Receiving Wide Coverage ...
The Pay Gap Debate: The Securities and Exchange Commission approved a rule Wednesday that will require publicly traded companies to disclose the pay ratio between chief executives and average workers. While the Dodd-Frank requirement was primarily aimed at helping shareholders compare the pay gap between companies, most of the papers predict the disclosures will matter more to employees and the public than to investors.
A New York Times article suggests pay ratio disclosures will add further fuel to current debates about income inequality, excessive CEO pay and sluggish wage growth. The Wall Street Journal concurs, pointing out the rule will allow employees to compare their salaries not only to the big cheese but to the average worker. "This is going to raise all sorts of questions as to whether that person believes they're paid fairly both internally and [compared] to competitors," a regulatory expert tells the paper.
Corporations plan to appeal the ruling in court, while Republican lawmakers have vowed to circulate a bill that would repeal the requirement. But companies' opposition to the rule isn't unanimous: the Times notes a number of businesses, including the Bank of South Carolina, already have some form of pay disclosures in place.
Meanwhile, Neil Irwin tackles the question of what constitutes fair pay for CEOs of major corporations. John Carney of "Heard on the Street" predicts the rule will just prompt executives to scrap the lowest-paid positions, such as summer internships, in order to improve the ratio. And the editorial boards of the Times and the Journal take exactly the positions you'd expect.
Wall Street Journal
Speaking of the SEC, the paper reports the agency has taken to flipping witnesses to testify in its civil enforcement actions. But the SEC's cooperation program is drawing criticism from those who worry that such tactics are unfair to defendants, given the SEC uses administrative courts "where the agency brings the cases, appoints and pays the judges, has first say on appeals and the power to decide what to fine the cooperator after he or she testifies."
Over a month ago, Deutsche Bank fired two traders who had allegedly lied to clients about the price of commercial mortgage bonds. Now the bank is showing the door to two trading executives who had supervised the more junior employees.
The Consumer Financial Protection Bureau wants Fifth Third Bancorp to lower the amount by which car dealers can mark up loan rates in exchange for a better settlement deal. The offer is related to government probes into whether auto lenders' markup practices lead to discrimination against minorities.
New York Times
Bank of America's wealth management unit is withdrawing clients' money from hedge funds run by billionaire investor John A. Paulson, who made it big betting against the subprime mortgage bubble. His wagers of late have been less farsighted: his funds have a lot of exposure to both Greece and Puerto Rico.
Nicolas Kristof praises American Express, MasterCard and Visa for no longer allowing their cards to be used to pay for advertisements on Backpage.com, a classified website with an "adult" section allegedly used by sex traffickers. The latter two credit-card companies cut ties with Backpage at the behest of Sheriff Tom Dart of Cook County, Ill., while American Express had made the same decision earlier this year. "Pimps all over the country are reduced to figuring out how to pay to promote their ads with, yes, Bitcoin," Kristof writes.
A recent Education Department report cleared student-loan servicers of violating the law by charging active-duty military service members high interest rates. But Sen. Elizabeth Warren isn't buying it. The Massachusetts senator and other Democrats argue the report used too small a sample size, reviewing just 55 cases in depth, and downplayed the problems it did find. They're asking the Education Department's inspector general to conduct an independent investigation into the agency's review.
New York Post: The Post reports that Mayor Bill de Blasio is pushing to preserve a law that would give his office access to New York City banks' mortgage and lending data. Under the Responsible Banking Act, the city could withdraw municipal funds from banks that failed to meet the lending standards. But the New York Bankers Association is challenging the law in court, arguing the city is not empowered to regulate banks. A Manhattan federal court judge is expected to rule on the case as soon as next week.