Obama Wants Executive Pay Capped
Another step toward a command and control economy.
WASHINGTON - The Obama administration plans to mandate new executive pay limits on Wednesday for government-assisted financial institutions in a new get-tough approach to bankers and Wall Street.
“If the taxpayers are helping you, then you’ve got certain responsibilities to not be living high on the hog,” President Barack Obama said in an interview Tuesday with “NBC Nightly News”.
The president and members of Congress are weighing various proposals to restrict chief executives’ compensation as one of the conditions of receiving help under the $700 billion financial bailout fund.
Obama did not reveal details of the administration’s compensation caps but CNBC and The New York Times both reported that a $500,000 limit was being considered. Administration officials have said that the restrictions would apply only to those firms receiving “exceptional assistance”, such as the American International Group Inc., Citigroup Inc., and Detroit automakers.
Yes, that’s it… let’s make sure that the troubled companies have a hard time attracting the truly talented executives who could fix it. 
Seriously, if you are a talented executive, why would you go to a company that’s already in trouble and where your pay is capped? You wouldn’t. Instead, you’d go to a nice healthy firm where your job will be easier and the pay is better. Obama seems intent on further handicapping companies that are already in trouble.
On another note, I wonder if he plans to make this retroactive to companies that took bailouts prior to Obama’s term.
On a final note, I wonder if Obama will go to GM, which received a bailout, and have them cap union wages at the level of auto workers at non-union plants. That would do far more to make them competitive than capping a few executives’ salaries at a multi-billion dollar corporation.
I’m very big on free markets - but I do have to say that executive pay has just gotten ridiculous. Should the government be putting caps on it? No. But I think shareholders need some way to have a better say on these enormous salaries. It is obvious that the boards are just all winking and nodding to each other.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 0913 hrs
Agreed. If the owners of the companies (the shareholders) want to cap pay, then that’s perfectly fine. But having the government set an arbitrary cap that has no relevance to the executive labor market is unacceptable.
Posted by Owen on February 04, 2009 at 0915 hrs
I don’t know that handicapping is the right word….But I do agree that SOMETHING needs to be done, and that some sort of oversight needs to be applied.
The money should be spent where it is needed most, (Opening up the credit markets, investing etc.)
Multi-million dollar bonuses and trips to California are not a good way to spend the money.
Now if we could just get some accountability in the Welfare checks the State of Wisconsin sends out….
Posted by Michael J. Cheaney on February 04, 2009 at 0916 hrs
Yes, that’s it… let’s make sure that the troubled companies have a hard time attracting the truly talented executives who could fix it.
Do you mean from that pool of truly talented executives that just drove most of Wall Street, and our economy, over a cliff?
I’m certainly not saying there aren’t talented executives out there, but I think what has people really irate is the sense of entitlement that makes a lot of those executives think it’s OK to spend millions of dollars (of bailout money!!) on office renovations or corporate jets. Or the fact that many of them make 350-400 times what the average worker makes. If someone wants top tie bonuses to performance, that’s fine by me, but I don’t think I’m alone in my outrage that the very executives whose decisions have trashed the economy are the very same ones literally making out like bandits.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 0926 hrs
oops…If someone wants to tie bonuses to performance…
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 0928 hrs
Nobody is forcing someone to cap anything. They don’t take our money, we won’t tell them what to do. Pretty simple. (Kind of like the idea that churches who receive government funds to do their charity work can’t employ discriminatory hiring practices.)
On the other hand, I do hear you about attracting talent. On the other other hand, one wonders why existing exorbitant compensation packages didn’t hire the kind of talent it would have taken to avoid financial disaster. And what is up with executive pay these days? It’s completely ridiculous. Nobody is so productive and valuable that he/she merits the kind of money thrown at these people. Nobody. Something is seriously broken here.
Posted by scott on February 04, 2009 at 1005 hrs
Umnnnhhhh….
Most of the highest-level execs at bailout companies will have noplace else to go. You think for 1 second that Associated Bank/Milwaukee will hire one of those yobs at $10 mill/year to get the results they got in NYC?
Heh.
Frankly, they’ve proven their worth by (in most cases) simply ignoring risk-management principles. One wonders if $500K is too generous…
And which OTHER auto company will hire Waggoner? Not FoMoCo, for sure…
Posted by dad29 on February 04, 2009 at 1045 hrs
Nobody is forcing someone to cap anything. They don’t take our money, we won’t tell them what to do. Pretty simple.
Exactly…
When these fuck-ass companies that are stealing my tax dollars stop demanding my money to save their pathetically run/managed companies they can pay execs whatever they want. Hopefully this dose of “control” from the government will make companies re-think what a “grand”
idea it was to go running to the government tit for help.I’m very big on free markets - but I do have to say that executive pay has just gotten ridiculous. Should the government be putting caps on it? No. But I think shareholders need some way to have a better say on these enormous salaries. It is obvious that the boards are just all winking and nodding to each other.
Executive pay has gotten rediculous. And YOU AND I are to blame. Mutual funds are perhaps the worst thing to happen to publically traded companies and consumers alike.
How many of you go to shareholder meetings? How many of you EVEN know what which companies your mutual funds are invested in?
People just keep dumping money into mutual funds and then multi-millionaire fund managers vote YOUR proxy votes for -multi-millionaire boards who put in multi-multi-millionare compensation packages for executives. Its the worlds largest circle-jerk. And YOUR money is the lubricant.
So if we want to play the blame game, the problem here is lazy investors who throw their money into the mutual fund fondue like lemmings and become so separated from their money and what they are REALLY investing in that this kind of lack-of-accountability-shit goes on.
Now the question is are people going to sit back and continue to be lazy and demand government fix the problem (which will only lead to these companies finding work-arounds and such because business INHERENTLY reacts faster than government ever will) or are people going to wake up and demand better for their invested monies.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1126 hrs
That’s fine XX, but as an individual shareholder what am I going to accomplish at the meeting? If I own 200 shares of company X, is it really worth it for me to fly to annual meeting to vice my opinion on executive compensation?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1136 hrs
Errmmm ... there is a simple fix to this pay-cap business:
Simply don’t take the bailout funds.
Since this bailout is a bad idea, anyway, I welcome anything that discourages CEOs from taking any of the money.
How about a paycap and 20 lashes in public? if the money goes out too fast, increase the number of lashes until CEOs stop taking the funds.
Posted by Kristopher on February 04, 2009 at 1150 hrs
Why stop at just capping thier pay? Why not also cap the pay of employees regardless of job grade? Hell ... Why not dictate who the executives of the company are. Obama and Geithner should just take the place of the Board of Directors at every company recieving bail out money and start dictating all corporate policy, particularly related to company expenditures. After all, they were recipients of government bail out money ... they should be forced to abide by every single condition that the Federal government chooses to place on them. Depending on the company, they should be able to dictate whom they should lend to, what interest rate they charge, what products to offer, what price to charge for them, what materials to use and the means of production ... the list is endless.
I agree with XX to the extent that the companies that choose to take this money deserve what they get (unfortunately I work at one of them, and have been pissed as hell from they day they took it). Unfortunately their shareholders are the ones that will ultimately pay the price for it. (on second thought, as the federal government acquires more and more preferred stock in these companies, there will be less and less shareholders in the private sector anyway, so that will work itself out). But hopefully it will serve as the example to the rest of those companies out there considering taking bail out money, or thinking of asking for it, to stay the hell away.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1200 hrs
What the fuck is wrong with saying “sure we’ll grant your request for a big bunch of money if you do X”? You don’t want to do X, you don’t take our goddamned money. What the fuck. And, no, I don’t think it’s a slippery slope where capping executive pay naturally leads to controlling every facet of their business. Please give me a goddamned break.
Posted by scott on February 04, 2009 at 1206 hrs
How about a paycap and 20 lashes in public?
I’d rather see them put in stocks for public humiliation (and I’ll take the rotten tomato concession), but lashes would be an adequate alternative.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1213 hrs
I never thought I would say this…...........I agree with Scott et al
Don’t want the cap? Then don’t take the bailout.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1217 hrs
Another thing. Lots of people seem to have no problem with the idea of imposing draconian restrictions on people who are getting the pittance that goes out for TANF payments. Why the uproar over capping (at $500,000 a year, fer cryin’out loud) executive pay for executives of companies receiving hundreds of millions of dollars from the federal government?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1222 hrs
So Scott, where do you draw the line on the conditions that Federal government can place on a company who chooses to take bail out money?
Only executive compensation?
If an auto manufacturer takes it, do you have an issue with the government dictating that a certain percentage of the cars that go to market must meet certain ‘Green Criteria’? (MPG, Raw Materials, Manufacturing Methods)
If a bank takes the money would you have an issue with the government dictating to them that must make X amount of loans to people based on income or racial quotas ... or that dicates a certain amount needs to be used to forestall foreclosures?
Would you be opposed to conditions that disallow those who recieve the bail out money from carrying out lay-offs for some specific period of time?
What conditions do you find justifiable ... and which ones would you find objectionable?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1236 hrs
Which ones do you find acceptable or unacceptable? What’s your point?
Posted by scott on February 04, 2009 at 1242 hrs
That’s fine XX, but as an individual shareholder what am I going to accomplish at the meeting? If I own 200 shares of company X, is it really worth it for me to fly to annual meeting to vice my opinion on executive compensation?
Bill, if you own mutual funds you don’t own any company stock. The fund manager controls voting rights of those shares.
Thats the problem with the proliferation of mutual funds. It use to be a guy owned 5000 shares of ford and he knew who was on the board because he read his annual reports and he went to shareholders meeting to vote his shares and there was accountability.
There is no more accountability. You are so far separated from where your money is invested.
If you do have cash accounts where you own company x y or z then you should merely inquire with the investor relations what kind of exec compensation plans they have if that bothers you. Invest in companies that you like their compensation plans.
As for people who’s money is all in 401k and IRAs, the real answer to your question is so complex it made my head spin when I asked my tax accountant.
Government regulation and IRS policy has dictated how we live and how we invest for decades.
IRS policy on deductible mortage interest makes it advantageous to borrow and buy homes rather than pay cash or rent. Bad for us, good for banks (government control) (and the incestuous relationship between banking and government continues)
IRS policy on tax deferral and IRA’s drive us to shovel money into our company directed retirement accounts that we can’t touch without penalty til we are old and we live differently because of it. bad for us, good for the world of financial firms.
No mutual fund company offers the option of investing in ‘companies’. They are all funds. You have no voting rights in the companies your money is used to buy shares of. Your fund managers control all of that.
But government regulation has caused this problem. Because IRS policy dictates what we can and can’t do with our retirement money. We can’t get pissed and pull it out and invest it all in Ford cause they didn’t take bailout money. Welcome to the big screw.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1251 hrs
What the fuck??? Do you answer a direct question? Or are you really that obtuse? You claim that capping Executive Pay doesn’t lead to a slippery slope that leads to controlling the rest of the business. So I’m testing you on this point ... Is capping executive pay the only condition you find acceptable? Or are there others that you think would be reasonable. I’ve listed a few. Which conditions would you object to the Feds placing on a business that accepts bail out funds. Are there any? Certainly this isn’t a difficult question for you to answer.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1253 hrs
Which conditions would you object to the Feds placing on a business that accepts bail out funds. Are there any?
Any condition which is legal/constitutional would be just fine with me.
Just like lenders themselves put all manner of fine print minutiae in the loan/credit docs why should they be immune from the same sort of rectal exam when they are the borrowers?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1311 hrs
how about conditions after the fact pjr? Ok with that?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1318 hrs
But government regulation has caused this problem. Because IRS policy dictates what we can and can’t do with our retirement money.
What I find particularly interesting about this perspective xxp, is that within the last year or two you were adamant in your advocating for the govt to allow the investment of SS funds in the private equity markets.
What a success that would have been for participants?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1324 hrs
You mean the way credit card companies can arbitrarily change the terms of their agreements at will?
Yea, I think I am OK with that.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1326 hrs
As long as we are capping salaries for comoanies that get gailed out, how about capping salaries of school teachers for schools taht get bailed out. Let’s start with the principals and cap thier salaries at, let’s say, $60,000.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1409 hrs
Just one question? What would GE stockholders pay Jack Welch to come back and toss out the clown that has ruined their company? And sold weapons to Iran to kill our kids.????
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1409 hrs
You claim that capping Executive Pay doesn’t lead to a slippery slope that leads to controlling the rest of the business.
That’s right.
Is capping executive pay the only condition you find acceptable?
No.
Or are there others that you think would be reasonable.
Yes.
I’ve listed a few. Which conditions would you object to…Are there any?
I think that’s what it really comes down to. The point you seem to be circumambulating is that you believe that there are no conditions that I would object to, that I’m a communist who has no problem with the government taking over the entire private economy. If that is your point, why not just come out and say it instead of asking me 20 questions?
I have no problem with the conditions I’ve so far heard about with regard to the current bailouts. And yes, there are conditions that I would find unnecessary and/or too burdensome for economic growth.
What about you? Are there conditions you do find acceptable? Any conditions at all? If so, how do the ones under current discussion deviate from them? And if there are none you can approve of, don’t you think we should refrain from helping any of these guys out in the first place?
Posted by scott on February 04, 2009 at 1414 hrs
Which schools are getting “bailed out”? I thought they were publicly funded in the first place. If someone isn’t doing their job, fire them. Where’s the problem?
Posted by scott on February 04, 2009 at 1417 hrs
What I find particularly interesting about this perspective xxp, is that within the last year or two you were adamant in your advocating for the govt to allow the investment of SS funds in the private equity markets.
What a success that would have been for participants?
pjr, you can’t point to one moment in time as your “ah ha!” moment to prove your case. Historically people could have and in the future will be able to do SO much better with their SS money than the return they get from the government on it. In a few years (depending on how long the government continues to fuck up the ability of our market to recover) private equity markets will again provide returns far greater than SS does compared to what people put in it. Ultimately I believe we should abolish social security and allow people to invest that money HOWEVER they please, but that’s probably too much “freedom” for a liberal like you to stomach. In the interim I"d compromise with allowing peole to invest their monies in the market (if they are smart hopefully not in mutual funds)
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1421 hrs
pjr, you can’t point to one moment in time as your “ah ha!” moment to prove your case.
What “ah ha” moment did I allegedly have?
Relative to what?
Historically people could have and in the future will be able to do SO much better with their SS money than the return they get from the government on it. In a few years….....
could have
Yep, if they had perfectly timed the markets.
I think many people did not.
in the future will be able
Pure conjecture.
Based on what?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1455 hrs
I have to roll with President O on this one although I think he came up short. I would have demanded execution or public humiliation (tar and feathering) for the CEO in order to get taxpayer money. This is no assault on the free enterprise system, it is an overdue spanking.
The CEOs who avoided taking their shareholders through this nightmare will be more heavily compensated in the future-good. Those who did not should get the full lashing they deserve. $500,000 is too much and should be paid, instead, to the custodian for keeping the place clean.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1505 hrs
Somehow I think you guys are losing perspective on this topic.
Thinking about this a bit more - if there was a better way for stockholders (inclusing those wrapped up in Mutual funds or IRA’s) to be able to exert their influence (ie., a web based meeting, or an asynchronous method of obtaining shareholder input) other than the old archaic methods we have in place now (go to the annual meeting).
But of course - the guys in charge like it the way it is. Reminds me of some church boards I have been on. Include the congregation, but don’t make it easy for them…
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1540 hrs
..., school boards, village boards, non profits…
same story.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1548 hrs
Shareholders do need better tools to combat the insane levels of executive compensation that exist in some corners of the world. But an arbitrary cap is not the way to accomplish that. Requiring shareholder approval of executive level compensation packages would reign them in, and it would come from the people who should have the power to control compensation. The owners and not the government.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1718 hrs
Shareholders do need better tools to combat the insane levels of executive compensation that exist in some corners of the world. But an arbitrary cap is not the way to accomplish that.
Under ordinary circumstances, perhaps not. But these aren’t ordinary circumstances. The public is offering to bail these companies out to the tune of billions. I don’t think it’s unreasonable to ask for such concessions under these circumstances.
Posted by scott on February 04, 2009 at 1723 hrs
Capping CEO pay doesn’t help anyone.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1741 hrs
What would GE stockholders pay Jack Welch to come back and toss out the clown that has ruined their company?
Ummmm, Bob: Neutron Jack WAS the ruin of GE. If you really, really, really believe all those ‘earnings’ statements he put out, with nice, neat, continuous increases quarter-after-quarter, then you shoulda bought into Bernie Madoff’s fund.
Neutron Jack put GEFinancial into commercial real estate and he left just in time; the bomb exploded only a few years later. Do you really think that GEJet Engine is making money now? What about GE lightbulbs? GEPlastics? The only GE Division that actually made a LOT of money was GEMed; all the rest were massaged ‘earnings.’
Welch did have one insight: the water business will be very good over the next 20 years, and GE’s getting into it very quickly due to his direction.
By the way, Bob, SixSigma sucks. Only GE could buy into a program as paper-bound as 6S. See what it did for Motorola, Bob?
Posted by dad29 on February 04, 2009 at 1748 hrs
Capping CEO pay doesn’t help anyone.
No it does not.
But it sure provides an appropriate reward for bad behavior.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1808 hrs
“Under ordinary circumstances, perhaps not. But these aren’t ordinary circumstances. The public is offering to bail these companies out to the tune of billions. I don’t think it’s unreasonable to ask for such concessions under these circumstances.”
That comment just puts way too much trust in government. To me government is a necessary evil, whose grabs for power must be fought at every turn. Giving stockholders more power over executive pay would be a great idea, giving government more power in any arena is seldom a good idea. If you can buy the “this isn’t an ordinary time” argument to excuse this overreach of government power, you are continuing our slide down a very scary, very slippery slope. This isn’t an ordinary time, but that means we must be extraordinarily vigilent of our rights, not that we just relinquish them at every unfortunate bump in the road. It is much easier to protect your rights in the first place, than it is to claw them back once you have given them up.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1828 hrs
No one is being forced to accept this deal.
The equation is simple.
You want taxpayer’s money these are the rules.
Why is this an overreach of govt power Curt?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1843 hrs
Goys you are all over the map. Scott is actually on target here.
Obama proposes only caping CEO pay of companies getting bailout money. He is actually providing the accountability that has been missing in this scenario. This is not about shareholder representation which sucks except you can sell your stock and buy something else.
The CEOs who have done things right and don’t need a bailout will be worth their weight in gold through market demand.
The CEOs who f’d up will have lost as much as their shareholders. I think this is a victory (or maybe just justice)for capitalism except for the fact that I wouldn’t give bailout money to anybody except those companies who are strong today so they could acquire the assets of the companies who f’d up and turn things around.
The successful should be rewarded and the failures should die from their own greed or incompetence. Capitalism 101.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1856 hrs
There is no cap on CEO pay. These firms can sign contracts to pay their CEO’s hundreds of millions per year, but that pay has to be in the form of stock and it can’t be cashed in until we get our money back first.
We (that is all of us commenting here) gave these companies hundreds of billions of dollars with no strings attached. Only people giving away other peoples money would do that without any recourse.
Now that someone has finally set some limits on what they can do with OUR money Owen complains that we are being set on a course “toward a command and control economy”.
to quote Owen :
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1946 hrs
I do agree that certain CEO’s and other executives screwed things up royally but I disagree with capping thier pay. After all, where do you draw the line with a private organization that receives government funds. Should we limit the pay to the head of planned Parenthood or ACORN? How about the farmer who receives farm subsidies? How about the execs over at the Red Cross? How about University presidents and their highly paid athletic coaches? where do draw the line.
This is just another case of Obama pitting a class of people against another class of people. I highly doubt it is constitutional but it sure grabs headlines.
Finally, if he reduces pay for these people, that greatly reduces the income taxes and other taxes the government receives. Not too bright, that Obama fellow.Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1949 hrs
As stated by someone earlier in the thread, we had set in place theoretically the greatest set of pay packages in the world the last 10-years. And look at the “talent” it attracted.
The joke here though is that the execs aren’t the only ones at these companies making a killing. There will still be guys walking home with $20 million dollar a year paychecks. Unless of course the CEO’s now use their limits as a way to limit the comp of their subordinates.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 1959 hrs
Most of y’all are missing the point.
1. What does limiting executive pay have to do with stimulating the economy?
2. I agree that many of the current executives don’t deserve a warm bucket of spit for their performance, but how will limiting executive pay attract better people?
3. While accountability for receiving a taxpayer bailout may be good in concept, why not demand reforms that will actually make the companies more competitive instead of the political statement of limiting executive pay?
Face it, this measure is just rooted in jealousy or frustration, but does absolutely nothing to correct the underlying problem.
Posted by Owen on February 04, 2009 at 2022 hrs
Actually, there is some IRS oversight applied to nonprofits (Red Cross, Planned Parenthood, ACORN). It is now a dead issue, with Daschel’s withdrawing his consideration for HSS, but the next item that was going to hit the fan was the relationship between him & EDUCAP, a nonprofit entity. We will never know now, but I suspect that had something to dow with his decision to withdraw. Some of the items were raised because the IRS had been taking a look at their expenditures:
http://online.wsj.com/article/SB123358318483339241.html?mod=rss_US_News
The IRS’s probe into EduCap is looking is looking into cash transactions involving Ms. Reynolds, the purchase of a $28 million corporate jet by EduCap, trips to Europe by Ms. Reynolds, and spending on gifts and luxuries, according to details disclosed in documents filed in a court case in Washington, D.C. The documents are exhibits in a Freedom of Information Act lawsuit EduCap is pursuing against the IRS demanding the names of individuals whom the agency has interviewed for its investigation. The IRS is refusing to identify many of its sources, saying they fear legal retaliation by EduCap.
The IRS also is trying to determine why a former EduCap “security officer” made two cash deposits of $170,000 each into personal account of Ms. Reynolds at Riggs Bank in 2003, according to disclosures by the IRS in U.S. District Court. The former employee told the IRS in 2006 that he didn’t realize the money was going into Ms. Reynolds’ personal account, according to an agent’s notes filed with the court.
EduCap describes itself on its Web site as a “non-profit education organization” with a mission of providing affordable college loans to students whose family incomes are too high to qualify for financial aid or federal student loan programs.
The IRS is probing whether EduCap’s spending for such things as the jet amount to an improper personal benefit to its executives under the tax laws governing not-for-profit organizations.
My bolds - the point is, in exchange for the tax advantages that are conferred on non-profit entities, there is an inherent level of scrutiny & control by the IRS. They probably wouldn’t get to spend $1 M to renovate the CEO’s office, like at Merrill Lynch, before it was taken over by Bank of America. Curtains for $28,000; a pair of chairs for $87,000, $13,000 chandelier, etc. (those come from a Maureen Dowd column that was in my newspaper the other day).
So, if a corporation is going to go for government funding (as opposed to going strictly “free market”), I don’t know why it would so audacious to propose limiting the ability of the CEOs to take huge amounts of money out of the company.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2040 hrs
Owen,
It limits their annual salary not their potential annual compensation if they do a good job.
I would think that provides an excellent incentive to attract not only better but maybe the right people.
I am anxious to hear what govt mandated reforms you would not consider an overreach of power by the govt.
Face it, this measure is just rooted in jealousy or frustration, but does absolutely nothing to correct the underlying problem.
That is the funny part, none of this bailout BS is going to fix the underlying problem.
We did not just burst a housing, credit or whatever bubble, we burst our economic bubble in the aggregate.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2104 hrs
I don’t know, but pretty much the personal responsibility crowd can show up here that gets pretty irritated when kids get rewarded for doing nothing.
These people, however, lost a lot of money for a lot of people.
Looks like two standards. One for the suits—no matter now badly they have run their companies—and everybody else who have to live with the consequences.
Jealousy? Frustration? How about disgust.
The trouble with some conservatives is when it comes to business they are like doting, spoiling parents. And some of them have no ideas how business works.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2115 hrs
“...no idea how business works.” You’re at the top of that list, Keith.
The problem with the whole argument of ‘If you don’t want to limit compensation, don’t take the money’ is that if you are a company that doesn’t take the money you then have to stand by and watch the government subsidize your competition, which is the whole problem with bailouts in the first place.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2123 hrs
The problem with the whole argument of ‘If you don’t want to limit compensation, don’t take the money’ is that if you are a company that doesn’t take the money you then have to stand by and watch the government subsidize your competition,
Gee you mean an executive might have to forgo their own short term gain for the long term competitiveness and health of their company?
Novel idea.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2131 hrs
If you don’t need to take the money, pjr, you have already ensured the long term competitiveness and health of your company. Why should be punished for being good?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2138 hrs
If you don’t need to take the money, pjr, you have already ensured the long term competitiveness and health of your company.
Why should we be giving money to companies that don’t need it in the first place?
I thought this was to be about saving our banking , auto or housing industries from extinction.
Now it is about creating a level playing field?
My current mantra is that if you are to big to fail, you are to big.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2148 hrs
If you need to take the money your company has failed. If my company fails I am out on the street looking for work.
The heads of a failed companys should be sending each one of us thank you notes that we are allowing them to keep their job and potentially be compensated at exactly the same level they were if they can get their company back on its feet and repay the money we gave them.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2152 hrs
We should not be giving any bailouts, pjr. That is the point. But don’t pretend that you do not punish good performance when you reward and subsidize bad performance.
No company is too big to fail.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2156 hrs
What letter will you be sending to the heads of companies that don’t want your money 3rd way?
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2157 hrs
We should not be giving any bailouts, pjr.
No company is too big to fail.
What a revelation?
Now if only we could convince those imbeciles in DC.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2203 hrs
Those inbecilies in the senate just passed a $15,000 tax credit for people purchasing homes.
It may be the stupidest piece of legislation of my lifetime. So stupid that it ought to be generating discussion as to whether or not stupidity can rise to level of criminality.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2206 hrs
While accountability for receiving a taxpayer bailout may be good in concept, why not demand reforms that will actually make the companies more competitive instead of the political statement of limiting executive pay?
So, you want Nancy Peolsi et all to legislate reforms to make companies more competitive? Why not give them quaaludes and firearms instead. The result might be prettier.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2319 hrs
BVBB - what is wrong with giving a tax credit for buying a house? It will certainly help simulate the market. Housing is dead right now - ask any homebuilder or real estate agent.
Posted by .(JavaScript must be enabled to view this email address) on February 04, 2009 at 2354 hrs
Face it, this measure is just rooted in jealousy or frustration, but does absolutely nothing to correct the underlying problem.
If it discourages one company from seeking bailout money I’d say it helps correct an underlying problem.
While all these execs line up with their greedy pathetic tin cup out for taxpayer money i hope some of them think better of it because they don’t want their posh comp plans fucked with.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 0014 hrs
It will certainly help simulate the market.
Simulate is exactly what it will do.
It will quite likely put a false bottom in the housing market and make it even more difficult and simply take longer to determine what real values are.
I believe this is the last thing we need right now if we expect to maintain whatever credibility we have left with the guys who buy our paper.
Housing won’t come back until people have confidence in the short & long term valuation that the market ascribes to it.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 0015 hrs
Housing is dead right now because housing should be dead right now. Housing produces nothing for most people. It is simply another consumer good that has been overconsumed. Worse, it should be obvious by now that banks long ago exhausted the credit worthy borrowers for housing. Worse still, a housing speculation bubble having contributed to the current recession, we are now attempting to reinflate that bubble. Worst of all the attempt will prolong the recession as outlined in pjr’s comment 60. Housing is the absolute last thing government money should be thrown at now.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 0045 hrs
didn’t read a single comment in this thread, all I know is it is a tough argument to take from someone who went off on legislators taking a pay increase a few weeks ago.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 0110 hrs
As F. Scott Fitzgerald once said, the rich are very different from you and me. Indeed. They have Owen Robinson to make excuses for them.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 0709 hrs
Apparently Obama was out snorting cocine when he was supposed to be studying contract law at Harvard. Most, if not all of those executives have contracts and Obama now wants to break all those contracts.
Obama is a Marxist and is on his way to becoming the worst president ever,Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 0807 hrs
The frequent “we shouldn’t be giving any money to anyone” meme among many conservatives here makes me think back to something I read the other day (can’t remember where). It was the idea that while you guys totally suck at governing, what you’re truly good at is preventing others from doing so.
The crisis we are now in requires effective action if we are to avoid a prolonged and potentially devastating economic downturn in our nation’s history. (Yeah, I get that you deny this, but every economist in the country can’t be wrong, fellas.) And the best idea going, it seems to me and many, is that the government must spend a lot of money. That is the surest way to turn a borrowed dollar into a dollar’s worth of demand: spend it directly. Tax cuts don’t work this way. People can spend or not spend as they like. I heard the last check that got mailed out only had a third of it spent on goods and services. That’s a lot less bang for your buck.
Lowering interest rates is a good tool—until it ceases to work, like it has now. If you can’t get people to spend money by making it cheaper, the government has to step in and spend instead. This is basic Keynes, and seems to be the only idea going for what to do when manipulating the central bank doesn’t stop the bleeding.
Meanwhile, here you guys are doing your very best to convince everyone that we should not be doing this. You can’t govern, but you sure can obstruct.
Posted by scott on February 05, 2009 at 0940 hrs
I totally agree with PJR and BVBB regarding this tax credit craziness.
I am torn about the plan to artificially force mortgage rates down to 4%. It would have a similar effect of “simulating the housing market” as this tax credit, but it would allow millions of people to refinance their debt and hopefully start spending again. Our economy’s main problem is that the consumer is over indebted and more willing to save and pay down debt than to spend.
Our economy isn’t going to recover until that paradigm changes. Trying to reduce the amount of income Americans spend on servicing their debt seems like it could have a positive effect, certainly better than this tax credit lunacy.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 0954 hrs
Our economy’s main problem is that the
consumer is over indebted and more willing to save and pay down debt than to
spend.This is precisely why the majority of the stimulus bill has to be in direct government spending, instead of trying to get others to spend.
Posted by scott on February 05, 2009 at 0958 hrs
the government can spend 40 trillion dollars, scott. Unless it produces an excess of the 40 trillion it will do no good.
Our government is even more overindebted than the consumer. The effect of that overindebtedness is traditionally a currency devaluation.
The bleeding is a good thing, scott. It needs to occur. The proper role of the government is to deal with the unemployed that accompany the bleeding. That will become very difficult after we waste another trillion dollars.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1021 hrs
As for governing: Eisenhower, Nixon, Reagan and Bush have done quite well either countering the commies, though some escaped to join the Obama team, and the terrorists.
During the Eisenhower, Nixon, Reagan administrations, they had far bigger problems than Obama to solve, inflation was low, jobs were high and the country prospered. All of them inherited bad foreign policy problems left to them by their predecessors.
Bush has made some bad decisons with regards to the dollar and easy credit, but the majority of that problem came from Barney, Chris and Bill. Just came home to roost now.
The mess made by Crter was far worse than the one we have now and what Obama and compnay rae doing could be far worse.
As Reagan said: “It will get better” and it did. As Obama says: “it will get worse and he is also right. If we follow his policies it will get worse. Another round of Carter “Malaise” and hyper inflation will be far worse.
We should just ride this out, take our medicine and then regroup.Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1030 hrs
Our economy’s main problem is that the
consumer is over indebted and more willing to save and pay down debt than to
spend.This is precisely why the majority of the stimulus bill has to be in direct government spending, instead of trying to get others to spend.
Let us get something straight.
Consumer and govt spending are just fine with me if we actually have the resources to do it.
I get a little testy when we print & throw money around like beer at a wet T shirt contest.
Should the govt be spending any money? Yep.
But not on saving a bloated and clearly unsustainable model for just about every sector of the economy.
What we are doing now is deploying air bags after the impact has actually occurred.
A “to big to fail” tag line attached to a bank, auto company or the housing market misses the point that if they need a bailout they have already failed.
Their models and underlying assumptions are off the mark and the game is over.
Time to reset.
So consumption is the only thing we are going to bring to the global table we are doomed in the long run.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1044 hrs
SHB,
If consumption is the only thing we are going to bring to the global table we are doomed in the long run.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1050 hrs
Amen, pjr. That’s exactly why we need to let the bleeding occur.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1052 hrs
So basically your positions are that “the bleeding needs to occur” rather than attempting—successful or not—to stop it through a stimulus plan. You believe that we should take our lumps, suffer through the worst economic catastrophe in living memory doing nothing but let it take its course.
Posted by scott on February 05, 2009 at 1111 hrs
we should take our lumps
Who is the “we” in this scenario?
suffer through the worst economic catastrophe in living memory
I am not suggesting anything even remotely that passive.
doing nothing but let it take its course
Why don’t you review #70/71.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1134 hrs
The premier said that an “unsustainable model of development” based on low savings, high consumption and a “blind pursuit of profit” had played a big part in prompting the crisis.
We need to change this perception.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1145 hrs
No more corporate welfare please.
Paycaps? Hell ... that and public lashings aren’t enough. Throw the stupid f*ckers in scorpion pits. Give them the Hanover Fiste treatment:
“Hanging’s too good for him. Burning’s too good for him. He should be torn into little tiny pieces and buried alive!”
For once in their lives, Obama and the class envy clowns are almost completely correct here. If we can just get them to withdraw TARP completely, or make it impossible for a CEO to participate, they will be completely in the X ring.
We already have a bailout process ... it’s called bankruptcy. It puts the assets in the hands of competent people quickly.
Posted by Kristopher on February 05, 2009 at 1151 hrs
PJR, I don’t mean to be dense, but I don’t quite see what you’re getting at in 70/71 that indicates exactly what you want to do if anything. Could you be more clear?
Posted by scott on February 05, 2009 at 1152 hrs
Why not require comapanies that have failed and need a bailout go bankrupt? that way they can restructure, reorganize, and if they cannot pull out of it, release contract holders. Dragging this out just seems to me to be like using a butterknife instead of a scalpel to perform surgery, it makes it hurt more, last longer and get really messy.
Posted by fishaddict on February 05, 2009 at 1242 hrs
Remember the goal here isn’t to keep them going or not keep them going. The issue here isn’t whether we ideologically are okay with propping up a failing private business or not. The goal here is to bring the economy out of its current tailspin, period. Right?
Posted by scott on February 05, 2009 at 1244 hrs
You are proposing, scott, that we “bring the economy out of its’ tailspin” precisely by propping up failing businesses and keeping them going and also propping up a failed business model. If that isn’t the goal, then don’t propose it.
Your proposal is precisely to make everything far worse in order to prop up existing interests. the real economy is going to take its’ course regardless of what you think you can do it.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1256 hrs
No, I’m proposing that we juice demand with government spending so that the economy can get going on its own again. Right now, nothing we do seems to be working. Interest rates are cut to the bone, but people aren’t spending. Last time we mailed checks only a portion of it was spent, so that’s not going to cut it.
Posted by scott on February 05, 2009 at 1259 hrs
People shouldn’t be spending, scott. It is not rational. Until the the portions of the economy that rely on unsustainable spending are allowed to fail all this pork will continue to feed an unsustainable bubble.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1304 hrs
So as I said: let things take their course. that’s what you’re recommending for how to deal with the biggest economic downturn since the great depression.
Posted by scott on February 05, 2009 at 1307 hrs
This is not the biggest downturn since the great depression, what Carter handed Reagan was far worse and what Bush senior handed out had higher unemployment.
Friedman and others have written that recessions are just as big a part of capitalism as booms are for many-reasons.
They come periodically and there are many safeguards from dropping into a depression.
Most of this crap is Obama speak and media speak.
How many banks have gone broke this year and how may during the depression?
The first rule in medicine is “do no harm”. that is what we have here. Most of the things that roosevelt did caused harm, that is why the depression was worse in 1940 than in 1932.Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1317 hrs
So your position is actually: the problem isn’t so bad—and that’s why we need to do nothing.
Posted by scott on February 05, 2009 at 1324 hrs
No scott, we need to do two things. First we need to do is allow the unproductive portions of the economy to fail without dragging down the productive economy. What the “stimulus” package proposes to do is precisely the opposite: prop up the unproductive portions of the economy at the expense of the productive sectors.
Second, we need to be prepared to deal with the inevitable unemployment problems as the economy goes from a comsumption model to an investment and production model. This can be done for a fraction of the “stimulus” cost. The latest unemployment figures were 4.8 million. We could triple that figure by adding 10 million more unemployed, pay them all $30,000 a year tax free and it would only cost 300 billion; one third the annual cost of the proposed “stimulus”. Clearly we can afford to deal with the unemployed.
The proper role of the government is to deal with the people problem, not prop up failing business models and poor investment choices.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1337 hrs
Dohnal’s commentary is as hilarious as it is ahistorical.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1342 hrs
Regarding comments 79 - 85, I honestly think the best bet to “correct the market” and “juice the economy” would be to have the government spend the trillion dollars to pay off everyone’s current debt load. Anything else is just a round-about way to try and do the same, without getting anywhere near the same results.
Before anyone starts frothing at the mouth for what I just said, I’m against just what I said. It goes against every principle and moral that I have. What I have suggested is simply the best and quickest, and probably cheapest solution to the problem, for those that think the government needs to fix it.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1344 hrs
Oh, and here’s more example of the TARP failure… or in reality, doing what it was supposed to do, but not the intended result of the creators.
http://money.cnn.com/news/newsfeeds/articles/djf500/200902051243DOWJONESDJONLINE000573_FORTUNE5.htm
The U.S. Treasury may have significantly overpaid for its investments in financial institutions, a government watchdog said Thursday, as criticism of the $700 billion financial rescue continues to build.
Uhhhh….. DUH - that’s why they were labeled “Troubled Assets”. It’s all just a smoke and mirrors show to fool the sheep into thinking it wasn’t really a handout.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1349 hrs
scott,
What do you think we should be juicing demand for?
Defense?
Oil?
Health Care?
Bad Banking/Investing/Insuring practices?
Look I think there are parts of the stimulus plan that have merit and we should throw boatloads of money at.
Energy efficiency and domestic/alternative energy production would be two specific examples.
Anything that we should or could do better would be a broader brush.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1351 hrs
Infrastructure, education and alternative energy production. How’s that?
Posted by scott on February 05, 2009 at 1352 hrs
Works for me as long as it includes innovation and recognition of past failures.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1404 hrs
I think you guys are too worried that the stimulus package adhere to the principles of rewarding winners and punishing losers than you are in making sure that it actually works to stimulate the economy.
Posted by scott on February 05, 2009 at 1405 hrs
Well, if your goal was “stimulation”, infrastructure is the single worst possible way to spend money with the possible exceptions of education and alternative energies. They take years to implement. They may have investment value in the case of education and alternative enrgy, but they are too slow even if one buys into the stimulus theory.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1411 hrs
if your goal was “stimulation”, infrastructure is the single worst possible way to spend money
Uh, how do you figure? Money is allocated to remodel a federal building somewhere, bids are made, contractor chosen…suddenly someone has a job, someone else is selling steel, carpeting, light fixtures, etc. Why does it take longer than something else? Seems pretty rapid to me.
Posted by scott on February 05, 2009 at 1413 hrs
The oldest political trick in the book is to “never let a disaster go unrewarded”, Rahm Immanuel. Remember Gulf of Tonkin? Lusitania? ,WMD, Pearl Harbor?
And many others.
They always use these things to-grab more power and BS the public. It is a long stretch to claim that we have to form the United States Socialist Republic to counter the problem.Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1418 hrs
That process, especially from a government standpoint, is measured in years, scott.
First, someone has to decide what they want to do. Then they have to decide who they want to hire to do a design. Then they decide what they want to spend. Those three things alone take you into next year.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1420 hrs
If stimulating consumption is what you are looking for than Jason has the right idea.
Pay off debt and/or provide long term low interest consumer credit.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1421 hrs
Remember Gulf of Tonkin? Lusitania? ,WMD, Pearl Harbor?
And many others.
Oh, like 9/11 perhaps? It’s ironic in the extreme that you can stand there like a whistleblower alerting us to the idea that someone might be playing upon our fears in order to further his political aims—when you supported George W. Bush like was your sainted mother. (At least I think you were a supporter. True?)
If stimulating consumption is what you are looking for than Jason has the right idea.
Pay off debt and/or provide long term low interest consumer credit.
Paying off debt and cutting interest rates do not directly create demand for anything. You hope that people with less debt are going to spend more money. You hope that cheap money will lead to increased lending/borrowing/spending. And you know what? Often it does. But in this case it isn’t working well enough. We need spending—demand—to squirt some gas on the carburetor of the economy. We don’t need indirect methods which aren’t as efficient at producing it.
Posted by scott on February 05, 2009 at 1426 hrs
What isn’t working well enough and for whom, scott? The current model isn’t rewarding housing speculators? The current model isn’t rewarding bloated companies? The current model doesn’t sufficiently reward companies that leech off the government?
The reason people with less debt are not spending more is that we have been, and are proposing to further artificially prop up prices by propping up failed businesses and failed investment strategies. Until you let prices fall the good money should stay away from spending.
You are adhering to the principle of punishing the winners and rewarding the losers. I don’t want the government punishing or rewarding anyone. I want their outcomes to reflect their own decisions.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1440 hrs
What isn’t working well enough and for whom, scott?
Lowering interest rates hasn’t been increasing demand for goods and services. Clear?
Posted by scott on February 05, 2009 at 1444 hrs
And only a third of the last tax rebate got spent—not good enough.
Posted by scott on February 05, 2009 at 1444 hrs
You hope that people with less debt are going to spend more money. You hope that cheap money will lead to increased lending/borrowing/spending. And you know what? Often it does. But in this case it isn’t working well enough.
That’s the quickest way to recover though. I didn’t mean that the Gvt would send a rebate check, I meant that the gvt would send a check to Joe Plumber’s CC company. For $1,000,000,000,000.00 the gvt could send nearly $8k to every household in the country.
The problem then is that the mooks that started this problem in the first place, by spending outside their means, would do it again, and we’d be out 1 Trillion. Any other approach by the gvt (including spending on Infrastructure, Energy, Education) is likely to result in the same. Why? Because the economy needs to adjust downward on it’s own. Anything other than that happening is just going to delay it, and increase the crash and increase the money wasted. Think of it as constantly switching credit card balances to new accounts that have some special promotion on balance transfers. You’re not paying anything off, just passing it from one account to another.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1457 hrs
Actually Dohnal did mention WMD’s, good for him.
Paying off debt and cutting interest rates do not directly create demand for anything. You hope that people with less debt are going to spend more money. You hope that cheap money will lead to increased lending/borrowing/spending. And you know what? Often it does. But in this case it isn’t working well enough.
Am I missing something here?
What debt has been forgiven?
Have consumer credit (not mortgages) interest rates come down?
So far all the bailout largess has gone to financial institutions and the auto companies.
The former are doing an excellent job of playing Shylock with the cash we have given them, while the latter continue to piss it away.
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1459 hrs
Demand for which goods and services has not been sufficient scott? Overpriced housing? Overpriced cars? Overpriced TV’s?
Posted by .(JavaScript must be enabled to view this email address) on February 05, 2009 at 1504 hrs
You know that executives of the
banksandcredit unionsdon’t want to see thei pay capped - but you can bet they want the bailout money to keep coming.Posted by Banks on February 26, 2009 at 0057 hrs
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