Top banking groups whining over clawback

Reuters:

Washington - Banks and other large financial companies that could be seized and liquidated by the government are balking at a proposed plan they argue gives regulators too much power to snatch back executives' pay if their institutions fail.

The plan is part of a broader proposal first issued earlier this year. A final rule is expected to be adopted on Wednesday by the Federal Deposit Insurance Corp.

The 2010 Dodd-Frank financial oversight law gives regulators the ability to recoup up to two years of pay from executives considered substantially responsible for a company's failure as part of regulators' power to seize large financial firms on the brink of failure.

The clawback provision was inserted into the law in response to public anger that banking and Wall Street executives at firms such as American International Group were being paid handsomely despite mistakes that helped bring about the 2007-2009 financial crisis.