Council of Institutional Investors is lauding the one-year anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act this week, saying it “has helped to restore trust in U.S. markets and strengthen investor protections.”
The act, signed into law by President Barack Obama July 21, 2010, was called “the most sweeping overhaul of U.S. financial regulations since the 1930s” by the Washington-based group in a statement.
“The Dodd-Frank Act was a clear win for investors,” Ann Yerger, the council's executive director, said in the statement. “It represents a significant step toward closing the gaps in regulation and corporate governance that fueled the worst financial crisis since the Great Depression.
“The law included key corporate governance improvements that give shareowners important tools to hold the boards of companies they invest in accountable for their actions.”
Two of the corporate governance provisions “are already making a difference at hundreds of U.S. companies” — say on pay, the requirement that companies seek advisory shareowner votes on executive compensation, and restrictions on discretionary broker voting on pay proposals at annual meetings, the statement said.
“These provisions are forcing many companies to reconsider their executive pay policies and ratchet back some of the most abusive practices, such as tax gross-ups and lavish severance packages,” Ms. Yerger said in the statement.
“Regulators are still fleshing out detailed rules of other Dodd-Frank provisions aimed at increasing market transparency, lowering costs and strengthening safeguards against fraud and systemic risk,” she added in the statement. “Congress should make sure regulators have the resources they need to get the job done — and ignore the pleas of financial lobbyists to starve regulators of needed funds and gut critical Dodd-Frank protections.”
The CII is made up of public, union and corporate pension funds, endowments and foundations with combined assets exceeding $3 trillion.