Wall Street Compensation Lawyer Steve Eckhaus: 'I Have Friends Who Blame Me For The Crisis
Don't blame record levels of Wall Street pay for the financial crisis, one high-powered lawyer tells the Wall Street Journal.
In an interview with the WSJ Steve Eckhaus, a New York City lawyer who has brokered pay packages for some of the Street's most well-known execs, says pay just wasn't the cause of the financial crisis.
Most of his clients are as "pure as driven snow," he tells the WSJ, and the crisis was caused by a "confluence of economic, political and historical factors."
Here's more from the WSJ:
"I hate to say it, but I have friends who blame me for the financial crisis," says Mr. Eckhaus, who estimates he has negotiated well over in $5 billion in banker pay over the years, including several $100 million pay deals.
Eckhaus, who has worked on deals for execs like former Lehman Brothers CFO Erin Callan and former Goldman exec Tom Montag (now of Bank of America), leaves out ample evidence that compensation did play a significant role in the financial crisis -- and may, in fact, hurt long-term corporate performance.
In a highly-anticipated report released last month the FInancial Crisis Inquiry Commission, a government panel charged with investigating the causes of the meltdown, pointed to compensation as a key factor. "Compensation systems--designed in an environment of cheap money, intense competition, and light regulation--too often rewarded the quick deal, the short-term gain--without proper consideration of long-term consequences," the report reads.
The FDIC is reportedly weighing a proposal to force the nation's largest banks -- including Bank of America, Goldman Sachs and Wells Fargo -- to defer at least half of all bonuses compensation to top execs for at least three years. Under the Dodd-Frank financial reform bill passed last year, regulators may prohibit compensation practices that compel execs to take "inappropriate risks."
Since the crisis, the EU, for its part, has pushed to establish limits on financial industry compensation. Aligning pay with long-term shareholder interests is also one of the top concerns surrounding the international bank accords known as Basel III.
A report released last year by the Council of Institutional Investors, a group of public and privete pension funds, found that Wall Street pay practices had not sufficiently changed after the financial crisis.