Deliberately courting failure...Government to slash salaries....

[Headless Thompson Gunner]

Well, companies that take TARP money agreed to follow congressional rules about compensation, so that is their fault if it bites them in the butt.

Yes, and what laws have congress passed regarding employee compensation?

And if they have passed any such laws, by what legal authority?

[zahc]

Yes, and what laws have congress passed regarding employee compensation?

Federal minimum wage

And if they have passed any such laws, by what legal authority?

I would argue, no legal authority at all

[mellestad]

Yes, and what laws have congress passed regarding employee compensation?

And if they have passed any such laws, by what legal authority?

I imagine that by accepting TARP money they simply agree to follow the congressional rules.  No-one says they have to accept Federal money.  If an organization takes Federal grant money for whatever reason, they also agree to follow whatever rules the Fed wants them to.

I am just saying it isn't like this stuff is blind-siding these companies.  They knew what they were agreeing to when the asked for Federal help, and compensation oversight was certainly part of that.  It would be different if this was random, after the fact stuff for fully private companies, but it isn't.  TARP has requirements built into it, and so do the non-TARP bailout programs.

They have legal authority because these private enterprises voluntarily accepted Federal oversight when they asked for Federal money.  They entered a contract with the Fed, and part of that contract was giving up some corporate sovereignty.

Stupid?  Maybe...if their choice was bailout money or total failure it might have been tough to refuse.  Right or wrong?  It doesn't matter.  Legal?  Certainly, since the programs are all voluntary.  GM did not have to give the Fed a majority stock holding and agree to total oversight, they could have just let things collapse or sold out to some other company for pennies on the dollar.  Any of them could have.

(Edit: Legal as within commonly accepted Federal authority.  If you are arguing it is wrong because the government should not be able to do something like TARP in the first place, commerce clause abuse, etc. then fine, but that is another discussion.)

[makattak]

I imagine that by accepting TARP money they simply agree to follow the congressional rules.  No-one says they have to accept Federal money.  If an organization takes Federal grant money for whatever reason, they also agree to follow whatever rules the Fed wants them to.

They have legal authority because these private enterprises voluntarily accepted Federal oversight when they asked for Federal money.  They entered a contract with the Fed, and part of that contract was giving up some corporate sovereignty.

Really? Have a copy of that contract? Where's the clause dealing with executive compensation?

Democrats want to screw the executives over now (and, before this all happened). I understand that.

By what legal authority can they do that?

Can I, after seeing you get into an accident come and save you and then require you to hand over your house/car/life to me now that I've saved you?

[Scout26]

 No-one says they have to accept Federal money.  

Ummm, not quite. 

http://www.cnbc.com/id/30745687

"We don't believe it is tenable to opt out because doing so would leave you vulnerable and exposed. If a capital infusion is not appealing, you should be aware your regulator will require it in any circumstance," the document said, citing Paulson talking points.

Might want to read the entire article.

According to the documents released by Judicial Watch, Treasury Secretary Tim Geithner, FDIC Chair Sheila Bair and Fed Chairman Ben Bernanke co-hosted the October meeting with Paulson.

[mellestad]

Really? Have a copy of that contract? Where's the clause dealing with executive compensation?

Democrats want to screw the executives over now (and, before this all happened). I understand that.

By what legal authority can they do that?

Can I, after seeing you get into an accident come and save you and then require you to hand over your house/car/life to me now that I've saved you?

http://www.ustreas.gov/press/releases/reports/document5hp1207.pdf  <-- This is for TARP, specifically, and is just a FAQ, not the actual agreement they would sign...but it illustrates that there are written rules and guidelines.  It even has a specific part on executive compensation.

These programs are highly regulated, they are not just taking a number and getting an interest free loan.  It *is* a loan contract, essentially.

If I am about to have my house taken away, and you offer to give me a loan but I have to follow contractual guidelines, sure you can do that.

Ummm, not quite.  
http://www.cnbc.com/id/30745687
Might want to read the entire article.  

True, the banks probably would have been forced to take money before they failed because they could have had the regulators mandate levels of acceptable liquidity.

(Edit: Again, I am not arguing for it being 'right', I am just saying it is legal by current Federal standards.  You can still hate it.)

[Headless Thompson Gunner]

http://www.ustreas.gov/press/releases/reports/document5hp1207.pdf  <-- This is for TARP, specifically, and is just a FAQ, not the actual agreement they would sign...but it illustrates that there are written rules and guidelines.  It even has a specific part on executive compensation.

These programs are highly regulated, they are not just taking a number and getting an interest free loan.  It *is* a loan contract, essentially.

By what legal authority can the Treasury Secretary enter into such a contract? 

True, the banks probably would have been forced to take money before they failed because they could have had the regulators mandate levels of acceptable liquidity.

Banks that weren't at risk of failing were still forced to accept TARP money.  JP Morgan and Wells Fargo both come to mind.  And Bank America was arm twisted into spending billions to buy out Merrill, and the loss of those billions put them in a position to need TARP money.

[mellestad]

1. By what legal authority can the Treasury Secretary enter into such a contract? 

2. Banks that weren't at risk of failing were still forced to accept TARP money.  JP Morgan and Wells Fargo both come to mind.  And Bank America was arm twisted into spending billions to buy out Merrill, and the loss of those billions put them in a position to need TARP money.

1. No idea, but since the banks have not sued them (or some conservative organization has not sued them, it would be pretty easy to establish harm for a lawsuit if it had a legal avenue of attack) I imagine there is a basis in law.

2. The Fed threatened to change regulations to force acceptance of Federal money.  I am not arguing with your point.

[Headless Thompson Gunner]

1. No idea, but since the banks have not sued them (or some conservative organization has not sued them, it would be pretty easy to establish harm for a lawsuit if it had a legal avenue of attack) I imagine there is a basis in law.

2. The Fed threatened to change regulations to force acceptance of Federal money.  I am not arguing with your point.

It wasn't that FedGov threatened regulatory changes.  It was that the Treasury Secretary called all of the execs to a meeting and told them, literally, "you aren't leaving this room until you all sign."

Don't assume that because it hasn't been challenged in court it's therefore "unchallengable".  FedGov clearly has the clout to make the big banks and their execs come to heel.  Surely that clout allows them to, ah, dissuade the execs from suing.

Also, you're confusing The Fed (aka the Federal Reserve, our central bank) with the Federal Government (our government, the Congress, the Executive branch with its various departments like the Treasury Dept, and the courts).  The Fed is a vastly different beast from the Federal Government, with different powers, mandates, and accountabilities.

[mellestad]

1. It wasn't that FedGov threatened regulatory changes.  It was that the Treasury Secretary called all of the execs to a meeting and told them, literally, "you aren't leaving this room until you all sign."

2. Don't assume that because it hasn't been challenged in court it's therefore "unchallengable".  FedGov clearly has the clout to make the big banks and their execs come to heel.  Surely that clout allows them to, ah, dissuade the execs from suing.

3. Also, you're confusing The Fed (aka the Federal Reserve, our central bank) with the Federal Government (our government, the Congress, the Executive branch with its various departments like the Treasury Dept, and the courts).  The Fed is a vastly different beast from the Federal Government, with different powers, mandates, and accountabilities.

1. They threatened to force them through regulation, I read the papers.

2. Like I said, a conservative group could claim damages and sue if it were such an obvious case.  I can't argue specifics about it because I am not a scholar of financial law and regulation.

3. No, I am not.  When I say The Fed I mean the whole government, and the central bank.  For the sake of this discussion I have not felt the need to differentiate between the people controlling TARP, the people regulating banks, and the Executive branch since it is all so intertwined.