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President Barack Obama kicks off a campaign to rein in corporate compensation with rules limiting executive pay to $500,000 a year for companies getting taxpayer bailout funds in the future.
Obama, who sharply criticized Wall Street chiefs for accepting billions of dollars in bonuses last year while the economy fizzled, had promised compensation reform as part of a package of stricter regulations on the financial industry…
An Obama administration official said the new rules would require companies that get exceptional government funds — such as financial giant Citigroup and insurer AIG have in the past — to abide by the cap.
Additional compensation must be limited to restricted stock that does not vest until government money is paid back with interest.
Companies that have previously received bailout money would have to agree to stricter oversight and prove that they have followed already established restrictions on executive compensation, which are widely seen as being too lax…
They will also put restrictions on golden parachutes — the lavish severance packages common for senior executives — and require more transparency for costs such as aviation services, big parties, office renovations and conferences.
Do you think executives of the corporations receiving bailout bucks have been earning their salaries, bonuses, perks? Think their payscales should remain unchallenged?
#155 bobbo – I completely agree that the government should not have changed the lending requirement. My mother-in-law is a federal bank examiner and she was concerned about the “melt down” several years ago. I remember her telling me that all it would take was a small down turn in housing values.
But….if we are trying to help these institutions recover why (using your scenario) should we make it impossible for Bank A to hire the CEO from Bank B or other financially conservative CEOs who did the “responsible” thing during this period.
And what do we do with the jackasses who changed the regs to begin with? Oh thats right we gave them the keys to the US treasury and told them to fix this mess. That’s like giving my kids a hammer and chainsaw and telling them to go clean their rooms.
Don’t get me wrong. I want Obama and his peeps to help guide a recovery. AND I think that government oversight of institutions that took bail out funds is prudent and fair. I just think that this particular piece of oversight is misguided and could have the opposite effect.
#156–Robart==you sure like flitting all over the place don’t you? Happy to answer your questions after you respond to my post.
#156, Robert,
And what do we do with the jackasses who changed the regs to begin with? Oh thats right we gave them the keys to the US treasury and told them to fix this mess
And whom might they be? OH RIGHT!!! The disaster that was just removed from office. I agree that Congress should have insisted upon more oversight in the first part of the stimulus package. HOWEVER, the President and Treasury Secretary were telling Congress how the sky was falling and this was needed yesterday.
Paulson had his chance to add some regulations to the money given away. Instead he invoked a veil of secrecy and attached no conditions. The recipients then went on a spending spree that included time in holiday resorts, huge bonuses for near bankrupt firms, buying other institutions when the buyer was asking for rescue money.
I just think that this particular piece of oversight is misguided and could have the opposite effect.
Why?
As a quick thought, paying these people with the same “toxic paper” their firms hold might be a more fitting compensation.
Or would that upset too many people that think they have a right to pillage our economy?
Fusion–I’m watching “Morning Joe” right now and its sad: Joe Scarborough and Jack Welsh mocking the notion that anyone qualified would work for the respect of a job well done and capped at $500K.
Our cultural leadership has its head so far up its ass. They would deny that “Greed is Good” exactly while they advocate for nothing but.
No wonder this country is f&cked up.
Talk about closing the barn door after the horses are long gone–it only applies to FUTURE recipients of federal aid. All of the major banks and financial institutions that already received aid are exempt. Citi, Goldman, JPM, etc are off the hook. Only the future smaller regional banks who ask for aid are impacted.
#161==you are mostly correct but nothing wrong with clawbacks for those institutions that want more.
#161, Billy,
Maybe that is a good thing. When stock holders are seeing how their banks are fareing, they might be a lot more inclined to depose the leaders for ineptness. The same with the Boards of Directors.
Would you like to explain that CEO “X” deserves $10 million per year + bonuses + perqs when the bank is losing money at the next stock holder meeting?
On the other hand, the smaller banks most likely aren’t paying their CEOs those huge bucks. That will make them more advantageous in the financial world for deals and loans. Since the bigger institutions will still be short on cash, look to most of their portfolios to suffer.
#159 – Mr. Fusion,
As a quick thought, paying these people with the same “toxic paper” their firms hold might be a more fitting compensation.
Or would that upset too many people that think they have a right to pillage our economy?
Excellent idea!! When we print the paperwork, let’s make sure to use recycled and quickly biodegradable paper and soy ink. We don’t want to clog up the city septic system.
Some head on tv just said: “Pay the execs all the bonuses and stock options you want but make them payable only on the taxpayers getting all their money back.”
Seems like a good compromise of all the competing interests.
I would put all such payments in escrow for at least a 5 year post performance check and then pay out the bonus over a 10 year period with continuing rights to recoup losses based on any remaining escrowed amounts.
Whats wrong with that? Long term bonus for long term results.
#165, Bobbo,
I see where you are going but disagree. These “managers” are being paid to run a business. They agree to do it for $X. I see no reason that in turn they also deserve a bonus. Especially when it appears that when they fail there is no repercussion.
If they need to be bribed to do their job then fire them. There are a lot of people clogging the system that would make great managers but are being held back because there are only so many openings. Those that got the management jobs are not necessarily the best managers or financial people. Most, in my opinion, are simply more ruthless or are so driven to make a profit that they will accept any “toxic paper” risk.
#165 – bobbo,
Escrowed boni/options may be a great way to go. Better yet, IOUs that don’t tie up any physical cash now. And, make them pay back taxpayers with interest.
At minimum, they must pay the debt on the treasuries the gov’t must sell to come up with the stimulus in the first place.
Personally, I’d rather make them pay back at whatever predatory lending rate each institution used on their customers with worst credit rating.
Certainly, their corporate credit rating is now even lower than their customers’ since they are in chapter 11 now.
How about prime + 7% adjusted monthly? Or LIBOR + 9% or something that no sane individual would ever sign? If it was OK for them to do it to the masses, then it’s OK for the masses to do it right back at them.
#166–Fusion==well, I agree with you basically. I offered the alternative only for Robart who seems fixed on the notion that competent bank execs willing to work for $500K don’t exist.
#167–Scott==IOU’s much better. Interesting what great minds working in tandem can produce? That includes YOU Fusion.
Yea==we all know what UNDER-COMPENSATION causes–people LEAVE for other industries/countries/whatever.
How come there is absolutely no recognition of any downside to OVERCOMPENSATION?
Why is that? Or is compensation just that unique????
#140, Scott,
I’m arguing against an across the board cap. I do agree with one where the corporation takes the government’s money. When you beg for money, you have to agree to the terms of the lender.
#145, Fusion
“Actually, no. The Commerce Clause in the Constitution gives Congress the authority to regulate commerce. Almost since the beginning of the nation, the Supreme Court has ruled that that authority is near unfettered.”
Wrong, the Commerce Clause has only enjoyed its status as the be-all-end-all excuse for overreaching federal regulation since the 1942 Wickard v. Filburn ruling where the Supreme Court inexplicably ruled that a farmer can be restricted from growing wheat for his own consumption because it allows him to avoid going to the market and engaging in commerce to purchase it from another.
#169, SL,
Actually, it goes back to at least the 1820s when the Supreme Court decided that even a waterway entirely within one State could be regulated under the Commerce Clause.
Regardless, Congress has the authority to regulate wages at their whim. It doesn’t matter that Cow-Patty, Liberty Loser or you claim otherwise or suggest it is stupid. They have the authority and may, with as much or as little justification as they desire, regulate wages. As already pointed out, they have established minimum wages.
#170, Poison Twin,
Regardless, Congress has the authority to regulate wages at their whim. It doesn’t matter that Cow-Patty, Liberty Loser or you claim otherwise or suggest it is stupid. They have the authority and may, with as much or as little justification as they desire, regulate wages. As already pointed out, they have established minimum wages.
There is a big difference between limiting the lower end of the scale vs the higher end. On one hand you have bleeding hearts screaming, “Think of the children.” On the other, you are jacking with a rich and powerful individual’s livelihood. That is a good way to get assinated (as in removal of one’s anus).
Congress only has the power given it by the citizens. And as citizens do not have the right to tell someone they can only make so much money, Congress doesn’t either. Have you wondered why they haven’t tried it yet? Because that effort would fail.
Where do you get this hair-brained ideas from?
#171, Loser,
Can you point to one case where a court ruled Congress does not have the authority to regulate wages? Well, one that wasn’t overturned on appeal. Just one. Although a link would be great, I could handle just the legal listing.
You are always so quick to argue the point. You have yet to point to any authority. But hey, some ignorant piece of bovine excrement that made the original claim likes it when someone else fights his battles.
#36 – Paddy-RAMBO
>>I already have that. I am the single payer
>>for my health care.
Not to worry, Paddy-RAMBO. When you finish the studies for your GED, you will get a real job with bennies like health insurance.
You won’t be a Radio Shack counter boy forever!
¡Si, se puede!
#172, Poison Twin,
Can you point to one case where a court ruled Congress does not have the authority to regulate wages?
Quit changing the question. You are trying to tie in two completely different questions.
Can Congress regulate minimum wages? No. Are they doing it? Yes. How are they doing it? With guns.
Can Congress cap salaries on CEO salaries? No. Are they doing it? No.
They question you should be asking is “why aren’t they?”
I’ll give you the short answer. Their balls ain’t big enough.
Let me give a picture of stupidity caught in concrete:
“Can Congress regulate minimum wages? No. Are they doing it? Yes. How are they doing it? With guns.” /// I can see someone writing that in a fit of pique==but then to go ahead and post it??
ROTFLMAO!!!!!!!! What a retard.
Mr Fusion for the win.
And for all you other trolls–you are self identifying when asked for a link and you provide nada!!!!
#169 – Sea Lawyer,
I’m arguing against an across the board cap. I do agree with one where the corporation takes the government’s money. When you beg for money, you have to agree to the terms of the lender.
I’d agree with that. However, I would also like to see some level of control, not an across the board cap, but some control over the pay given to execs and to dividends.
When a publicly held corp has large layoffs (definition of large may have to be by percent of employees or some such) to reduce costs, I think they should be prohibited from paying a dividend or for giving bonuses, possibly across the board, but at least to anyone with a C in their title.
It always makes me physically ill to hear about XYZ corp laying off N,000 workers and then paying multi-megabuck boni to their top execs for doing such a great job in laying everyone off.
Publicly held corporations, at least, can be held to some standards.
But then, I’m the kind of radical individual who thinks that corporations should only provide protection from personal bankruptcy, not for actual crimes and negligent actions taken by their officers under the corporate umbrella. (Union Carbide/Bhopal, India always comes to the forefront of my mind in that debate. But, there are many other such cases, including BP/Exxon‘s violations of their agreement for using the Valdez port, which led to the huge spill there, violations of laws in other countries regarding factories that have living quarters on the third floor, materials on the second, and machinery on the first. These tend to burn down, killing all of the workers and are illegal even in most developing nations, but are still built so that Mall-Fart can sell 3 dollar beer hats.)
In short, I don’t want government ownership of most business (other than health care), but do want corporations regulated within an inch of their lives. And, I want real live humans to be as free as possible. I know this puts me on the political compass as somewhere left and more libertarian than Ghandi, Mandela, and the Dalai Lama. I’m OK with that.
#169 – Sea Lawyer,
I’m arguing against an across the board cap. I do agree with one where the corporation takes the government’s money. When you beg for money, you have to agree to the terms of the lender.
I’d agree with that. However, I would also like to see some level of control, not an across the board cap, but some control over the pay given to execs and to dividends.
When a publicly held corp has large layoffs (definition of large may have to be by percent of employees or some such) to reduce costs, I think they should be prohibited from paying a dividend or for giving bonuses, possibly across the board, but at least to anyone with a C in their title.
It always makes me physically ill to hear about XYZ corp laying off N,000 workers and then paying multi-megabuck boni to their top execs for doing such a great job in laying everyone off.
Publicly held corporations, at least, can be held to some standards.
But then, I’m the kind of radical individual who thinks that corporations should only provide protection from personal bankruptcy, not for actual crimes and negligent actions taken by their officers under the corporate umbrella. (Union Carbide/Bhopal, India always comes to the forefront of my mind in that debate. But, there are many other such cases, including BP/Exxon’s violations of their agreement for using the Valdez port (http://tinyurl.com/39j9rz), which led to the huge spill there, violations of laws in other countries regarding factories that have living quarters on the third floor, materials on the second, and machinery on the first. These tend to burn down, killing all of the workers and are illegal even in most developing nations, but are still built so that Mall-Fart can sell 3 dollar beer hats.)
In short, I don’t want government ownership of most business (other than health care), but do want corporations regulated within an inch of their lives. And, I want real live humans to be as free as possible. I know this puts me on the political compass as somewhere left and more libertarian than Ghandi, Mandela, and the Dalai Lama. I’m OK with that.
#176, In short, I don’t want government ownership of most business (other than health care), but do want corporations regulated within an inch of their lives.
That’s an oxymoron. How do you control a company without taking it over? You either give them free rein to make money, hire people, and produce, or you don’t. Regulations prevent them from doing so. The government already has a 35% stake in every company in this country. How much more do you think it will take before it all craters in on itself?
Let’s bring this down to a lower level. Would you work for half of what you make now? Why not? There is no incentive to do so. If you remove the incentive (profit), you reduce productivity.
People wonder why so many companies are moving offshore. I can tell you why. Profit. It costs too much to produce things in this country. I get a dozen emails a month from companies in India and Pakistan offering their services to my company for pennies on what I pay my guys now — and I would take the offer if I thought they could do the work without our required one year training period. I wouldn’t have to pay insurance, SS taxes, income taxes, etc.
It has gotten too expensive to produce things in this country. If you increase the regulations on a company, all you will do it reduce their bottom line. This leaves three options — lay people off, find cheaper workers, or increase the sales price of the product. All of them hurt the average Joe on the street by forcing him to compensate. You aren’t affecting the company at all.
#177 – You are trying to convince the uneducated rabble that are ruled by emotion, not logic & reason. Otherwise, they’d already realize the following fact:
“Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains.”
And they would act accordingly…
#178, Sigh. I know. But I have to keep to trying.
To give up would be to invite Ragnarok.
#177 – LibertyLover,
#176, In short, I don’t want government ownership of most business (other than health care), but do want corporations regulated within an inch of their lives.
That’s an oxymoron. How do you control a company without taking it over?
It’s not an oxymoron at all. You write laws within which the corporation must operate. Those who violate the law will be shut down. I’m not sure why you see this as government ownership? You must operate within the laws of society or else be thrown in jail. Does that mean the government owns you? I certainly hope not. That would be slavery.
You either give them free rein to make money, hire people, and produce, or you don’t. Regulations prevent them from doing so.
Actually, I think we have just proven that regulations can keep business healthier. Have you looked out your window lately? This is what happens when corporations have truly free reign. They get very short sighted. They steal all of the money in the short term and then expect tax payers to bail them out. Were you not paying attention?
The government already has a 35% stake in every company in this country. How much more do you think it will take before it all craters in on itself?
Patently and completely false. They take a tax on the profits. They do not own the company, although maybe now that is changing, for the worse, IMHO. Taxes != ownership, see above. You too pay taxes. That means you are a slave, but your warped definition, right?
Let’s bring this down to a lower level. Would you work for half of what you make now? Why not? There is no incentive to do so. If you remove the incentive (profit), you reduce productivity.
High profits in the financial sector did nothing for productivity. Banking does not produce goods. And, those who took the highest salaries not only bankrupt their companies, they put the entire world economy at risk.
As for whether I would work for half my salary, perhaps. Let’s see what jobs are available. When all of them are at half my salary and I still need to work, the answer is an obvious yes. And, I would likely be just as conscientious knowing that I was still earning a competitive salary by the new standards. But, I think what we are really talking about here is income disparity. The U.S. income disparity is more in line with developing nations than with developed democratic ones.
People wonder why so many companies are moving offshore. I can tell you why. Profit. It costs too much to produce things in this country. I get a dozen emails a month from companies in India and Pakistan offering their services to my company for pennies on what I pay my guys now — and I would take the offer if I thought they could do the work without our required one year training period. I wouldn’t have to pay insurance, SS taxes, income taxes, etc.
But, remember, the big market is still here in the number one consumerist nation in the world. If companies want to sell their goods and services here, and they do, they will abide by the laws that we write. They get away with this now because we have no regulations on corporations and virtually no tariffs to speak of. These things can be changed. Francoise Mitterand once suggested a tariff based on the standard of living of the employees or nation in which the goods were produced. This would level the playing field significantly and would improve world standard of living dramatically.
It has gotten too expensive to produce things in this country. If you increase the regulations on a company, all you will do it reduce their bottom line. This leaves three options — lay people off, find cheaper workers, or increase the sales price of the product. All of them hurt the average Joe on the street by forcing him to compensate. You aren’t affecting the company at all.
Increasing the sale price does not hurt Joe. There is more to live than blind consumerism. One need not have 7 high def TVs to be happy.
70% of the U.S. GDP comes from consumerism. In the rest of the civilized world, the average is closer to 50%, and studies show people are happier.
http://tinyurl.com/anu6tz
Paddy-tr0ll,
You made it all the way through a 680 page legal doc but couldn’t read and respond to post #149?
Oh well. Stick to working on your poop-cycle stand.
#174, Loser,
Can Congress regulate minimum wages? No. Are they doing it? Yes. How are they doing it? With guns.
Somehow I am very confused about your answer. The last I heard, guns were not allowed in Congress, even for members. Only the Capitol police may carry guns.
What Congress has done is regulate commerce. As the Constitution allows them to do. The reasons behind most of the regulations are two fold.
First, for the protection of America. These include laws regarding pollution, financial relations and dealings, disseminating some classes of information, what products and product components may be made or sold in America, and product safety.
Secondly, they consider the actions of corporations in regards to employees. These include health and safety laws, discrimination protections, hours of work, workman’s comp and unemployment, and wages.
These laws were all passed into law. That makes them the “Law of the Land”. Since we are a nation of laws, we are all expected to abide by them. If you don’t abide by the rules society, through its Congress, have set, you pay the consequences. If you consider that being the force of a gun then you are not an American.
As I suggested before, if you don’t like America, try the Antarctic where there are fewer restrictions on what you have to pay your people.
#182 – Mr. Fusion,
I agree with everything you said and could add a litany of other such legislation including usury laws, the entire Food and Drug Administration that regularly prevents or attempts to prevent unsafe drugs like Vioxx (oh well), corn syrup with mercury in it (oops they don’t stop that), and many other things they do or should regulate.
Where I disagree with you is in sending morans to Antarctica to do business. That would be a violation of one of the truly great international treaties we have that states that Antarctica is to be used only for scientific purposes (or for penguins and seals and the like).
http://tinyurl.com/hv3m3
The last thing we need is a bunch of multi-national corporations mucking up the place even more than the antarctic bases do.
#180, Scott,
Actually, I think we have just proven that regulations can keep business healthier. Have you looked out your window lately? This is what happens when corporations have truly free reign. They get very short sighted. They steal all of the money in the short term and then expect tax payers to bail them out. Were you not paying attention?
I was paying LOTS of attention. I don’t blame the corporations, I blame the government. If a parent keeps bailing out their teenager when they screw up, the teenage never learns. Government should have told the corporations, “You made your bed. Sleep in it.” Now, corporations KNOW the government will not let them fail. This makes the problem worse and no amount of regulation is going to solve this.
And, I would likely be just as conscientious knowing that I was still earning a competitive salary by the new standards.
Let me rephrase. Would you work for half if your expenses didn’t drop to compensate? Would you reduce your standard of living out of altruism?
Re: Tariffs
You should look up Smoot-Hartley to see what tariffs do to economies.
Increasing the sale price does not hurt Joe. There is more to live than blind consumerism. One need not have 7 high def TVs to be happy.
Then why enforce a minimum wage? The whole purpose of a minimum wage is to ensure people can eat. If prices continue to rise, the minimum wage has to increase and you end up with an inflation feedback loop.