Posted on 02/11/2009 5:15:59 PM PST by Wolfie
CBO: TARP Executive-Pay Limits Would Cost Treasury $10.9 Billion Over 10 Yrs
WASHINGTON -(Dow Jones)- Caps on compensation paid to executives at firms receiving taxpayer money under the financial rescue program added to the Senate economic stimulus bill would cost the Treasury around $10.9 billion over the next decade, the Congressional Budget Office said Tuesday.
One cap, introduced last week as an amendment to the stimulus bill by Sen. Claire McCaskill, D-Mo., would cost the federal government nearly $14 billion in lost income-tax revenues by 2019, the nonpartisan CBO said.
The cost to the taxpayer would be partially offset by a separate amendment which would seek to claw back bonuses already paid to executives at firms taking part in the Troubled Asset Relief Program. That amendment was authored by Sen. Ron Wyden, D-Ore.
Both changes to the bill are aimed at cracking down on compensation paid to executives at many of the largest banks in the U.S. that have received billions of dollars of cash injections from the Treasury since October.
The McCaskill amendment would cap total compensation for executives at TARP firms at $400,000 a year, the same salary the U.S. president draws.
The bonus amendment introduced by Wyden would claw back bonuses over $100,000 already paid to senior executives, or force the firms employing them to pay a 35% excise tax on any bonuses over $100,000.
Another nonpartisan group, the Joint Committee on Taxation, said Wyden's amendment would raise just over $3 billion for the Treasury in the next decade, leaving the net loss to the federal government at just under $11 billion.
Both estimates assume that the bulk of firms would continue to participate in the TARP for the next 10 years.
A spokeswoman for McCaskill didn't return phone calls seeking comment for this article.
A third amendment added to the Senate bill by Senate Banking Chairman Christopher Dodd, D-Conn., would have a negligible impact on revenues because of overlap with the McCaskill change.
The Dodd amendment would prevent bonuses from being paid to the top 25 executives at each firm receiving TARP funds, but the likely result would be that many of those executives would receive a salary of $400,000, thereby hitting the McCaskill cap, said an official at the Joint Taxation Committee.
The Obama administration has proposed its own limits on executive compensation. Under its plan, executives at the handful of firms that have received company-specific TARP solutions would have their salaries capped at $500,000, with any additional compensation paid in stocks that would be frozen until all money was paid back to the Treasury.
These firms include American International Group Inc. (AIG), Bank of America Corp. (BAC) and Citigroup Inc. (C).
Executives at the bulk of companies taking part in the TARP would also face the $500,000 cap, but this could be waived if the additional salary were disclosed and the companies agreed to a nonbinding shareholder vote if one were requested.
Neither the CBO nor the Joint Committee on Taxation provided an estimate of the cost impact of the Obama proposals.
On the other hand, I can’t help but wonder what revenues have been lost by offshoring jobs. But I bet the Dow Jones Newsire’s not worried abou that.
Minimum wage meet Maximum Wage.
Welcome, comrade.
Congress is populated with some seriously stupid people.
Unless they pay the money back...they would be using taxpayer money...we would be paying the whole thing. It’s cheaper to lose the taxes then pay the entire amount...whoever wrote this article is a fool. Not that these guys pay taxes...they have all sorts of tax loopholes.
The more capable people would simply take jobs at other companies.
Any stockbroker who brings in four or five million a year in revenue can easily get a job anywhere for a million a year. That is the truth Congress doesn’t want to recognize.
I’m thinking we just give $100,000 a year to everbody on welfare. Think of the taxes we’d collect!
A situation encouraged by Congresscritters who wish to make companies “pay their fair share” with one of the highest corporate income tax rates in the Western world.
Bingo.
People who make 100,000 pay taxes...it’s not enough to take advantage of the loophole...most between 75,00 and say 250,00 pay the bulk of taxes.
Hit the pavement Jack...be sure to put on your resume...made risky stupid loans and bankrupted the country...plenty of takers, I’m sure.
Yes, but they don’t pay the taxes as they have lots of tax goodies to make sure they don’t...there stupid bonuses are tax deductible. You think they have been donating to Congress for no reason?
I guess you didn’t read the whole post. They take their rich customers with them when they leave, and their new brokerage house gets the revenue.
If you are that kind of stockbroker, you are a top salesman who can work anywhere.
Do these guys still have rich customers, and I did read the article...I’m more impressed with a local banker who makes responsible loans and is helping out his community in a responsible way...these guys are shysters as we say in New York.
Now this banker is a mensch-which in New York (Yiddish) means a person of integrity and honor.
http://www.freerepublic.com/focus/f-bloggers/2183645/posts
As are the executive halls of the biggest banks.
These whining crybabies should have been smart enough to know taking Gov’t money would equal this. Plus they pretty much all backed Obama in the election. eff ‘em.
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