The House passed legislation Friday afternoon aimed at curbing Wall Street pay packages that have stoked public outrage amid the worst recession since the 1930s.
The bill would give federal regulators the authority to ban pay incentives that they deem would encourage officials at financial institutions to take risks that could threaten the economy or viability of the institution.
The measure also includes the White House backed “say-on-pay” provision that would give company shareholders annual, non-binding votes on top executives’ compensation, including arrangements like “golden parachutes,” in the event their employment is terminated.
Supporters of the measure, which passed by a vote of 237-185, say that grossly excessive executive compensation practices has led to reckless risk-taking on Wall Street and contributed to the recent financial crisis.
“This is not the government taking over the corporate sector. … It is a statement by the American people that it is time for us to straighten up the ship,” said Rep. Melvin Watt, North Carolina Democrat.
Republicans disagree, saying it would give “unprecedented authority to unelected Washington bureaucrats.”
“The sweeping compensation mandates in the bill, which were not subject to any Committee review prior to its consideration, will have far-reaching and unintended consequences that will drive capital away from our financial markets,” said Rep. Spencer Bachus of Alabama, the top Republican on the Financial Services Committee.
The measure now goes to the Senate, which is expected to take up the matter after returning from its August break.