More Overregulation

More fallout from Dodd-Frank: these regulators now are about to promulgate a rule set that requires companies to sequester bonuses paid to their executives for some period of years before those execs can collect their bonuses.

Aside from interfering with decisions that are wholly internal to a business and so none of the government’s business, there are other problems with this set.  This rule set will

govern pay to risk-taking executives who are in a position to do material damage to their companies.

In addition to extending the deferral window, regulators want to broaden the pool of bank employees subject to the new rules by expanding the definition of risk taker to include factors like the amount of money an employee handles.

Never mind that risk is part of business, and there already are Federal, and State, laws extant that deal with both fraud negligence in this area.  Never mind that shareholder suits, or the threat of them, also already exist as a market mechanism for adequately managing risk-taking.

There’s also this:

…how to balance risk with reward in compensation arrangements that will apply to a cross section of banks, investment advisers, broker dealers, credit unions and executives at mortgage-finance companies Fannie Mae and Freddie Mac.  …

“Trying to come up with a rule that can be uniformly applied to a set of highly diverse players in the financial-services industry was always just going to be very difficult,” said Kyoko Lin, a partner at law firm Davis Polk & Wardwell LLP.

Well, NSS.  This is yet another reason government has no business meddling in the market place.

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