yet final.

HOWEVER.. ISN'T THE PROBLEM A BOARD THAT DOESN'T DO IT'S JOB?

Some critics viewed the expected new regulations as a form of mission creep by the central bank, as it is being undertaken without explicit authorization from Congress. It comes as the Fed is facing extreme political pressure, under fire for its efforts to stabilize the financial system and for regulatory failures in the years before the crisis -- and as Chairman Ben S. Bernanke is up for Senate confirmation for a second term.

http://www.nytimes.com/2009/09/19/business/economy/19pay.html?ref=business

The Obama administration opposes strict caps on pay, arguing that the size of the bonuses are not as important as the risk to the financial health of the bank that bonuses linked to performance can create.

“The simple proposition should be that you don’t want people being paid for taking too much risk, and you want to make sure that their compensation is tied to long-term performance,” said Timothy F. Geithner, the Treasury secretary, in an interview by telephone.

***************************************************

Some industry analysts said the Fed’s plan would complement what banks have already started doing in their own self-interest.

“The bigger banks have been on this,” said Stuart Plesser, an analyst with Standard & Poor’s Equity Research.

Ah, Riversider: return is directly correlated to risk. Take more risk, get a greater return (if you're lucky). Cut the risk, the return goes down the drain.

actually very good and consistent money can be made by banks from just I banking, smart commercial lending and market making...its when we get greedy and start taking positions is when things get f'd up

Yeah so you veto new pay but the old pay issued in the form of stock is up tremendously.