Corporate and Financial Institution Compensation Fairness Act of 2009

Floor Speech

CORPORATE AND FINANCIAL INSTITUTION COMPENSATION FAIRNESS ACT OF 2009 -- (House of Representatives - July 31, 2009)

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Mr. POSEY. Mr. Speaker, I rise to express my concerns about H.R. 3269, the Corporate and Financial Institution Compensation Fairness Act of 2009, as drafted.

It should not come as a surprise that the American public is outraged at those executives who would benefit from lavish compensation packages while failing to produce results. Worse still are those executives who would deliberately place their own interests above those for whom they are accountable. As the land of opportunity, America is a very forgiving place for risk and failure, but Americans also believe that those who fail should take responsibility for their failures.

Executives of public companies should have the fiduciary responsibility to put the long-term best interests of shareholders foremost in all their dealings, and executive compensation committees should have the same responsibility.

The bill before the House, however, goes too far. Section 4 of the bill is most troubling. As written and amended, this bill is a significant expansion of the power of the federal government to micromanage the compensation practices for executives and employees in all financial institutions over $1 billion. The bill also has a loosely defined definition of financial institutions, potentially opening the door to controlling even more companies.

Despite two requests from me and many of my colleagues on the House Financial Services Committee, the Chairman did not even hold a hearing on this legislation to address some of these questions. We were unable to inquire with federal regulators on how they would interpret their newfound duties to judge if compensation is commensurate with the vague criteria of ``sound risk management.'' It is thus left to the imagination how the federal government would approve or disapprove the compensation packages and what other ``unreasonable incentives'' would be banned by unelected bureaucrats. It is bewildering, but the United States Congress is punting enormous, arbitrary power to the unelected bureaucrats to decide how much money people can earn and whether any risk they take is ``unreasonable.''

As we debate financial regulatory reform, it is important that we refrain from condemning the free enterprise system which has given us the greatest prosperity in the history of the world. The rise of the corporation is integral to free markets and the prosperity we enjoy. Congress should not pass legislation so sweeping as to micromanage the thousands of enterprises which create jobs in our communities and produce goods and services we want.

Unfortunately, the House has rushed a bill to the House floor that has not been fully vetted and is filled with vague language that no one fully understands. It is no wonder that so much that has passed the House has been found unacceptable by the Senate.

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