Cut exec pay or government stay away?
Many readers of this blog have expressed outrage at the excesses of executive compensation.
But many readers also have expressed dismay over the amount of government intervention in the economy.
Now, those two views appear to be at odds with the latest news development.
The Obama administration will order the companies that received the most taxpayer bailout money to slash compensation to their highest-paid employees, the New York Times is reporting.
The plan, for the 25 top earners at seven companies that received exceptional help, will on average cut total compensation this year by about 50 percent, the Times said.
The companies are Citigroup, Bank of America, American International Group, General Motors, Chrysler and the financing arms of the two automakers.
What do you think of the government’s action?
Is it at odds with too much intervention? Or are these seven cases worthy of an exception?
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82 comments Add your comment
Rick Cole
October 22nd, 2009
6:25 am
If you lay down with dogs you will get fleas. These banks took government money so the government can dictate terms. However, it should be a warning to all of us. Watching the government exercising control so abruptly and obviously politically give us all a glimpse of how they manage everything, including our health care. Do you want your politically incorrect disease or condition demonized, debated and defunded? What if you have AIDS? What if you have mental illness? Are obese? Or enjoy activities deemed unsafe? Beware of government intervention.
DCB
October 22nd, 2009
6:29 am
As a rule I’m not for government intervention in matters of controlling the free enterprise system. And that included the bailouts in the first place. But these are extreme times and the credibility of the government’s efforts to stabalize the country’s financial well-being are at stake. What I would hope will happen is that there will be some objective way of arriving at what the compensation of the top executives will be – such as correlating the amount of future pay to the performance of the company. This should also be true for the board member’s compensation for they are the ones responsible for the ridiculous compensation packages offered their executives in the first place.
Charlie
October 22nd, 2009
6:33 am
If, at the time the money was given, there were “no strings attached” then it is none of the governments damn business what they get paid. I might think that the pay is excessive but private companies are free to do what they think is best for their employees. Can you say…..SOCIALISM? We certainly don’t want that, do we? Oh, sorry…the Democrats DO want that!
Heather
October 22nd, 2009
6:56 am
I suppose its okay if this were China, Venezuela, Cuba, or any other socialist state.
Shadowman9
October 22nd, 2009
7:00 am
It’s taxpayer money bailing them out. It’s not crazy or “pinko” to have strings attached. Every loan you’ve ever taken had terms and conditions to insure you would pay back the money and limit the risk to the loaner. You also have terms limiting how you can spend money (ie – you can’t take out a car loan to remodel your house). Controls over how loan money is spent is not a new concept.
If you manage a company into the ground what the hell should you be rewarded that much for anyway? You pay talent for performance, and these CEOs are failures.
Nobody is coming after your paycheck, so drop the talking points.
Decatur Bubber
October 22nd, 2009
7:31 am
You bet this is government’s role! These birds took the American people down a path toward financial ruin with their many bizarre investment schemes, nearly destroyed our nation’s and the world’s economy, and wiped out a lot of individuals’ private investments. All this so they could pile their own material wealth higher and deeper. Then, when the house of cards collapsed, they turned to us lil’ ole taxpayers to bail them out, then they took a big hunk of that taxpayer-provided bail-out money to pay themselves outrageous bonuses! The gall and arrogance of this is beyond belief. For you to even have to ask the question “Is this government’s role” is astounding!
GBC
October 22nd, 2009
7:32 am
What are we to do? Its obvious that they are not policing themselves or have no intentions to do so. I have always felt as Americans we are our worst enemy. Thats why no other nations are threatening the USA. Because at our current pace, we will destroy ourselves. Our self hate within most Americans will fuel our divide & destruction. I feel that health care and education should be our primary focus. If all citizens could get a education beyond high school, I believe the USA would have a more common goal. The reason we are so at odds with each other is because the basic necessities are not balance. If every citizen (rich or poor) had the same healthcare service, then what would be the argument. If every child had a guarantee chance for a college education. What would be the argument. If all those basic needs are meet without any compromises, then I am all for true Capitalism. Our Politicians are too corrupt to allow any chance for reform. I was raised Democrat however, I share a lot of Rep views.
CurtisM
October 22nd, 2009
7:39 am
When the very idea of socialism is brought up concerning this question of government intervention, we already know the response with their typical tired dogma. Give it a rest will you? It’s old, it’s incorrect and it has absolutely nothing to do with socialism. Please get your facts straight, read about socialism, and then remember that it is your money, my money and our neighbor’s money that is helping prop up the banks and the financial industry. Even now as gas prices begin to rise, who is the culprit? Is it more socialism, is it Chavez, is it the Arabs, is it Obama? NO. It’s none of these. It is our friends on Wall Street! See how much a barrel of oil costs to manufacture, no wars to speak of, the usual unrest in the mid-east, yet somehow the barrel of oil keeps going up. It’s not vacation time, it’s not an oil baron president. So if you believe that banks and big business have your best interest at heart, think again.
Without the government stepping in (again and again), we will keep on losing. So many eyes and nay-sayers watching the government, who watches big-business as they stomp all over the American dream? Yes, our government.
Careful how you use the word socialism, it almost rhymes with big business.
Shadowman9… I agree.
Chris Pettigrew
October 22nd, 2009
7:43 am
Of course it is fine for the government to control everything. That makes life so much easier for me. I can my food stamp card, my check every month for setting on my duff and soon I will get my “free” health care. This will complete the circle, I can drive my government made car down to my government ran bank to cash my government check on the way to the government ran clinic. Yea! Yea! I have always wanted to live in North Korea and now I can without having to travel there. Go Government!
Joe McLain
October 22nd, 2009
7:50 am
NO, its not the governments role to cap salaries/bonuses/options. If a bank took money, the terms should have been given up front and I guarantee, they didn’t mention anything about salary caps. We need to stop being so small minded about this and start thinking that if the government can do this to an executive, who will be next?
War Jacket
October 22nd, 2009
7:56 am
If you belly up to the government trough for survival, you deserve what you get. These firms would have gone bust without taxpayer money, i.e. compensation would have gone to zero. If these executives don’t like the deserved cut in pay, then move on!!! Personally I am sick of witnessing the “private profit, social loss” paradigm in play now. Just look at Goldman, being able to borrow money at 0% interest from the Fed and then use it to back securitized life insurance instruments and other unregulated derivatives. They are printing profits, all enabled by easy access to taxpayer backed loans. It’s a joke and the joke is on the poor working stiffs that believe the “socialism” rants being concocted by the very same politicians they support. Wake up America!!!
AnnieR
October 22nd, 2009
7:59 am
I agree with Shadowman9…they took the money (our money as taxpayers) to bail out companies they mismanaged to the point where a bailout was needed. Why shouldn’t they have conditions attached, the management of those companies certainly don’t deserve any handsome rewards…some don’t deserve a reward at all and should probably be prosecuted!
But that is just THOSE companies, there are lots of other public and private companies that haven’t taken bailout money that are free to set the CEO compensation to whatever they want with no government intervention so what is all the big fuss about?
Dan
October 22nd, 2009
8:06 am
It is absolutely absurd, the lack of any economic insight on this blog is a great example of the kind of thinking that caused this mess. But I digress, these “bailouts” are loans, and anyone who bank or government who provides a loan should be able to monitor the procedings subsequent to the loan to ensure proper management.; A sweeping statement saying the top twenty five execs pay will be slashed is the height of stupidity and quite frankly a fine way to ensure the furthere demise of those companies meaning the loans won’t be repaid. But then that is probably the whole point
IC Atlanta
October 22nd, 2009
8:09 am
No it isn’t the government’s role to control executive pay within private organizations. If there were no strings attached to the loans or investment then certainly the government should not step in after the fact and require it. Also limiting these top executives to essentially mid-level manager pay is bound to doom these companies. Anyone worth their salt at this level can make much more money.
Wonder what the Mao Obama Czars make? I notice that Mao Obama now wants to step in and put money in smaller banks. Another step to control. Mark my words the Chairman will try to nationalize banks in the near future.
travelerguy
October 22nd, 2009
8:13 am
I find it odd when people complain that if there are salary caps, these talented, smart people will “brain drain” to other companies. Maybe it would be better for taxpayers’ money if they did leave — these are the same people that couldn’t accurately assess risk. And if they all do drain to other companies, what company will hire them? They walk into an interview somewhere and have to explain that they did such a horrible job at their last company, the company had to take government loans? Yeah, real talent there!
travelerguy
October 22nd, 2009
8:17 am
“A sweeping statement saying the top twenty five execs pay will be slashed is the height of stupidity and quite frankly a fine way to ensure the furthere demise of those companies meaning the loans won’t be repaid.”
@Dan: that’s cash salaries. They can get a TON of stocks, that they can’t cash in for 5 years … talk about MAJOR incentives to turn around a company, both for the tax payers and for their own wallets.
knox
October 22nd, 2009
8:32 am
HELLO PEOPLE: IF YOU ARE SO CONCERNED YOU SHOULD BE WRITING YOUR SENATORS AND CONGRESSMEN INSTEAD OF TO THE AJC. http://www.govtrack.us/congress/findyourreps.xpd
Noneya
October 22nd, 2009
8:34 am
OK….I just want to make sure I have this right…..we have some very struggling companies so we want to cut executive pay for most critical executives by 90%. I’m sure that will result in quite a few of them heading to those nice Japanese, Korean, and Chinese institutions without similar constraints leaving only those incompetent enough to get jobs elsewhere running our most critical financial institutions. Seems like a good recipe for a financial disaster. But I guess Obama knows what he’s doing…what with all that community organizing experience he has.
Noneya
October 22nd, 2009
8:35 am
Should have been incompetent enough to NOT get jobs above……incompetent typing here.
travelerguy
October 22nd, 2009
8:41 am
“I’m sure that will result in quite a few of them heading to those nice Japanese, Korean, and Chinese institutions without similar constraints leaving only those incompetent enough to get jobs elsewhere running our most critical financial institutions.”
@Noneya: and what, they’re going to go overseas and proudly tell the boards of those companies, “Yes, I completely destroyed my previous company to the point we needed government intervention. Yes, I was completely incompetent when it came to analyzing risk. But I promise I’m a good CEO, PROMISE! Please, PLEASE, give me a job!”
Dan
October 22nd, 2009
8:44 am
Sorry traveler guy they are talking about total compensation, and lets not forget much of their “failure at assessing risk” was due to government pressures to lower the standards in the name of political correctness. By far the biggest purveyors of risky loans were fanny and freddie, the quasi government entities. So why do we want the government to run anything else? (Much like medicaid being the worst insurer)
travelerguy
October 22nd, 2009
8:47 am
“they are talking about total compensation”
Dan, no, it’s salaries, not total compensation. The execs can be given millions of shares of stock — they just can’t cash them in for 5 years, providing them the incentive to work really well to raise share prices so they’ll be even more rich. Win for the execs, win for the other share holders.
Reality
October 22nd, 2009
8:50 am
Who would you rather be robbed by, big government or big business? When the republicans are in control big business robs us. When the democrats are in control big government robs us. Take your pick.
Nash TENN
October 22nd, 2009
9:08 am
They took the money to survive. The had to in order to stay afloat. If they did not take the money then they file bankruptcy and everyone gets nothing. Corporate executives should have stepped up and volunteered to cut their pay since earnings are down and they are reporting huge losses. They are still being paid millions of dollars so what’s wrong with taking a haircut when things are tight. If things are tight at home you make adjustments to keep your home, then make adjustments to keep your job. Stop the greed until you are able to get back to a sense of profitability. Some of these comments are just crazy and to hear the ignorance of you southern FOOLS just confirms that all of you should be buried alive!
real fan
October 22nd, 2009
9:16 am
What how fast these execs leave. Next step apointing execs to run the companies .Then Government takeover is complete . Hello to the motherland.
andy
October 22nd, 2009
9:32 am
Our country is turning more and more into a socialist regime than a capitalist republic. The government has too much on its plate right now. If we are not careful this country could fall into a larger hole than it is in now. With record spending, terrorism, and even the right to free speech being debated. If we keep spending this money we will pay for it later. Let the businesses and banks fail, then some one else will come in and buy them and turn them around, thats capitalism. As far as free speech, if a news channel right to broadcast its views is taken away becuase they are conservative, then we are headed down a path of dictatorship and not democracy.
theboogins
October 22nd, 2009
9:34 am
I love how the morons on the left like to get into someone else’s pocket. Let em’ try to control YOUR pay, I guess that would be different eh? It’s as if you think that since some mgmt guy gets a pay cut that your pay is going to go up. You wish, not gonna happen.
The Govt should have let these companies fail and let the market take care of how much they make. As much as I despise the big banks (Bank of Amigo the most) for their hideous lending practices, being run by Big Bro has to be far worse in the long run. The very notion that some govt flunky has the authority to determine anybody’s compensation is chilling.
Then again, maybe that same hack could look at congressional pay with an eye to curbing the excesses there.
Terry
October 22nd, 2009
9:38 am
1. US Government spends billions to bail out companies
2. Companies need to use the bailout money to turn their business around, for all shareholders including taxpayers.
3. US Government slashes pay of highest compensated employees, likely the most valuable employees in the company
4. Competitors to the bailed out companies seize the opportunity to steal those most valuable employees, whose compensation was just slashed.
5. Bailed out companies lose top talent, their competitors pick up the talent.
6. Success of bailout is handicapped. All shareholders end up losing.
Penny wise, pound foolish.
TU87
October 22nd, 2009
9:40 am
I hate government involvement in private corporations – let the free market decide success or failure. But if these companies are going to take the money then they are going to have to do what the government says. Pay back the money like Goldman Sachs did and they can go back to running there own show.
Josh
October 22nd, 2009
9:41 am
So what happens when those top execs realize they can get paid far better at other companies? They LEAVE for those other companies – and then the corporations running on our bailout money truly do fail, and the taxpayers are left in the lurch. Genius.
Suburban Mom
October 22nd, 2009
9:41 am
Dear mom,
Thanks for giving me a weekly allowance although I continue to get bad grades, cut class, don’t clean my room, play computer games until the early morning hours, and take recreational drugs!!! You are the best mom in the world for not regulating….oops…..I mean monitoring and punishing my actions.
HereWithaPurpose
October 22nd, 2009
9:42 am
I say cut the pay. Who cares if they leave. They just move out the way for someone else to step in and possibly do a better job than they did. And maybe a paycut will motivate them to pay back the taxpayers quicker. Just like with the credit cards now. They are raising interest rates to obscene heights. That motivate a customer to try to back that loaned money more quickly. I know it does me. If they come to the american people for a loan, they have to deal with the consequences of their actions.
just a question
October 22nd, 2009
9:43 am
What law did congress pass giving the government (executive branch) the authority to set compensation?
If there is not a law on the books, then no matter your opinion of the pay, having the government set it is not legal…
HereWithaPurpose
October 22nd, 2009
9:47 am
@Just a question. There probably isn’t a law on the books but that doesn’t mean there isn’t something included in the small print on the loan documents when these companies took the loan granting the government to do something just like this.
Wendell
October 22nd, 2009
9:53 am
Thank you King Obama. Thank you for letting me have other people’s money to buy my health care. Thank you for letting me have other people’s money to buy my food (and rims and cell phone and beer). I can’t believe that so many people are foolish enough to get up and actually WORK every day when they could be getting all of this for free! From the Government and Heir Obama!!
So what if in exchange we must let the government control the media, the banks, the auto industry, healtch care? After all, it’s a small price to pay in exchange for doing nothing all day but waiting on my checks from King Obama.
Who says there is anything wrong with “spreading the wealth around?”
Everyone should be on Welfare/Obamacare!
Chris
October 22nd, 2009
9:57 am
Once again we see proof of how you can’t trust the government. One little known factoid to the Pay VZar taking away 90% of these top execs compansation is that itis written in that these execx can simply QUIT their jobs or retire. They MUST accept this deal AND keep working. THAT is NOT the American I thought I lived in…Thought we had gotten rid of slavery, but it is baaack!
Chris
October 22nd, 2009
9:58 am
Once again we see proof of how you can’t trust the government. One little known factoid to the Pay CZar taking away 90% of these top execs compensation is that it is written in that these execs can not simply QUIT their jobs or retire. They MUST accept this deal AND keep working. THAT is NOT the American I thought I lived in…Thought we had gotten rid of slavery, but it is baaack!
Whatever
October 22nd, 2009
9:59 am
It amazes me how many of you scream “Socialism” now about bailing out Wall Street, but when Bush bailed out Wall Street (and the Airline industry after 9/11) it was seen as something necessary to keep the economy afloat. So let me get this straight, its ok for the previous administration to burn through taxpayer money fighting a needless war in Iraq, not finding the mastermind of the 9/11 attacks in Afghanistan because of Iraq, bailing out Airlines (who pretty soon plan on charging passengers to go to the bathroom) and Wall Street Executives who drove their companies into the ground along with our economy, as well as doing nothing to stop the speculation in the Oil Markets that drove our gas prices to $5 a gallon, but it is not ok for the American Taxpayer to demand universal healthcare or demand that the tax dollars that are forcibly taken from us all to stay within the counrty? If a company took tax money to stay alive then it is their responsibility to pay the american taxpayer back as fast as possible, especially if they turn a profit. They are not entitled to large compensation. Maybe you people screaming “Socialism” will look at it like this – you get upset when you hear of people abusing welfare and living life up on the hog using taxpayer money, especially when they have the ability to do the right thing and choose not to. All of the sudden when it is “White Collar Welfare” it is perfectly OK to do whatever they want because these executives live a life of “entitlement”? I wonder how you all would be reacting if McCain had been given this huge pile of dung known as our economy and ended up doing similar steps – it would be back to the days of “Stand behind your President. If you don’t you are free to leave” YOU ARE ALL HYPOCRITES!
Chris
October 22nd, 2009
10:02 am
To “Whatever”…When will you get tired of the mantra…”It’s all Bush’s fault!” That is so old….
Whatever
October 22nd, 2009
10:04 am
Hey Chris, remind me again where the Executive bailout package came from? All of you act as if it was Obama that did it. Blaming the current administration is JUST AS OLD! But I guess the truth hurts, huh?
Chris
October 22nd, 2009
10:06 am
God has the power and right to force his beliefs on us and yet made us free, the government has not that right, and yet seeks to wield that power over every aspect of our lives. – Thomas Jefferson
As true today as when Jefferson spoke them 230+ years ago.
HereWithaPurpose
October 22nd, 2009
10:06 am
@Whatever. I agree.
Chris
October 22nd, 2009
10:08 am
“Whatever” not sure what posts of mine you are reading…BUT I have not “blamed” any administrations…Just commented on the facts.
Brent
October 22nd, 2009
10:08 am
If you take my money, I SET THE RULES. So it’s ok to some of you that someone, borrow big money from you and take it and pass it out to their buddies and tell you- you’ll get your money when we get ready. No one is going to let that happen to them. If you borrow my money, you don’t have money for bonuses, until you pay me my money.
Whatever
October 22nd, 2009
10:08 am
And if Obama leaves office and everything is just as bad as it is now (or worse) I’ll be calling him out as well. Has nothing to do with party lines or affiliations. The middle class suffered the worst this decade. The Wall Street Bailout was under the Bush administration – but I am sorry to remind you of that. Its not a mantra when it is the truth.
Chris
October 22nd, 2009
10:13 am
Brent…as an example…If I take your money..and your rules say pay me back in a month…Is it fair to CHANGE your rules after one week and say screw you, pay me NOW!
Whatever
October 22nd, 2009
10:16 am
All human situations have their inconveniences. We feel those of the present but neither see nor feel those of the future; and hence we often make troublesome changes without amendment, and frequently for the worse.
Benjamin Franklin
I too can quote words spoken hundreds of years ago, and can claim this statement can apply to the Wall Street Bailout. Maybe those companies should have failed, but I didn’t get a vote on that, nor did you – and god forbid that I speak TRUTHFULLY about where the Wall Street bailout came from.
HereWithaPurpose
October 22nd, 2009
10:19 am
@Chris. I know you weren’t talking to me but you speak on “fair”. Was it fair that the american people had to bail out these “talented executives” and these companies to prevent the economic collapse of this nation. And they can continue to enjoy huge bonuses at the expense of same said taxpayers, when many of us had to take pay cuts, furloughs, and job loss. Is that fair to us. When the majority of the people who can least afford it, help prop up companies and their executives with their failing performances can reap huge rewards. That’s not fair.
Whatever
October 22nd, 2009
10:21 am
“Brent…as an example…If I take your money..and your rules say pay me back in a month…Is it fair to CHANGE your rules after one week and say screw you, pay me NOW!”
Credit Card companies do that, as do Banks and Financial Institutions that took taxpayer money. Maybe a taste of their own medicine will give a little perspective to why Joe Taxpayer is so pissed at this situation.
Brent
October 22nd, 2009
10:22 am
Again Chris, you have no money for bonuses, if you haven’t paid me back my money. We on this blog have no idea what the lawyers and govt. officials put in the paperwork they exchanged with these companies. People are talking on this blog like they have the contracts in front of them. I can’t believe that you aren’t troubled by someone taking your money and paying bonuses, before they pay back the taxpayers. Just my opinion -it’s insane. It seems you are arguing against your own interest. This is corporate welfare.
RSC
October 22nd, 2009
10:22 am
Funny, some folks raise cain at the thought of someone buying pizza or ice cream with their measly foodstamps, but think it’s perfectly acceptable for taxpayer funded companies to pay out billions of dollars “rewarding” poor performances.
RSC
October 22nd, 2009
10:25 am
Shareholders of any company should be allowed a say in the compensation of the executives of that company. As major shareholders in these bailed out companies, US taxpayers, with the government as our representatives, have the right to determine what is appropriate executive pay. I only wish that all shareholders of these failed companies had the wherewithal to band together and sue the former execs who drove these companies into the ground and then bailed out with golden parachutes to recoup some of those undeserved billions of dollars.
Chris
October 22nd, 2009
10:26 am
HerewithaPurpose…I too have had to take pay cuts and furloughs…I am now back to making the very same amount I did 11 years ago when I started. Glad to have a job however.. No one ever said life is “fair” But contracts should be honored and not changed…The democrat congress wrote and passed the bailout, Bush enacted it their law…If pay decreases and no bonuses were wanted in the legislation, it should have been written in at the time
playthatfunkymusic whiteboy
October 22nd, 2009
10:29 am
Oh this one is easy. If I borrowed $1000 from my dad because I was about to lose my house – then turned around 2 months from then and bought a big screen television, without first paying him back or even offering to pay him back (my dad wouldn’t take the money anyway – but you have to make that offer if suddenly your financial situation turned around); I think my dad would “strongly urge” me to take the new tv back – I mean that’s just common sense.
Plus, if the banks and institutions have that much set aside already for compensation, then it can easily now be funneled back to the US Govt and the taxpayers toward their repayment of the loans we extended to them.
And don’t worry about “losing the top talent” from these institutions. Only Bob Nardelli can sink company after company and still get a good job handed to him – that guy must be a heckuva interviewee.
Chris
October 22nd, 2009
10:31 am
But Brent…If we have an agreement that I will pay you back “in a month” and I go out that same day and win $500 on a scratch off lottery ticket…That shouldn’t mean that you can demand payment of your $$$ back early. Morally it would be right for me to go ahead and pay you back…But shouldn’t be something you could “demand” of me.
I hate white people
October 22nd, 2009
10:32 am
Thank you Obama for sticking it to the white man! It is about time that Black Power rise up. Thank you Thank you Thank you.
P.S. Please don’t cut my welfare checks.
Chris
October 22nd, 2009
10:35 am
AH…Thank you ” I hate white people”…Finally gotten to the real truth of the matter.
HereWithaPurpose
October 22nd, 2009
10:35 am
Regardless of where the windfall comes from, whether profit or luck, the honorable thing to do would be to pay back the person who extended a helping hand to you when you most needed it. And if you do it in a timely manner (ahead of schedule) that person wouldn’t think twice about lending to you the next time you need it.
Chris
October 22nd, 2009
10:51 am
I agree with you Brent on a moral basis…my only point is that is not what Contract Law is supposed to mean in our country. Of course why am I surprised that contract law mean nothing anymore…Sports figures have been sticking their tongues out at owners for years and refusing to honor their contracts when it so suited them.
Whatever
October 22nd, 2009
10:51 am
Ah yes, the Race card. Hate it when its used by every race. Now that we have a Black President its ok for a white guy to say that we are being screwed because we are white. It’s not “Sticking it to the white man” it is “Sticking it to people who have more money than sense”
I’m white and felt screwed by my government LONG before Obama came into office. But its easier to say something that boneheaded, isn’t it? Welfare is welfare, be it blue collar (poor folks) or white collar (these poor executives who can’t buy another vacation home this year, boo hoo) and it upsets me whenever it is abused in either case.
And I guess its ok to demand morality from the everyday american (Drugs, Abortion, etc) but not ok to demand it from these people who can affect the entire country when they screw up.
Brent
October 22nd, 2009
10:54 am
I don’t know the contracts, and neither do you CHris. I will say this though, these companies have plenty of lawyers to argue there side. They don’t need you, to argue for them. These companies owe us money, they have no money for bonuses until they pay us back.
Suburban Mom
October 22nd, 2009
10:56 am
Something tells me that “I hate white people” is not a minority at all, but someone who is trying to bring race and tension into the discussion. If so, you should be ashamed of yourself!!!
Wing nuts of the confederated Taliban GOP have lost it
October 22nd, 2009
10:58 am
After the GOP messed every thing up this is part of clean up. If the clowns has left some rules to follow and not belive the market know all. Man left to himself will screw up. if there is no rules and watchdogs this is what happens. The GOP don’t want rules free market free to rip you off and take every body Else under greed !!
Cry Me A River
October 22nd, 2009
11:13 am
First, these Wall Street pigs STOLE our money with fraud, deceit and corruption of the unregulated derivatives market. (Thanks to the IDIOT PAC of Alan Greenspan, Robert Rubin, Tim Geithner and Larry Summers.)
Then, the G.W. Bush (the guy who bankrupted EVERY business he ever touched — BEFORE he was elected) added insult to injury by giving them MY tax money, for FREE. Free loans for them; foreclosures for the rest of us.
Then, the Wall Street Robber Barons had the gall to think they were entitled to bonuses while middle class America was being strangled to death with rising unemployment, skyrocketing health care costs, rising education costs, sagging wages and rising taxes from bankrupt local governments (like our own Sonny Perdoo-doo).
I’d be p—ed off if the government DIDN’T step in and stop the madness. This is like the friend who owes you money coming over and showing off their brand new Rolex. WTH??? And this garbage about “we need bonuses to attract the best and brightest” is ridiculous. (Would you like a little cheese to go with that whine?) What they’re really saying is that they need to attract the best THIEVES and the brightest LIARS.
As long as they are playing with MY money, they need to sacrifice a few furs for the mistress and a Swiss ski vacation or two. And if it takes the Government to act on my behalf to enforce the debt (because that’s really what this “government” action is, debt enforcement) then, that is OK with me.
Matt
October 22nd, 2009
11:13 am
Tort reform
AB
October 22nd, 2009
11:13 am
Allow me to give you an example…Company X hires employee Z to lead division Y within company X. Employee Z’s total compensation package (legally agreed to by both parties) includes a base salary & annual bonus paid based upon division Y’s performance during the previous fiscal year and ranks Z within the top 30 in X’s salaries. Here comes bad times for Company X, where X’s profits fall, margins & cash flow begins to contract. Company X’s top management tries to trim the fat: layoffs, furloughs, etc. but cannot stop the “bleeding.” Company X’s top management decides to go to bank A to get a loan realizing that it cannot meet its legal obligations (debt repayment, salaries, benefits, etc) without one. Bank A gives Company X the loan on the premise that it will be paid back within 5 years. Keep in mind the interest paid on the loan is little to none because Company X is extremely important to the well being of Bank A. Company X now has the means to meet it obligations as it approaches the end of the fiscal year. Within company X, division performance reports for the year begin to come in and division Y has shown sales growth YoY (year over year) in excess of 12%, client growth YoY of 8%, & decreased division expenditures by 10% YoY. Employee Z is thrilled because their division performed better than other divisions although overall Company X struggled tremendously. Employee Z gets their annual bonus because of the division’s performance. But wait. Clients of Bank A are mad that Bank A “bailed out” company X and that company X used the loan to meet its obligations, which included compensating it’s employees. So Bank A’s mgmt demand that Company X slash the compensation of its top 30 employees which includes employee Z. All of a sudden, Bank A is telling Z that Z must repay the already paid out (& spent) bonus. Employee Z is mad because they met their end of the compensation agreement (see above) but is now being forced (read shaken down) by Bank A to repay it. Is this fair to Z? Do you understand that salaries are part of legal obligations a company has – you expect to get paid for how ever many hours you worked or based upon the terms stated in the offer letter right? A loan is just that, a loan. The recipient can do whatever they so choose to do with the proceeds, unless stated otherwise in the contract i.e. mortgage, car, or student loan. Should the banks have been bailed out? Hard to say. But unless (& we’ll never know) it was stated in the agreement that the banks could not use the proceeds to pay bonuses, then there is no reason why the gov’t should dictate how the proceeds are used. We should be more upset that we as taxpayers will a) never see a dime returned to us & b) how “sweet” the terms were to the banks. Little to no interest rate…
Chris
October 22nd, 2009
11:23 am
Well said (or typed AB) That is the point I so poorly tried to make…
Sluggo
October 22nd, 2009
11:24 am
Governments control people. It’s what they do. We should all be afraid when we see the power and scope of government expanding.
Whatever
October 22nd, 2009
11:36 am
So say my house was destroyed by last months flood and FEMA loans me the money to get back on my feet and I use that money on hookers and beer. I should be entitled to more of that money because it was given to me to fix my house and re-establish my life, but there were “prior obligations” that I had to spend the money on first. Do you think they’re going to care I have no home and they want their money back that they loaned to me in good faith? What if I use the argument “You gave me the money and I did what I saw was fit to do with it, stay out of my life (unless I need more help)”? Would that make a difference? No. And I’d have to learn that no matter what “prior obligations” I had that money was loaned to me with a specific purpose, and should have been used for said purpose ONLY. But I spent that money on hookers and beer. They deserved it more than my family, who depended on my judgment to stabilize their lives after the flood, and for the life of me I can’t understand why they’re upset! I was entitled to said hookers and beer, I should be able to replace my home and keep throwing money away for useless compensations to Budweiser and The Pink Pony, because after all, THEY DID EARN THE MONEY, right?
/sarcasm
citizen
October 22nd, 2009
12:22 pm
Democracy only thrives in a stable environment and a stable environment depends on the rule of law, parameters, and ethics. The greedy actors on Wall Street have stacked the deck. Even in the ‘Bernie Madoff’ scam, some investors made a profit because he controlled ALL of the 65 Billion so he was the one who controlled who made a profit and who lost. With the unregulated derivatives market we don’t know who controls our investments nor who to trust to oversee our investments.
American consumers should boycott all corporations who lobby to keep the derivatives market unregulated.
AB
October 22nd, 2009
1:40 pm
Exactly what are you trying to say, Whatever?
Situation A) FEMA gives you a loan to “get back on your feet” with the hope you actually do that but the only legally binding term is that you repay it in XX years, but instead you go buy beer and visit the Pony with the proceeds?
Situation B) Situation A and you don’t want to repay it?
Situation C) Situation A + B & you want another FEMA loan?
Situation D) You give InBev and the Pony promissory notes for payment of services rendered and use proceeds from Situation A to pay those notes off? **Well situation D is flawed from the start because last I checked both those involve payment at point of purchase**
Mr. Whatever, let me ask you this. You expect your company to pay you based upon the terms you and your employer agreed upon at the time of your hire correct? If that’s true, then you mean to tell me, you’re completely okay with having your pay cut in half or not getting paid at all should your company get money from the gov’t? Just stop and think about it, look at the big picture. This isn’t about some top level exec at AIG getting a bonus. No, this is about gov’t interference in private enterprise. It all starts with a “He got a fat bonus with my money!” and before you know it, pre-clearance has to be given to pay individuals more than $50k/year and business plans have to be presented along with an application to any type loan all while Gov’t sets the benchmarks. But in case that’s just a little beyond your scope, reverse this situation. Every April you pay taxes and should you over pay you get a refund. Still with me? That money you got back was essentially money you leant to the gov’t to do whatever they so chose to do with it: invade countries, bail out banks, increase congressional salaries, etc. I didn’t have a say in any of it, did you? Do I agree with how they spent it? Heck no, but I got what was owed to me and that’s it. Or if that doesn’t make sense, you go purchase a Treasury note or savings bond. Guess what, you just leant money to the gov’t. But do you have a say on where your money goes or how it’s spent? Again, the answer is no. So, unless the terms agreed to by both the gov’t and those firms bailed out explicitly said, “Cannot use proceeds to pay salaries and/or yearly bonuses”, then the gov’t should just expect nothing more than to get their money back at date XX. As for me, I’m doing the best I can to take advantage of the situation. If you need a new car, GM deeply discounted their product (I’m more of a Ford man, but I looked at the Silverado), I took advantage of BAC’s depressed stock price and invested in it, and if I had the courage (and $$$) I’d buy some of their paper.
playthatfunkymusic whiteboy
October 22nd, 2009
2:23 pm
AB – you sound like exactly the kind of person that helped lead us into this mess, possibly moaning “securitization” and “bundled securities” in the throws of passion with your steady right hand.
You nerds outsmart yourselves everytime – “Long-Term Capital”, Black Scholes, Enron, Bundled Mortgage Backed Securities… 1+1 will always equal 2, nerd.
Why don’t you go back date some options or something?
AB
October 22nd, 2009
3:12 pm
Playthat-
Sorry you’re wrong. Those who got us into this mess are not those on Wall Street, but Mr. & Mrs. Keeping Up with the Jones’ on Main Street. They are the ones who bought a house they knew they could not afford. They are the ones who bought furnishings for said house using credit instead of cash. They are the ones who bought a big fancy SUV again with credit because their old one was “embarrassing”. They are the ones who failed to save money from their paychecks. They did all these things knowing that should one or both of them loose their jobs, that it would all come crashing down. Did the banks act as enablers? Of course. But as I suspect, the mortgage lender, nor car salesman, nor furniture salesman were putting Mr. & Mrs. KUWTJ’s under duress to sign the papers. Now am I one of those Wall Street types? Hardly. But am I smart with my money and let it work for me instead of me working for it? Yes, and for that I’m not ashamed. And please, don’t let your envy of those who were smart and saved and resisted the temptation of excess debt get in your way of seeing the truth. Wall Street didn’t cause this mess we’re in, Main Street did. And until people stop drinking the Washington Kool Aid, the divide between the haves and have nots will only get bigger.
just a question
October 22nd, 2009
3:27 pm
the Fed is now proposing a review of the pay at financial institutions, all the way down to the local level. Hope you work there and get your 90% pay cuts ….
AB
October 22nd, 2009
3:42 pm
Just a question-
Was that remark aimed at me? If so, I’m sorry you loath someone you’ve never and probably will never meet. But I refuse to lower myself to that level. If you’re currently facing financial or employment difficulties, I can certainly relate as I was once in your shoes (mid 20’s, living a champagne life on beer budget, then crash…laid off & out of work for 6 months) but wishing ill on me won’t make you feel better. Again, we only have ourselves to blame for this mess and gov’t intervention will only make it worse.
just a question
October 22nd, 2009
4:01 pm
no, not you AB. I agree with what you have said.
It was directed to those who think the government should step in. At what point (as proposed, the entire banking industry) does government intervention stop? Executive pay is an issue, yes, but the government solution in the past (limit CEO pay that can be expensed) lead to the bonus / option fiasco we have today.
AB
October 22nd, 2009
4:09 pm
Just a question-
Previous comment cheerfully withdrawn.
Steve
October 22nd, 2009
4:09 pm
If we have a government czar cutting salaries for banks that took bailout(tax money). Then why doesn’t he cut the salaries for our elected officials as they are driving the government into the financial ditch
whatever
October 22nd, 2009
4:12 pm
Thanks AB. You sure put me in my place. I’ll be sure to tell my aging parents that they lost all of their retirement savings and pensions that they saved for but lost because they were used in the stock market. They saved all of their money, have suffered from Cancer (depleting what was in the bank) and have lost almost everything when the market melted down their pensions that were “Invested” in the market without my parents consent. I sure am thankful that the former president didn’t actually put their social security into the stock market as he had planned on doing, because that would be gone too.
And my rant about FEMA and the sorts was sarcasm, because to us “non educated” peons that the way that it seems. I understand that you have a point about protecting contract law and people deserve to be paid what they are offered, but for gods sake if you are already rich shouldn’t you have a conscience and see that there are so many people that have lost nearly EVERYTHING because they were FORCED to bail out said company with Tax dollars. Legally, yes, those people should have what was promised – but should it be at the expense of the Middle Classes “American Dream”? There are those of us who have fallen on hard times even though we did everything correctly. It makes no sense that my neighbor was laid off from one of the banks that received a large amount of bailout money because they could not afford to keep her @ $35,000 a year but their CEO resigns and gets a $53,000,000 severance??? That fifty three million dollars could pay the salaries of over 1500 people for a whole year. Your argument and point are both valid, I am not debating that or calling you any names – sometimes what is right is not ethical.
I’m sorry but if you take public money then the public has the right to demand it not be squandered!
One other thing amazes me. Why are the people defending a wall street bailout the same people who now despise GM because they took a bailout? Is it because Bush (the uninformed conservatives wildest wet dream) bailed out wall street because of mismanagement under the mantra of “Saving Jobs and Restoring the economy” but when Obama (same uninformed conservatives worst nightmare) bails out another sector that built the American economy that made THE SAME TYPES OF MISTAKES that wall street made it all of the sudden turns out to be a bad thing?
Next year when GM proposes to give their execs compensations built on Tax dollars I hope every single one of you who think its moral and correct when Wall Street Does it feel the exact same way. Wouldn’t want someone calling you a hypocrite. Especially someone like me who needs an economic lecture about honoring what is promised to wall street executives, when I see promises to normal people (”your pension will be safe with us!”) melt away.
I’ve gotta stop typing in this forum. The more upset I get the harder it is to express in a civil fashion that sometimes contracts are made to be broken – especially when its to benefit those who have broken us.
just a question
October 22nd, 2009
4:27 pm
hey, whatever
sorry for your parents trouble. my investemnt adviser told me to transfer monies from the market to more stable investments as I got older. There is risk and reward. Higher risk, higher reward. I can absorb it now, not when I am 65. Many failed to head that advice.
the initial reason for the bailouts was that the market is based on confidence and liquidity and we hoped to avoid a run on the banks, as in the great depression.
contracts can be broken if you can demonstrate they were entered into illegally or one party has failed to live up to their end of the agreement. I would have no problems if the justice department, not an unaccountable Czar, found the execs guilty of breach of contract.
And some banks, notably BBT, decided to forego expansion by taking on unecessary risky loans (as mandated by the government).
Suggest you research a bit on the reasons for the housing bubble (not the first time the government caused one)…..
AB
October 22nd, 2009
4:52 pm
Whatever-
First, I’m truly sorry to hear about yours and your parent’s situation. Now then, if you did everything right as you say you’ve done, then you wouldn’t be in the pickle you’re in now. Think about it. Now before you get on to me about not having a conscience, help me to understand your logic when you said:
“…see that there are so many people that have lost nearly EVERYTHING because they were FORCED to bail out said company with Tax dollars. Legally, yes, those people should have what was promised – but should it be at the expense of the Middle Classes “American Dream”?”
So are you saying that everyone has a right to the American Dream regardless of whether they can afford it? You shouldn’t have to work towards the American Dream; rather it should just be handed to you? Is that the gist of your statement? And while I feel for your neighbor, understand that their $35k job is easier to replace than that of the CEO. And chances are that position actually will cost more (in terms of salary, benefits, etc) over time than the CEO’s. Is it fair, no but it’s the truth. But what do I know? I’m just a cold hearted person without a conscience who made a conscience decision to work for free with people helping them to avoid bankruptcy, foreclosure, & just general financial ruin.
S
October 22nd, 2009
11:08 pm
Why is it these companies think they should pay out huge salaries plus bonuses when those said companies lost money. Brain Drain, I hardly think so. The so called brain drain of these companies brought said companies to the brink and would have gone under except for said taxpayers. They are lucky to have a job, let alone bonuses.
We don’t have a Kingdom in the United States, why should we be creating little Kingdoms with these huge Salaries with even bigger bonuses to these creatures of Greed. Enough is never enough and yes limits of salaries and bonuses are in order. Capitalism will only last if it is shared amongst all. How soon we forget.