Question…
Much has been made of Obama’s proposal to cap executive pay. So here’s my question: Do taxpayers have a right to say how their money is spent?
I keep thinking that if you came to me asking to borrow money because you couldn’t pay your mortgage, and I lend you the money, and then you spend that money on a new Lexus… Well, not only would I feel like a fool, but I’d be damned if you would ever see another dime from me.
And, yeah, I’m thinking it’s that simple.
Tags: Bailouts, The Economy
It should be that simple but there’s a line of thinking by many that government can’t manage banks better than bankers can. I’m not sure with the current bank failures that this is true. Bankers have been abject failures at banking.
If he can set exec pay, then why can’t we set legislative pay? for the work that patty blevins does i figure she should get about minimum wage.
Simple answer: don’t cap the pay.
Simply reduce the bail-out funds on a 5 to 1 basis for every dollar paid to any corporate officer over whatever figure you want. Thus, if Bank of America really wants to keep paying its CEO nearly $25 million, it can do so–as long as it hands back $125 million in taxpayer funds.
That works for me as well, Steve. If they don’t want taxpayers having a say, then don’t take the money.
Steve,
No – you’re giving an incentive for the CEO to act in his/her own interest, rather than the company’s. Fix the compensation until the banks are making money again. Or compensate the CEOs by giving them the “troubled” assets that they loved so much. Or give bonuses based on performance against benchmarks.
We should nationalize the banks temporarily, work them through a bankruptcy like process, and then re-privatize them under tighter regulations.
If you act like a Welfare Queen, you should be treated like a Welfare Queen.
Making bank execs currently on the government dole live by the kind of restrictions that the government imposes on poor people getting government help works right down the line for me.
And, frankly, I think that letting these folks know that business as usual on the government dole is Not Going to Happen is a pretty decent deterrent. Some are going to work harder at getting their houses in order and some may choose BK, but whittling out the weak banks at this point seems reasonable.
Simple answer: don’t cap the pay.
They always have the option of turning down the government funds and paying themselves as much as they want.
did any catch the weasel word?
wasn’t it something like “exceptional” I took it too me this was complete bullshit and no ceo will take a pay cut because to define the circumstance will take an exceedingly disgusting amout of money…
this is bullshit and I call it
It would be advisable to check on tax implications of these proposals.
Ask Tom Daschle or the new Treasury Secretary?
“Or compensate the CEOs by giving them the “troubled” assets that they loved so much.”
Ooh, now that’s clever! Stock options for the First National Bank of TARP – portfolio to be managed by Bernie Madoff.
Credit Suisse gave bonuses of “troubled assets” this year. The thinking being giving these guys and gals alot of incentive to work towards getting those assets out of the “troubled” class.
I like #7. Give the CEO’s the choice and see where their loyalty is. Themselves or the bank.
For the record: I have always said that if a corporation accepts government money it gets government regulation and rules in the bargain. I’ve no problem with that, as I don’t think the corporations ought to be getting government money.
A1: other than countries with assets the size of a mid-size US corporation (Sweden) this bank nationalization idea that folks keeps floating is something that has absolutely no data to back it up at this level of money (even leaving ideological considerations aside)….
More to the point: where exactly are you going to find the magic “public servants” with the expertise at 500K annually to run these banks? Oh, yeah, that’s right–you’ll either have to take them from the fiscally prudent govt (laugh one) or the banking industry itself (laugh two), or you’ll have to toss people in there with absolutely no experience in the industry whatever (laughs three through ten).
donviti is right: the provision has an exception for anybody who curries sufficient favor with the administration, so what good is it anyway?
Go down this road and we’ll all end up regreting it as much or more than we already do…..
The official, speaking on the condition of anonymity because the plan had not yet been made public, said the most restrictive limits would apply only to struggling large firms that receive “exceptional assistance” in the future. Healthy banks that receive government infusions of capital would have more leeway.
let’s just see who doesn’t qualify for “exceptional”
Yes, I think there a some weasel words in there and we need to make sure the Congress and the president understand that we want real restrictions on pay.
“More to the point: where exactly are you going to find the magic “public servants” with the expertise at 500K annually to run these banks?”
Steve, although I tend to agree with your point, I would just ask this question:
Considering the mess of things that the people that supposedly had “the expertise” running things made, how can it get worse? 🙂 I know it could get worse, but I’d bet that either my 4 year old daughter or my 23 year old autistic son couldn’t have done any worse than what we presently have.
And one more point. I WILL NEVER begrudge a baseball players salary again. At least they don’t get bonuses for non-performance. The worst free agent signing has done better than these banks have done recently. We don’t want to pay the BEST right handed hitter the game has ever seen a megabucks salary, but we’ll give even more to the banking executive that shot his company down the tube.
Steve,
The people at the top of the banks now aren’t the only ones qualified to run them (if they ever were). There are people lower down the management chain that would be perfectly capable of running them for $500k/year – particularly with incentives for when the banks are re-privatized. In fact, I would argue that now is time to get younger managers in charge.
Since you think none of the current leaders will take these jobs, where do you think that all the experienced senior level managers that turn their noses up at $500k/year jobs in nationalized banks are going to go to get hired?
And yes, Manny Ramirez, flake that he is, IS THE GREATEST RIGHT HANDED HITTER EVER!!
steve,
you and protack should take each other out to dinner. You are made for each other.
dv
I’m impressed. An insult and you took the time to spell all the words and get the punctuation right. Missed those beginning capitals for me and for Protack, but still….
Such effort. I’m touched.
All I need to make my day complete is for jason to call me a Republican.
Pleeeeeeez, jason….
go write a 1000 word essay on your own blog why you don’t think the banks should be bailed out, then, when they are, you don’t think that the government should be able to limit their pay.
and that wasn’t an insult, it was an observation. You and Protack are eerily similar
Steve,
You may be in luck. I don’t think Jason has demanded apologies for “the past eight years” from Libertarians… yet.
May I just say that I am thrilled we, as a country, are even having this conversation; that this option is even on the table!
I am a firm believer of the concept of “You want my money, you play by my rules” all the way down the line. It’s the same for unfunded mandates to the states. If you don’t do X, you don’t get Y. Why should bailouts, that we shouldn’t even be paying out in the first place, be any different?
Honestly, if you don’t want the government to get involved in your budget, don’t ask the government to get involved in your budget.
Be careful what you ask for, because you might just get it.
Noone gets free money without strings attached. Borrowing money from the government is turning out to be like asking for a loan from the mob. You might get away scott free now, but down the line there will be favors to return, and legs broken if payments are late.
CEO pay seems to be a broken leg.
shut up pandora 😉
CEO pay seems to be a broken leg.
A broken leg? More like a decent haircut.
And worst of all, now they have to start paying tax on their free car service.
Make me, Nemski! 🙂
Just sayin’ this looks like change… Maybe not perfect change, but change nonetheless.
More to the point: where exactly are you going to find the magic “public servants” with the expertise at 500K annually to run these banks?
This is something of a red herring, since “nationalization” has many faces — the worst of which is actually running a bank until it is healthy enough to sell it.
These things need to happen for the banks to get healthy:
Existing equity has to be wiped out
Assets need to be written down
Replace executive management
At core, this is what Sheila Bair at the FDIC does when she takes an insolvent bank back. If there is not a ready buyer, they are operating that bank for some very temporary period until they can sell off the portions of the bank that investors can be induced to take. The smarter nationalization proposals that I have seen call for the Government to get a massive audit of the books, so that every can finally see if the bank is insolvent or not. If it is insolvent, then unwind it FDIC style. If it is solvent, then make the assessments of any additional (loaned) capitalization requirements.
I really like the idea of limiting CEO pay. Like A1 said above, I would like to see new management, hopefully younger people who haven’t been corrupted by the existing system yet. With good oversight, hopefully these new managers can avoid really costly mistakes that their overpaid predecessors made. I also like the idea that their could be shareholder revolts if a CEO of an insolvent bank won’t take a government bailout because he wants to protect his personal income. Maybe it will lead to a little sanity in the compensation committees.
I believe that the Government should give these CEO’s compensation for the job they are doing . AND THAT SHOULD BE LONG PRISON TERMS.
Ya know, Citigroup is still on the hook for naming rights on the new Mets Stadium. Does that mean we can limit players’ salaries to 500 grand too? I’m just sayin’, Carlos Beltran got 18 million last year, Delgado got 16 million, etc.
Now that’s a plan I bet Phillies Phans can get behind.
Look the CEO’s should follow the Golden Rule and that is He who has the Gold makes the rules. In this case thats Obama so all you Repuks like Mike P should suck it up.