Posted on 02/04/2009 11:23:21 AM PST by Oldeconomybuyer
The new pay cap for some of America’s top bankers is rooted in the short-term exigencies of a government bailout, but it also may signal a turning point that affects executive pay for years to come.
On Wednesday, President Obama put a $500,000 limit on annual pay of bank executives whose firms receive government assistance during the financial crisis.
But he also said the new guidelines are “only the beginning of a long-term effort” to realign the way business leaders are paid, beyond the banking industry and other firms getting bailouts.
The announcement comes at a time of public anger about the meltdown of a once-strong financial industry, and as the Obama administration is about to unveil additional bank-rescue plans that are likely to cost taxpayers more than the $700 billion already allocated by Congress.
It also comes as many investors and financial executives say that reformed pay practices need to be part of any long-term solution for the industry’s problems.
“There is a serious problem with compensation [in the financial sector],” says Charles Elson, director of the University of Delaware’s Center for Corporate Governance. Top bankers “convinced the world that they were the smartest human beings on the face of the earth…. It turns out they weren’t all that smart.”
The financial sector has moved to the forefront of the long-simmering national debate over executive compensation, largely because it is receiving the greatest government assistance. But what happens in that industry could set trends that will affect others.
[snip]
(Excerpt) Read more at features.csmonitor.com ...
“The Board of Directors sets compensation. If the major shareholders found it to be “excessive” then the Board would withhold approval.”
Provided you don’t take taxpayer’s money. When you beg for a handout, the rules change.
Bad precedent
He did hit a home run with that one, but they still have the loot?
Bad president, too.
Exactly - note to self: Don’t take TARP or any other federal assistance with strings, because the strings will f*** you up, sooner or later.
Good grief, a $500K on annual pay. No mention of stock options, etc. That will be easy to get around.
Not to worry, their pay will be going down anyway because the banks will fail.
I knew this was coming, and in a certain sense these guys brought it on themselves but still its a terrible precedent and deeply disturbing.
Really?
Who makes the rules?
Goldman announced that they’ll return their TARP money....others to follow. Good deal if you and your employer are cash rich....not so good if you want a loan.
Will this administration put a cap on salaries and expense accounts for the following executives:
UNION LEADERS who benefited from the auto bailout?
SCHOOL ADMINISTRATORS who stand to benefit from the “stimulus”?
LEGISLATORS who receive State bail out funds?
ENVIORNMENTALISTS who receive “stimulus” money to study the green toed frog?
How much is a good pitcher worth nowadays, a quarter back, a singer with a BIG nose? Makes ya feel real good, don’t it?
The same kind people who made rules that allow corporations. And according to the constitution they have the legal authority to change those rules.
You nailed it! This guy is dangerous. He's ringing in socialism in faster than I thought he would. Joe the Plumber had it 100% right.
“only the beginning of a long-term effort”
Remember Obama there is no ‘golden handcuffs’ to keep talented executives at these companies. Those preferred stocks the taxpayer now holds could end up junk.
He who has the gold, makes the rules.
And, he who has the guns, has all the gold he wants.
They’ve been demonizing corporate leaders for some time now. Now that demonization is allowing Obama the space to force his will on corporations.
Last year Paulson called in a number of large banks and forced them to take bail-out funds. In some instances those banks didn’t want them. They were given them anyway.
Now Obama comes along and makes the case that since the federal government has bailed entities out, it should have a say in their operations.
You’ve got to love the beauty of the way both parties job the system.
1. You pass bills that demand lending institutions make loans to people who can’t pay them back
2. The president signs on the dotted line (”Here, did you get your pen...)
3. The attorney general of the United States takes one corporation to court to enforce the new law, stating other heads will roll
4. Pretty much all lending institutions fall in line, providing these suicidal loans
5. Lending institutions recognize how bad the loans are, so they bundle the paper and sell it to others
6. Sooner or later, the ponzi scheme folds
7. The government expresses shock, “How could this happen? The executives of these entities are crooks!”
8. The government jumps in to bail out, taking trillions of taxpayer money, and the printing presses on full speed, to accomplish it
9. The government then states that it has been noble to bail out these lending institutions, then forces it’s will on them
10. When business can’t borrow money, the government blames them for mismanagement too
11. The government bails them out
12. Then the government talks about their mismanagement, as if any business could withstand 45% of their customers being too afraid to spend money
This is the government’s twelve step program. Note there wasn’t any criticism of who caused all this mess, namely the Congress and Presidency of the United States.
And the damage is global. The new power is invigorating...
And of course there’s always the fact that both political party’s members will blame the other for the mess.
And so it goes, those who ——ed us, walking off into the sunset, another job well done.
This is an absolute MUST to be hammered on.
And they haven't even started on socialized medicine yet....
“Really?
Who makes the rules?”
Right. And you’re going to cite that it’s not spelled out anywhere. And who makes the rules for corporations recieving taxpayer’s money?
When you stray from the rules, don’t expect just one rule to change.
Bump #21.
Everyone except Obama.
Wonderful move for conservatives.
Now, banks won’t take the bail out or there leaders will become huge advocates of change in leadership which is change we believe in.
So bank CEO’s now make less than a back-up shortstop. That seems fair.
Way less than a Hollywood bimbo.
They pretend to pay us, we pretend to work.......
“But he also said the new guidelines are “only the beginning of a long-term effort” to realign the way business leaders are paid, beyond the banking industry and other firms getting bailouts.”
So the Obama Administration is going to try to set pay in the future for PRIVATE COMPANIES IN THE US TOO..whether they get bail-out money or not?
Can we say UNCONSTITUTIONAL?
Most of these guys are getting calls from foreighn banks. Some of them will move.
The others will cook up a nice deferred compensation plan that will involve common stock and will require short term maximization of short term profit.
Obama is sinaling in this article that he is not going to stop with just firms that got bail-out money. He is going to try and regulate pay for industry and banks all over this country!
MAJOR ALARM BELLS HERE!!
” ... He is going to try and regulate pay for industry and banks all over this country!”
That’s unconstitutional, and if Obama somehow manages to do that, (I highly doubt he could), then that is when the constitution will become totally irrelevant.
Anything is possible, Americans are stupid.
Statists have been lusting after this for centuries. In the name of fairness, of course. And with just the right exemptions so that the elite statists can continue to become millionaires without actually having to have jobs or work.
The investment bank, which received a $10 billion capital injection from the U.S. Treasury's Troubled Asset Relief Program in October, is not happy with the strings that came attached to the money.
Compensation restrictions and certain capital requirements were part of the original injection, and extra limitations may be in store after U.S. President Barack Obama imposed tough new rules limiting pay for companies receiving government aid.
"We would like to get out from under that," Viniar said, adding that the bank aims to pay back the $10 billion this year.
This is the sentence that signals his marxist plans:
“On Wednesday, President Obama put a $500,000 limit on annual pay of bank executives whose firms receive government assistance during the financial crisis.
But he also said the new guidelines are “only the beginning of a long-term effort” to realign the way business leaders are paid, beyond the banking industry and other firms getting bailouts.”
Looks like he has a ‘long range’ plan to do just that.
Atlas Shrugged is now a reality show!
Excellent point. Maybe the Obama campaign can give that money back to the taxpayers/government. Oh wait. It took him half a billion dollars to WIN.
*** “We would like to get out from under that,” Viniar said, adding that the bank aims to pay back the $10 billion this year. ***
Incentivizing a borrower to pay back a loan.
Mr. Viniar must surely see this as a good thing? What banking professional wouldn’t see it as a good thing?
Yet, freepers are skeptical.
The government has no right to set pay levels. This is illegal and unconstitutional.
I’d like to end the era of excess, too. I think public “servants” like the Clintons, Daschle, and some day the Obamas, aren’t allowed to sell access and become millionaires when they leave office.
So......what is to stop these outfits from moving their corporate headquarters to the Caymens, Switzerland, etc????
The government has no right to lend money to private businesses. This is unconstitutional.
What in the Constitution gives Congress or the Presdient the authority to “bail out” banks in the first place?
(Plus, most corporations are created under State law are they not?)
If you are saying the “bailouts” shouldn’t be happneing in the first place then we are in agreement on that point.
Happiness is a warm gun.
This is all a diversion, with the Federal government kicking up dust in an effort to deflect or obscure the cause of this melt down, when in reality, the Federal Government is the most corrupt of them all, and is the cause of this epic disaster.
Interstate commerce clause!!! As to corporations. As to the tarp, bailout should have never taken place!
If that thing were a burro it would have died from exhaustion decades ago.
How about capping the fees that former members of Congress get as lobbying and consulting fees and speaking fees? How about capping the amount that a current member of Congress can take from their trust funds?
This proposal seems like a slippery slope. Suddenly anyone who has any affiliation with these banks or companies will be held to the same rules. How will Katie or Brian or any of the other “news” faces feel, if they are suddenly capped at five hundred thousand dollars?
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