Obama lashes Wall St executive payments

Written By Unknown on Rabu, 24 Oktober 2012 | 17.52

US President Barack Obama, who once called bank executives "fat cats" and their pay "obscene", says Wall Street needs to change executive pay incentives that reward risky bets that can yield fortunes but can also devastate financial institutions.

In an interview with Rolling Stone magazine, Obama says that despite congressional passage of a financial regulation overhaul in 2010, there still are not enough adequate means of holding risk takers in the industry accountable if their investment schemes fail.

"You still have a situation where people making bets can get a huge upside, and their downsides are limited," Obama says in the edition that hits newsstands on Friday.

"So it tilts the whole system in favour of very risky behaviour."

The wide ranging interview with presidential historian Douglas Brinkley covered topics from Republican presidential challenger Mitt Romney's secretly recorded remarks to donors about Obama supporters to Supreme Court Chief Justice John Roberts' tie-breaking decision declaring Obama's health care plan constitutional.

Obama's appearance on the magazine's cover comes less than two weeks before the November 6 election and underscores the president's outreach to young voters in key battleground states.

Obama also has agreed to a cable television interview with MTV that is to air on Friday.

When congress wrote new financial regulations two years ago, it included "say on pay" provisions giving shareholders the right to vote on executive pay packages.

But Obama said there was still a need to limit compensation, though he said it could be accomplished with a mix of legislation and corporate governance.

"I think a legitimate concern, even after Dodd-Frank, is, 'Have we completely changed those incentives?"' Obama said, referring to the legislation by the names of its two chief Democratic sponsors, then-Senator Christopher Dodd of Connecticut and Representative Barney Frank of Massachusetts.

"These days, you've got guys who are making five years of risky bets, but it's making them $US100 million ($A97.3 million) every year," Obama told Brinkley.

"By the time the chicken comes home to roost, they're still way ahead of the game."

In the interview, Obama also said he was not surprised by Roberts' decision upholding the constitutionality of the health care law.

Roberts upheld the individual insurance requirement at the heart of the law as a tax, but rejected Obama administration arguments that the mandate was justified by the Constitution's clause giving Congress power over interstate commerce.

That clause has been used to justify congressional authority for most federal programs since President Franklin D Roosevelt's New Deal in the 1930s.

Obama, a former constitutional law professor, shared the view of some legal scholars who say Roberts rejected the Commerce Clause argument to give himself flexibility to restrict congressional power in the future.

With Halloween approaching, Brinkley, in a lighter moment, asked what he would like Romney to wear as a costume.

"I don't know about this Halloween," Obama replied. "Next Halloween I hope he'll be an ex-presidential candidate."


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