Lawmakers Seek to Tie Exec Pay to Performance

New York State Attorney General Andrew Cuomo is in discussions with Rep. Barney Frank and other lawmakers on a plan to tie Wall Street pay to the long-term performance of the firms.

Frank (D., Mass.), chairman of the House Financial Services Committee, and other prominent Democrats appear to back such a plan, though no legislation has been introduced.

"We plan to put laws into effect, no question," said Frank. "We have to address this 'heads I win, tails I break even' issue."

Compensation became a big issue in late 2008 when the government was forced to step in to cover mounting losses on Wall Street. The giant federal stimulus package included pay caps for top earners at firms receiving federal funds.

Cuomo is investigating the $3.62 billion in bonuses that were paid out at Merrill Lynch just before it was acquired by Bank of America Corp. at the end of last year. He's trying to determine if the firm violated securities laws by failing to disclose information in the weeks leading up to the payouts.

Cuomo's discussions contrast with the tactics of his predecessor, Eliot Spitzer, who seized on the scandal involving tainted stock-research by Wall Street analysts and extracted a $1.4 billion settlement and changes in business practices from 10 Wall Street firms. Unless Cuomo finds abuses in other firms beside Merrill, his ability to get a similar settlement is limited without help from Washington.

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