These have been percolating in me for some time.
Preferably these would be coordinated with the EU...
1) Total compensation of anyone within the finance industry is capped at 50 times the median household wage in the united states ($49,445 per 2010 census). This is roughly $2,500,000 which i think is really generous.
2) Proprietary trading is illegal
3) All bonus income to people in the finance industry, whether in cash, stock, warrants, options, or gains on warrants or options, are taxed at 50%. I think this is fairly generous, considering economic research suggests a 70% top marginal tax rate is better.
4) All people in the finance industry are required to participate in 250 hours a year of community service in a city whose median income is within 20% of the national average.
5) Securitizing debt and selling to off-balance sheet special purpose vehicles is illegal. Debt may be securitized and sold, but only to individuals, corporations with actual operations (whether financial or otherwise), or to non-profits. It cannot be sold to non-operating companies, state, or local governments.
6) The entire congressional committee overseeing banking regulation must turnover 100% every four years and they are prohibited from taking campaign donations from people working in the financial industry.
Some of the predictable responses to this:
"Oh my gosh, if we do this, all those wonderful people in Wall Street will move to Hong Kong and make billions of dollars there and we will lose!"
My retort: A) I'll call your bluff, I think a fairly small proportion of people will do this. It's been shown that barely anyone moves to different states within the US due to tax structures, so I doubt people will move their entire family to another country and B) I don't really care. I would prefer that our country create value by actually building things rather than gambling. Secondly, there was a time when the best and brightest in our country became engineers or researchers. Today they go work on Wall Street or get law degrees and...wait for it....go work on Wall Street. I think we would be better served funneling our best and brightest into other vocations.
"Whatever you come up with, the smart people in Wall Street will find out a way around it"
My retort: that is why it is important that we hire smart people into regulatory bodies and constantly evolve the rules to reign them in. Fool me once, shame on you and all that.
"Community service? What the hell?"
My retort: People who work in the finance community, and for that matter, anyone riding a speculative bubble, get completely detached from the real world. In the real world, people care about each other, and have to make tough choices about how to best allocate their limited resources. I think everyone should donate their time to their community, and I think financiers in particular need to. Then maybe they will develop some sort of conscience and break out of the group-think that dominates the industry.
Nice! I wish we had implemented some of this in exchange for the bailouts. The fact that we bailed out banks and financial entities with NO STRINGS ATTACHED is both unbelievable and ridiculous. I also agree that those on Wall Street are completely detached from the real world. I've been saying for some time that capitalism should be about consumers paying what they feel are reasonable prices for valuable goods and services. Today, many of our financial institutions do not offer goods or services that have any value whatsoever for average consumers, and yet these institutions believe they are entitled to charge outrageous fees. I say, I'm not paying fees for nothing, which is why I've moved my money to a credit union. I don't have any accounts with any of the major financial institutions, and unless they decide to offer goods and services that I deem valuable, I will continue to steer clear of them. My credit card is with my credit union, so I truly have no involvement with any of the big banks or investment firms, but I'm not sure what else I can do. I wish everyone would pull their money, accounts, loans, etc.
ReplyDelete