Congressional Republicans have been attacking the Dodd-Frank financial reform law in a variety of ways, including gutting the budgets of the regulatory agencies charged with implementing the law and trying to repeal various pieces of it that they particularly don’t like. In their latest move, Republicans on the House Financial Services Committee yesterday voted to repeal a provision of the Dodd-Frank law that requires public companies to disclose the ratio between the pay of their executives and that of their median worker:
The panel also approved, 33-21, the repeal of an 18-line provision from Dodd-Frank that requires all publicly traded companies to report the ratio between chief executive officer compensation and that of their median employee salary. The provision in Dodd-Frank is “a burdensome regulation that provides no benefit and has substantial costs,” said Representative Nan Hayworth of New York, the Republican sponsor of the bill.
There is plenty of evidence that outsized and poorly designed executive pay at the nation’s biggest banks played a role in bringing about the financial crisis of 2008. As outgoing FDIC Chair Sheila Bair said last year, there is “an overwhelming amount of evidence that [executive compensation] is clearly a contributor to the crisis and to the losses that we are suffering.”
The provision that the GOP repealed is aimed at keeping workers, investors, and shareholders informed of the amount by which the growth in CEO pay is outstripping that of worker pay, in the hopes that transparency will lead to restraint in the growth of executive compensation. Today, American CEOs make 263 times the average compensation for American workers, up from a 30 to 1 ratio in the 1970s. In 2010 alone, CEO pay went up 27 percent while average worker pay went up just 2 percent. Over the last 10 years, as Americans experienced a lost decade for wages, bank CEOs made $19 million per year.
This week, a new report shows that 32 companies in the S&P 500 spent more on pay for their top executives last year than they paid in taxes. Meanwhile, “a mounting body of economic research indicates that the rise in pay for company executives is a critical feature in the widening income gap.” Still, House Republicans are attempting to repeal an extremely modest step towards reining in executive pay by claiming that it “provides no benefit.”
Here’s the roll call from the vote.