One way to oversimplify the ongoing fight over the financial reform is to say that Wall Street doesn’t want to change, especially if change is going to be expensive. Some firms, like Goldman Sachs, have let it be known in the weeks since the Dodd-Frank bill was signed that it won’t hurt them as much as some may have feared (or, in other cases, hoped).
But there are others who are still quietly grumbling.
In an interesting moment of openness, CNBC published a piece on its website by Rob Flaherty, the president of the public relations giant Ketchum, an Omnicom subsidiary whose clients have included H.P. and the Russian government. If you thought Sarbanes-Oxley was bad, “wait until you get a load of Dodd-Frank,” he says, warning about “the extensive disclosure and transparency requirements” that companies will have to deal with. Among other things, he complains not only that firms “will need to endlessly explain” themselves to the public, and that the reform will encourage “board independence and diversity.” He also doesn’t seem to like that the reform bill “liberalizes compensation clawback rules, calls for shareholder votes on golden parachutes, and requires compensation committees to be made up of independent directors.”
In a brief interview with The Observer about the piece, Mr. Ketchum said that his firm works for big banks and finance organizations, but wouldn’t say which. As for his article’s take on the new requirements, he said that they weren’t necessarily a bad thing. “Transparency is the best hygiene,” he said. “I think what I was saying was, don’t take the obligation lightly. With increased transparency comes with increased misunderstanding.” For example, “it’s going to take some effort to make sure people understand the complexities of executive compensation.”
But banks haven’t had the best luck over the past year making people understand their toughest issues. To the extent that financial reform will make financial firms have to do more talking, said Mr. Flaherty, “it creates a new and fairly full-time obligation.”