OBAMA WANTS TO DICTATE COMPENSATION AT ALL FINANCIAL INSTITUTIONS

... broad principles, would set standards that the government would like the entire financial industry to observe as banks and other companies compensate their highest-paid executives, though it is not clear how stringent regulators will make them.

... under the administration’s new plans, even companies that repay the taxpayer money will not escape some form of oversight on their compensation structure.

... The set of broad pay principles being drafted by the Treasury Department would authorize regulators to tell a bank to alter its compensation arrangements if it is found to encourage too much risk-taking.

It is not clear how the government will define too much risk.

According to the two government officials, the new principles will not include bonus restrictions, although they will encourage banks to set compensation in a way that avoids rewarding risk-taking through short-term bonus awards.

They will apply to a broad swath of financial companies, even the United States operations of foreign banks, as well as private companies like hedge funds and private equity firms.

• THIS IS FUNDAMENTALLY BAD BECAUSE POLITICIANS AND BUREAUCRATS DON'T KNOW BETTER THAN BOARDS OF DIRECTORS AND SHAREHOLDERS WHAT THEIR EXECUTIVES SHOULD BE PAID.

• IT IS LEFT-WING CENTRAL PLANNING, AND IT'S A SLIPPERY SLOPE.

• AND IT'S BAD FOR THE ECONOMY, TOO: ATTRACTING AND RETAINING THE BEST PERSONNEL IS ESSENTIAL FOR COMPETITIVENESS.