Bill Ends Incentive System that Encourages Excessive Risk Taking with Investor Money

Washington, DC – Last week, Congressman Joe Baca (D-Rialto) joined a bipartisan majority in the House of Representatives in voting for a bill that restructures the incentive system for executives at large financial firms to ensure fairness and protect American investors and taxpayers.  The Corporate and Financial Institution Compensation Fairness Act, H.R. 3269, provides shareholders of public companies with an annual, non-binding vote on the executive compensation plans of companies’ top five executives.  It also authorizes federal regulators to proscribe inappropriate or risky compensation practices of financial firms with at least $1 billion in assets; and passed the House of Representatives with a 237 – 185 vote.     

“For years, excessive compensation encouraged risky behavior at large financial firms and gambled with our financial future,” said Rep. Baca “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 is the first piece of a larger regulatory reform package the House will take up in the fall to fulfill its commitment to rebuild our economy and restore Americans’ faith in our financial system.   

Congressman Baca was instrumental in working to amend the legislation during its markup in the House Financial Services Committee, to ensure that smaller Credit Unions and financial institutions like community banks - who were not involved in the irresponsible activities that lead to our current financial crisis – are exempt from the regulations set forth in the bill.  

“I was pleased to work with Chairman Barney Frank and my colleagues on the Financial Services Committee to reach a responsible compromise that would exempt smaller credit unions and financial institutions,” concluded Rep. Baca.  “This bill is an important part of our broader economic strategy.  Regulatory reform is an absolute necessity to ensuring a strong economic recovery for all American states, communities, and businesses.”