Obama moves to cap executive pay

[HankB]

. . . Obama announced that executives of finance firms taking government bailouts would have their annual salaries limited to 500,000 dollars, . . . Douglas McIntyre at the financial website 24/7 Wall Street said the limits could make it more difficult for troubled banks to retain their best executives. (If the execs are so good, why are the banks "troubled?")

"Wall Street may keep most of its bankers if they face pay cuts, but it is the top five or 10 percent who make these companies really profitable, and they will soon be on their way to greener pastures if this measure is enacted," McIntyre said.

Excuse me, but if the guys facing pay cuts make the companies really profitable . . . THEN WHY IN THE BLINKING BLUE BLAZES DO THEY NEED MY TAX DOLLARS FOR A BAILOUT?!?! There are quite a few banks and such that are NOT in financial trouble, so that tells me that gross MIS-management (along with meddling by .gov) is the cause of a lot of the problems.

I've no problem with paying execs who've done a GOOD job plenty of money, but, almost by definition, the clowns running firms that need a bailout have NOT done good jobs. And I'd rather not see taxpayer dollars going to pay for resort junkets, Gulfstreams, and multi-million dollar compensation packages for execs who've failed to perform.

So I guess I actually agree - in principle - with this Obama plan, so long as it remains narrowly focused on institutions receiving bailout money, and with the pay cap ending once the bailout money is paid back. With interest.

http://www.breitbart.com/article.php?id=CNG.971ca461247820662877d6aaecf06087.361&show_article=1

[lone_gunman]

I would agree with this plan as well.  I would prefer that they simply fire the current executives, and promote up the next level.  But that is not likely to happen, so a cap seems reasonable if they are going to take government hand outs.

This does illustrate the danger of taking money from the federal government.

[lupinus]

bad at it or not, I want the government no where NEAR wages for anyone but their own employees.

That is one slippery slope I want absolutely no part of.  Unfortunately, it will likely go with the territory of propping up failing banks rather then letting them fail and other, better run, companies step in to fill the void.  That's the real fault in this IMO.  Demand doesn't simply vanish because a business goes under, where there is demand it will be met.

And should be met by those who can efficiently do so, not those propped up.

[Racehorse]

I don't agree with government meddling in private businesses or with bailouts in any form.

I do think that most executives are grossly overpaid. They're usually no more competent/skilled than a lot of mid-level managers. The only reason most of them got to where they are is that they're very good at corporate politics or, in a lot of cases, lucky.

[lone_gunman]

bad at it or not, I want the government no where NEAR wages for anyone but their own employees.

I agree with you.  But, remember taking federal money is voluntary on the part of the failing banks. There is an easy way for companies not to have to have their executive wages limited:  Don't take government money.

[lupinus]

and banks that were doing fine and pressured by the government into taking bailout money?

[lone_gunman]

If they took the money, they need to have the cap.  A lot of banks did not take any money.

[lupinus]

so the answer to one bad policy is to further it with another even slipperier slope?

[Manedwolf]

I'm fine with this. If companies are successful, they can make as much money as they want for their execs.

If they are FAILING, and want MY MONEY, they get limits! I am not going to help reward failure with my money!

[lupinus]

I agree.

However, my problem is the slippery slope this opens up.

Today "We gave you money, top pay is XXX,XXX"

In a few months it's "We don't think you are doing so hot.  In order to help ensure you don't get into trouble we are capping your salary at XXX,XXX" to banks they gave no money to.

The answer to one asinine move and regulations is not further regulations that open up slippery slopes.

[Headless Thompson Gunner]

Why stop at executive salary decisions?  Why not let FedGov make ALL of the decisions on how corporations are run?

Heck, let's just do away with corporations entirely.  We'll let Nancy Pelosi and Harry Reid run all business enterprises.

[Racehorse]

Why stop at executive salary decisions?  Why not let FedGov make ALL of the decisions on how corporations are run?

Heck, let's just do away with corporations entirely.  We'll let Nancy Pelosi and Harry Reid run all business enterprises.

Yeah, then we'll lose $500 trillion in GDP per month.

[MicroBalrog]

So, if there are any actually talented executives in those companies, why should they stay there? Why wouldn't they move to companies that are not influenced by this bill?

[HankB]

Would talented executives have put the companies they run billions of dollars in the hole?

[Headless Thompson Gunner]

Would talented executives have put the companies they run billions of dollars in the hole?

That's entirely possible.

[charby]

I wonder if he will do the same when they send federal dollars down to the Universities.

[wquay]

and banks that were doing fine and pressured by the government into taking bailout money?

If you have evidence of a financially sound bank being pressured into taking bailout money, I'd like to see it.

[Waitone]

http://philanthropyjournal.blogspot.com/2008/10/despite-joining-bailout-bb-says-it.html
<snip>

Allison reportedly struggled over the decision, trying to reconcile his belief in free-enterprise principles with his sense of obligation to support the government’s financial recovery plan.

Denham declines to comment on details of Allison’s decision-making process but says BB&T was concerned the bailout would give ailing banks an unfair advantage over healthy banks like BB&T that have avoided financial trouble by refusing to make loans to unqualified borrowers.

“We have an obligation to remain in business and maintain our competitive advantage, and from a business perspective, it simply makes sense to take advantage of the same low-cost capital costs as our other competitors,” Denham says.

Banking industry insiders say the U.S. Treasury Department pressured healthy banks to participate in the bailout plan and has the power to punish banks that do not participate.

Denham says the bailout plan actually hurts healthy banks like BB&T by, for example, increasing the premiums it pays the Federal Deposit Insurance Corporation to protect depositors, and increasing the costs it likely will pay the Federal Reserve Bank for overnight borrowing.

“Now we are being punished by the bailout plan for having followed our values, and everyone else is being let off the hook,” he says. “The bailout plan is for the banks and investment banks that were poorly managed.”

BB&T has been able to weather the credit crisis through years of putting into practice the moral values Rand spelled out in her novel Atlas Shrugged, Denham says.

<snip>

Paulson and Bernake put the arm on lots of banks for the simple reason the public can not get the idea that only certain banks were irresponsible in lending practices and others such as BB&T were not.  Might cause a flow of deposits and other business from the big and irresponsible banks to the small and responsible banks.  Can't allow competition based on substance in banking.

[Nitrogen]

bad at it or not, I want the government no where NEAR wages for anyone but their own employees.

That is one slippery slope I want absolutely no part of.  Unfortunately, it will likely go with the territory of propping up failing banks rather then letting them fail and other, better run, companies step in to fill the void.  That's the real fault in this IMO.  Demand doesn't simply vanish because a business goes under, where there is demand it will be met.

And should be met by those who can efficiently do so, not those propped up.

While I agree, if the banks don't like it, there's a simple solution: don't take bailout money. 

[lone_gunman]

Waitone,  did BB&T take bailout money?  It looks like they signed up for but has it been received yet?

I don't think it is fair to cap the exec salaries after the fact.  If the money was originally promised no strings attached, then I think the govt should honor that, and not add conditions to the deal after it is done.

In priniciple though I think it is totally reasonable to cap salaries if a business is taking tax payer money.  But the business needs to know that up front.

[MicroBalrog]

Would talented executives have put the companies they run billions of dollars in the hole?

If a company doesn't have talented executives, how do you expect it to get out of the hole?

[RocketMan]

This is just the beginning, folks.  Obama will eventually go farther than this, capping executive salaries in other industries not receiving federal bailout monies.  A slippery slope, indeed.

[lone_gunman]

This is just the beginning, folks.  Obama will eventually go farther than this, capping executive salaries in other industries not receiving federal bailout monies.

Now how would he do that???

[Don't care]

.

[MicroBalrog]

Now how would he do that???

In the same way the government regulates practically every aspect of the economy?