Obama caps executive pay tied to bailout money

#1
SavageOrangeJug

SavageOrangeJug

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#1
Watch the CEOs start walking away from bailouts.

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.
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Salary Cap
 
#3
#3
slippery slope.

what happens when Obama and friends think it's time that other industry's CEO pay adhere to their concept of "fairness" and "economic justice"?
 
#5
#5
I get it and am OK with this kind of thing for those taking TARP funds, but this absolutely is not the way to get the best and brightest to take those gigs. Chainsaw Al wouldn't have considered a job at $500k.
 
#6
#6
Agree they can set the rules for the money but be careful what you ask for. There were abuses but this kind of "feel good" policy might do more harm than good if they are serious about the government helping the financial sector.
 
#7
#7
MG1968 said:
what happens when Obama and friends think it's time that other industry's CEO pay adhere to their concept of "fairness" and "economic justice"?
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Who says that is going to happen? I have no problem with him doing this for those receiving TARP funds. If the executives don't like it they can go find a job elsewhere, at a company that actually performed.
 
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#8
rjd970 said:
Who says that is going to happen? I have no problem with him doing this for those receiving TARP funds. If the executives don't like it they can go find a job elsewhere, at a company that actually performed.
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but if obama actually wants this money paid back is letting their highest producers and best and brightest go elsewhere really in the taxpayers best interests?
 
#9
#9
This action is immensely popular, and for good reason. It makes no sense to allow tax dollars to be used to fund the compensation of someone whose company is failing.
 
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#10
rjd970 said:
Who says that is going to happen? I have no problem with him doing this for those receiving TARP funds. If the executives don't like it they can go find a job elsewhere, at a company that actually performed.
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I don't either. It's just that liberals in Washington have this policy of incrementalism, sort of like putting frogs in a pot and gradually turning up the heat.
 
#11
#11
droski said:
but if obama actually wants this money paid back is letting their highest producers and best and brightest go elsewhere really in the taxpayers best interests?
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If the executives and CEO's were reallythe best and brightest talent their company wouldn't have needed TARP funds in the first place.

If the top talent is bringing in $20 million, then take a chunk of that to pay his bonus. But not a single penny of TARP should go to bonuses. Period. This includes the obviously "mistreated and misunderstood" CEO's that were caught in the middle of this, and now don't get their country club membership. Cry me a river. All I hear is harping on self-responsibility except for when the shoe is on the other foot. The rules shouldn't change just because your company is "too big" or you need to "retain talent".

This whole thing is insane. These banks should have been allowed to fail, and instead, we are stuck with socializing their losses and handing out million dollar bonuses to those that made the irresponsible decisions in the first place. Aruguing the whole thing as talent retention is bogus IMO.
 
#12
#12
lawgator1 said:
This action is immensely popular, and for good reason. It makes no sense to allow tax dollars to be used to fund the compensation of someone whose company is failing.
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but the point is: how do you get the new guy to come in and salvage the operation?

You're going to get guys who see $500k as a good gig. The people who can actually help certainly don't see it that way.

Finally, free crap for everyone is immensely popular, but very stupid.
 
#14
#14
the majority of the ceo's who ran these companies into the ground have been fired as have most of hte top executives. now we are talking about their replacements. all this is is people pissed that other people are making a lot more money then they are. no more, no less. and if we let the banks fail you'd be fired by now too. all you are doing is making sure all the top talent goes to private equity or hedgefunds or set up their own shop. this is already happening btw.
 
#15
#15
rjd970 said:
If the executives and CEO's were reallythe best and brightest talent their company wouldn't have needed TARP funds in the first place.

If the top talent is bringing in $20 million, then take a chunk of that to pay his bonus. But not a single penny of TARP should go to bonuses. Period. This includes the obviously "mistreated and misunderstood" CEO's that were caught in the middle of this, and now don't get their country club membership. Cry me a river. All I hear is harping on self-responsibility except for when the shoe is on the other foot. The rules shouldn't change just because your company is "too big" or you need to "retain talent".

This whole thing is insane. These banks should have been allowed to fail, and instead, we are stuck with socializing their losses and handing out million dollar bonuses to those that made the irresponsible decisions in the first place. Aruguing the whole thing as talent retention is bogus IMO.
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It appears that you don't understand how those banks work and why they have the problems that they do.

Pretending that these issues are management failure is very shortsighted, especially if those managers are the ones who can generate enough income going forward to overcome the disaster.
 
#16
#16
BigPapaVol said:
but the point is: how do you get the new guy to come in and salvage the operation?

You're going to get guys who see $500k as a good gig. The people who can actually help certainly don't see it that way.

Finally, free crap for everyone is immensely popular, but very stupid.
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How many are bringing new guys in, and how many are still wanting to reward the existing guys for failure?

I think this is the whole problem with the government intervening in the first place. These banks should have been allowed to fail, restructure, and start over. Instead, we are sitting here arguing over the merits of rewarding failure with taxpayer money.
 
#17
#17
BigPapaVol said:
It appears that you don't understand how those banks work and why they have the problems that they do.

Pretending that these issues are management failure is very shortsighted, especially if those managers are the ones who can generate enough income going forward to overcome the disaster.
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exactly. you have divisions generating billions of free cash flow like smith barney and merrill at citi and boa. now you are basically going to let all their top brokers go elsewhere (because they aren't paying bonuses) because you want to punish guys in the investment banking department who actually caused the problem.
 
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rjd970 said:
How many are bringing new guys in, and how many are still wanting to reward the existing guys for failure?

I think this is the whole problem with the government intervening in the first place. These banks should have been allowed to fail, restructure, and start over. Instead, we are sitting here arguing over the merits of rewarding failure with taxpayer money.
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UHHH...if you look across the large banks who have received the majority of the TARP funds, they have all had a change at the top.

Allowing Citi and BoA to fail would have been a disastrous option. Finding a way to shore up the capital without actual cash would have been a dramatically better solution.
 
#19
#19
BigPapaVol said:
It appears that you don't understand how those banks work and why they have the problems that they do.

Pretending that these issues are management failure is very shortsighted, especially if those managers are the ones who can generate enough income going forward to overcome the disaster.
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So managers don't manage, and aren't responsible when the company fails? They get bonuses when the stock rises, no? If it is shortsighted to say the current issues are management failure, then can't we say it is shortsighted to say success is do to management talent?
 
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rjd970 said:
Instead, we are sitting here arguing over the merits of rewarding failure with taxpayer money.
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There are brokers who aren't getting bonuses who generate $20 mil in gross revenue easily for merrill. how is paying them rewarding failure? these guys can take their business ANYWHERE and do this.
 
#21
#21
rjd970 said:
How many are bringing new guys in, and how many are still wanting to reward the existing guys for failure?

I think this is the whole problem with the government intervening in the first place. These banks should have been allowed to fail, restructure, and start over. Instead, we are sitting here arguing over the merits of rewarding failure with taxpayer money.
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Holy cow.......

:blink:
 
#22
#22
rjd970 said:
So managers don't manage, and aren't responsible when the company fails? They get bonuses when the stock rises, no? If it is shortsighted to say the current issues are management failure, then can't we say it is shortsighted to say success is do to management talent?
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since they are currently unemployed i'd say they have been punished.
 
#23
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rjd970 said:
So managers don't manage, and aren't responsible when the company fails? They get bonuses when the stock rises, no? If it is shortsighted to say the current issues are management failure, then can't we say it is shortsighted to say success is do to management talent?
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broad RE market implosion of this nature hasn't happened in America before. Banks, almost to the one, are heavily invested in Real Property. When all of that devalued, it totally eroded their book equity and forced them into a horde of decisions to appease the FDIC.

I'd like to point fingers at someone here, but it was a myriad of factors that devalued the broader real estate market. None of these CEOs could have done anything to avoid the mess they're in, IMO.
 
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