The Wall Street Journal
Democrat Nods to Wall Street
Rep. Frank Is Flexible On Sarbanes-Oxley, Tougher on CEO Pay
By KARA SCANNELL
November 4, 2006; Page A4
WASHINGTON -- Rep. Barney Frank, the Massachusetts Democrat who could take over the House Financial Services Committee, says he has no intention of reopening the landmark Sarbanes-Oxley corporate-accountability law, but would be willing to let regulatory agencies adjust their rules in light of business criticism that the law is being applied too stringently.
While some business leaders have been dreading the prospect of a Democrat takeover of Congress in the Tuesday election, executives have always been struck by Mr. Frank's moderate stance, and say he understands the markets. For example, while many Democrats have pushed for regulation of hedge funds, Mr. Frank says he doesn't see a need for regulation now.
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There is one area, though, where the 56-year-old congressman is likely to cross swords with business groups: executive pay. The Securities and Exchange Commission won bipartisan support earlier this year for a rule overhauling the disclosure of executive-pay packages. The SEC went as far as it could, Mr. Frank says in an interview, adding that he would like to pass a law that would hand shareholders more power to approve compensation packages. "It's their company," says Mr. Frank, who recently chided executives, saying an average chief executive makes more before lunch than a minimum-wage worker earns all year.
Mr. Frank notes that shareholders in other countries can vote on pay packages, while in the U.S. that's a matter for corporate boards, which have been criticized for being too cozy with management, signing off on rich compensation packages with generous perks, large amounts of options, retirement benefits and severance plans. "I don't think directors at this time are an independent screen for this," Mr. Frank says. "There's too much conflict. Too many directors themselves are beneficiaries of high CEO compensation."
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For much of his 13 terms in the House, Mr. Frank's main passion has been housing -- with an emphasis on affordable housing for lower-income families. He says he would like to hold a series of hearings exploring one question: "How do you do a better job of sharing the benefits of overall economic growth with average workers?"
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