Granted, I still think Barack “The Nazarine” Obama is a socialist twit. But he’s done something I actually like. He’s done something that might be subject to the Law of Unintended Consequences – but in a good way.
Consider the following article:
Obama caps executive pay tied to bailout money
WASHINGTON – President Barack Obama on Wednesday imposed $500,000 caps on senior executive pay for the most distressed financial institutions receiving federal bailout money, saying Americans are upset with “executives being rewarded for failure.”
Obama announced the dramatic new government intervention into corporate America at the White House, with Treasury Secretary Timothy Geithner at his side. The president said the executive-pay limits are a first step, to be followed by the unveiling next week of a sweeping new framework for spending what remains of the $700 billion financial industry bailout that Congress created last year.
The executive-pay move comes amid a national outcry over huge bonuses to executives heading companies seeking taxpayer dollars to remain afloat. The demand for limits was reinforced by revelations that Wall Street firms paid more than $18 billion in bonuses in 2008 even amid the economic downturn and the massive infusion of taxpayer dollars.
“This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success,” Obama said. “But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.”
The pay cap would apply to institutions that negotiate agreements with the Treasury Department for “exceptional assistance” in the future. The restriction would not apply to such firms as American International Group Inc., Bank of America Corp., and Citigroup Inc., that already have received such help.
“There is a deep sense across the country that those who were not … responsible for this crisis are bearing a greater burden than those who were,” Geithner said.
Firms that want to pay executives above the $500,000 threshold would have to use stock that could not be sold or liquidated until they pay back the government funds.
Generally healthy institutions would have more leeway. They also face the $500,000 limit if they’re getting government help, but the cap can be waived with full public disclosure and a nonbinding shareholder vote.
Obama said that massive severance packages for executives who leave failing firms are also going to be eliminated. “We’re taking the air out of golden parachutes,” he said.
Other new requirements on “exceptional assistance” will include:
_The expansion to 20, from five, the number of executives who would face reduced bonuses and incentives if they are found to have knowingly provided inaccurate information related to company financial statements or performance measurements.
_An increase in the ban on golden parachutes from a firm’s top five senior executives to its top 10. The next 25 would be prohibited from golden parachutes that exceed one year’s compensation.
_A requirement that boards of directors adopt policies on spending such as corporate jets, renovations and entertainment.
The administration also will propose long-term compensation restrictions even for companies that don’t receive government assistance, Obama said.
Those proposals include:
• Requiring top executives at financial institutions to hold stock for several years before they can cash out.
• Requiring nonbinding “say on pay” resolutions — that is, giving shareholders more say on executive compensation.
• A Treasury-sponsored conference on a long-term overhaul of executive compensation.
Top officials at companies that have received money from the government’s Troubled Asset Relief Program already face some compensation limits.
And compensation experts in the private sector have warned that such an intrusion into the internal decisions of financial institutions could discourage participation in the rescue program and slow down the financial sector’s recovery. They also argue that it could set a precedent for government regulation that undermines performance-based pay.
“It’s not a government takeover,” Obama stressed in an interview Tuesday with CNN. “Private enterprise will still be taking place. But people will be accountable and responsible.”
Still, some elected officials were pushing for the stricter caps.
Sen. Claire McCaskill, D-Mo., has proposed that no employee of an institution that receives money under the $700 billion federal bailout can receive more than $400,000 in total compensation until it pays the money back. Her figure is equivalent to the salary of the president of the United States.
Even some Republicans, angered by company decisions to pay bonuses and buy airplanes while receiving government help, have few qualms about restrictions.
“In ordinary situations where the taxpayers’ money is not involved, we shouldn’t set executive pay,” said Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee.
“But where you’ve got federal money involved, taxpayers’ money involved, TARP money involved, and the way they have spent it, with no accountability, is getting close to being criminal.”
Now for those of you see the “conservative” word in my title, you’re probably thinking that I must be out of my frickin’ mind. No lover of market forces would EVER buy into having the government mandating wage caps in ANY form.
However, if these caps are tied to bail-out money, you’ll have less people running to the federal government with their frickin’ hands out. So yeah, they can allocate $900 billion (or whatever that number is now) for “stimulus”, but the old adage stands: you can lead a horse to water, but you can’t make it drink. If CEOs and high-level executives see the government reaching in and snatching away their nice, fat salaries and stock options, they’ll be less likely to go down that road in the first place.
In short, this proclamation by the Anointed One, and his Matthew (remember, the apostle Matthew was a tax collector, and Geithner has both tax issues, and controls the IRS) may have the REVERSE effect than what is intended.
Make no mistake, Obama is a far, far, far Left liberal socialist, and wants to control as much of the US economy as he can. Taking the aforementioned actions will not further that aim. Remember, this all came about because the Anointed One got his panties in a bunch over the fact that some $18.4 billion dollars in bonuses were paid out last year to the financial sector – which was a 44% drop from the amount paid out in 2007. Not every financial company was or is in trouble. What Obama is really upset about is the fact that some people in the financial sector were ACTUALLY DOING WELL WITHOUT FEDERAL AID. The Anointed One can’t have THAT going on! Nope. That entire sector should be sitting in ashes, and loudly lamenting their demise!
But, in the final analysis I say: kudos to him! His idiocy may save the rest of us a lot of money!
You see, there is an upside to just about everything!
Since this post was written, both TCF Financial and SY Bancorp have returned their TARP funds. In addition to that, both Wells Fargo and US Bancorp have both stated outright that they never needed TARP funds in the first place. Furthermore, as of the day of this update, US Bancorp and Northern Trust are in the process of returning their funds.