GOP pleads for financial execs to keep compensation packages

Politics International Politics
1

Fighting for the little guy, as usual, the GOP has been working hard to make sure the $700 billion bail-out doesn’t include a provision that the money not be used to pay CEO’s’ huge “compensation packages”:

[quote]After 7 1/2 years of drift, President Bush has finally returned to his compassionate conservative roots with a heartfelt plea to Congress to help a needy and deserving group: those Wall Street CEOs who, for all their hard work, have been unable to lift themselves up by their wingtips.

Treasury Secretary Hank Paulson (R-Goldman Sachs) made the rounds of the talk shows on Sunday, pleading for financial executives to be allowed to keep their multimillion-dollar compensation packages even if their companies need to be rescued by the $700 billion federal bailout.

“If we design it so it’s punitive and so institutions aren’t going to participate, this won’t work the way we need it to work,” Paulson, whose net worth is said to be north of $600 million, told Chris Wallace on “Fox News Sunday.”

“To have this program work, we don’t want to make it punitive and make it difficult,” Paulson advised George Stephanopoulos on ABC’s “This Week.”

It was a message of mercy and humanity – who, after all, would be so cruel to deny executives their eight-figure bonuses merely because they drove their companies into insolvency? – and administration officials and Republican lawmakers joined the cause of the unappreciated CEOs. [/quote]

God Almighty. GOD Almighty.

2

Don’t worry Vay, they’ll keep them come Nov 4. McCain will be in and all will be safe on Wall Street…

3

I think CEO compensation is obscene. Especially think that giving CEO’s golden parachutes when they’ve fucked up a company is criminal. That being said, Paulsen’s reasoning is that if you limit compensation, you’ll get mediocre CEO’s - and you need the best to fix this SNAFU.

4

Oh, you mean like Warren Buffett, who has been Chairman and CEO of Berkshire Hathaway for over 40 years, earning astonishing average returns for his shareholders of over 20% per year over that entire period and who earns a whopping total compensation package of . . . . $100k per year. That’s right, $100k, total package.

Or Steve Jobs, who came back to run Apple in 1997 for a salary of $1 per year, with no stock or options, just because he cares about the company and wanted it to succeed.

Contrast those with the $161M Stanley O’neal just received for destroying Merrill Lynch. Or Tony Mozilo, who earned $200M for bringing down Countrywide. Obviously, they were concerned solely with getting rich.

Which type of CEO would you prefer?

5

Well, if these guys allowed this mess, what makes anyone think they’re the best? If they’re the best then screw the bail out because it’s pointless.

6

So … the banks have a choice of whether or not to be propped up by the government at taxpayer expense??? I thought they’re trying to avoid the end of the U.S. economy as we know it - and we’re letting them opt out??

I missed the part where averting complete failure on the part of private industry is the responsibility of the U.S. government, or subject to whim and argumentation in the face of what is apparently impending doom.

Either these organizations are on the verge of bankruptcy and require immediate government support to continue functioning, or they can be allowed to fail without the destruction and mayhem being foretold by the media & Bush administration.

This is also supposed to be a temporary fix. Not one dollar of taxpayer cash should go to pay any employee who already has more than $200,000 in the bank themselves. Even that’s pushing it. They’re talking about avoiding a 2nd Great Depression by dumping it on the backs of taxpayers making 1/10th or less of what these guys make. It’s the worst parts of Communism and Capitalism combined …

7

Is this commentary from the Peoples Daily, Workers of the World or the Democratic Socialists of America?

I don’t see any links to source.

8

I admit to getting more and more confuseder by the hour. Either this is something that must be done NOW, or it’s something that can be done after two weeks of political bickering. 700 billion is either the sum needed to prop things up, or it’s simply an obscene number designed to make the other players at the political poker table blink.

I think this is all really just international political posturing. If our economy is really this far in the tank, it must leave us vulnerable in all sorts of ways.

Where does the 700 billion come from anyway? I’m a taxpayer but I don’t have anywhere near seven dollars for this thing, much less a more obscean number.

9

The OP failed to include a link, but there’s lots of news on the subject. And, it is true that Republicans initially opposed exec pay caps as part of the bailout package, while the Dems insisted on it, but the Repubs are apparently now giving in.

[quote] Leading lawmakers and Bush administration officials were nearing agreement Wednesday on a plan to impose limits on executive compensation for firms helped by the financial relief program that Congress and the Bush administration are creating.

The administration originally opposed the move, but is agreeing in the face of growing sentiment among lawmakers in both parties who know it would be a public relations disaster if they gave financial firms an infusion of taxpayer dollars without curtailing executives’ paychecks. . .

Leading Democrats have insisted that compensation caps would have to be part of any bailout. . .

As recently as Tuesday, administration officials were rebuffing congressional efforts to include salary caps in a bailout bill. Testifying before the Senate Committee on Banking, Housing and Urban Affairs on Tuesday, Paulson said that while he shared lawmakers’ “frustrations” with extravagant executive compensation, it would be difficult to include salary limits in the legislation Congress is considering.

Administration officials also had signaled their worry that the pay caps for executives heading firms helped by the relief program might dissuade some companies that need aid from seeking it.

But on Wednesday, Paulson shifted course. In a hearing of the House Financial Services Committee, Paulson said the American people were right to be “angry” about what CEOs are earning.

“We must find a way to address this in the legislation without undermining the effectiveness of the program,” Paulson told the panel[/quote]
chicagotribune.com/business/ … 6962.story

[quote]The stratospheric pay packages of Wall Street executives have become a lightning rod issue as Congress shapes a $700 billion bailout for financial firms. Proposals circulating on Capitol Hill vary, but they all would impose some limits or approval authority on salaries of executives whose firms seek help.

The moves in Washington mirror the popular outcry — in constituent e-mail messages and postings in the blogosphere — over the prospect of Wall Street’s tarnished titans walking away with tens of millions of dollars a year while taxpayers pick up the bill.

But Wall Street, its lobbyists and trade groups are waging a feverish lobbying campaign to try to fight compensation curbs. [/quote]
nytimes.com/2008/09/24/busin … ay.html?em

10

Its a complicated area with this particular story.
Fannie Mae and Freddie Mac are ‘private’ with Congressional oversight.
This makes it an especially tricky area for oversight and voiding of these obscene entitlements.

As to governmental interference or oversight into private corporation pay packages of company executives…forget it.

So we are speaking of two (2) separate issues here. With a strange 3rd element thrown in just to muddle the mix.

11

Forget it? WRONG. It’s going to happen. It’s about to happen.

You’re right that it seems strange for the govt to cap pay by private companies. But we’re talking about companies that have lost tens of billions of dollars, are on the verge of bankruptcy, and are about to receive massive bailouts using taxpayer money (ie., your money and mine). They can take it or leave it. If they want the bailout they’ll have to accept the terms that come with it.

12

I personally think that if a corporation suffers such immense losses as we’re seeing that all performance bonuses and perk packages should be declared null & void. Possibly legal action against the top execs for deriliction of responsibilities might be in order…heavy financial penalties incurred.
Now try getting the lawyers setting around the table to sign-off on that one…LOL. They’d rather eat their young with fava beans…oh wait, they already do that…but you understand what I mean.

Unless the legal climate makes a radical, as in major - not left-wing radical, change this will only ensure that minute codicils and addendums are added to exec pay plans to make certain that such contingencies are covered.
But what this can mean, is that new blood and new ideas can be hopefully given a turn at the reins. I like that idea.

Profit is good, but if must be a part of the continuing welfare of the company making the profits. The slash & burn take-over mentality of the '80s combined with the plunder & run of the '90s has set the stage for what we have now.

And that is not a good thing. Analyze, adapt and overcome.

13

Two years ago when I was a food stamp worker, the income limit for a single parent with one child was $1200 per month–give or take a couple of 10s. There are also asset limits and large amounts of paperwork and collateral statements are required to prove your claims. Why should a big shot CEO be any different? If you want the taxpayer handout, you should not qualify for the assistance if your CEO is making 200 times or more than the guy processing the bailout check.

14

I think that’s the main point to consider on the other side of this thing, MT – that they can take it or leave it.

CEO making $100m a year is given a choice:

Option 1: Take the government’s bailout offer, accept $99m pay cut, and give up your $150m golden parachute you’re due to get when you leave your job. Sacrifice potentially hundreds of millions of dollars that you could otherwise greedily grab for yourself in order to do the right thing for the employees and the shareholders.

Option 2: Tell the Congress “thanks but no thanks on that Bailout Package to Nowhere”, take your chances, keep your $100m compensation package (for however long you can continue to fudge books to keep the bank afloat) and jump ship with your $150m parachute as soon as you can see the bank is about to go under.

I think Paulson’s concern may be that not all Wall Street CEOs would be altruistic and self-sacrificing enough to choose Option 1, MT. That’s the concern about the compensation caps.

15

Looks like the point is moot. The little guy has won one for a change:

[quote]Admin Agrees to Limit Bailout CEO Bonuses

Bush is set to hold meetings today with top congressional leaders, as well as presidential candidates John McCain and Barack Obama. On Wednesday, Treasury Secretary Henry Paulson said the administration had agreed to a Democratic proposal to limit executive compensation at government-rescued firms. Paulson announced the concession during a second consecutive day of congressional testimony. Federal Reserve Chair Ben Bernanke told lawmakers the bailout would help stave off economic chaos.[/quote]

democracynow.org/2008/9/25/headlines#2

Speaking of CEO “golden parachutes”, here’s an utterly painful scene of McCain defending a $40-million-dollar payout for his campaign aid:

[quote]Senator John McCain has been campaigning to stop “multi-million dollar payouts to CEOs who have broken the public trust.” But on Monday, when asked on The Today Show about the compensation package that his senior economic adviser Carly Fiorina received after she was fired from Hewlett-Packard, McCain took a different stand.

Meredith Vieira, The Today Show: “But she left with a—I think it was a $45 million golden parachute, while 20,000 of her employees were laid off. She is an example of exactly the kind of person you say is at the root of the problem.”

McCain: “I don’t think so.”

Vieira: “The CEO—how can you say that?”

McCain: “Because I think she did a good job as CEO in many respects. I don’t know the details of her compensation package, but she’s one of many advisers that I have.”

Vieira: “But she did get a $45 million golden parachute after being fired, while 20,000 of her employees were laid off.”

McCain: “I have many of the people, and I do not know the details of what happened.”[/quote]