Posted on 02/03/2009 7:18:14 PM PST by sloop
I absolutely agree. When you ask for a handout you should expect to have strings attached. You don’t want to play by this rule, go under, get your own financing- something but I am not happy about coughing up cash to failed business leaders who horde it for themselves instead of fixing the problems.
“And the President’s authority to do this derives from — well, where, exactly?”
It’s called the power of the purse. Article I, Section 8, Clause 1 of the Constitution gives the Congress the authority to tax and spend.
Obama asks congress to include a compensation restriction in the bill, Congress adds it, passes it and he signs it. So he doesn’t himself have the power but in coordination with Congress, he can impose anything if it is attached to our tax dollars.
He is using the bully pulpit to let Congress know that this is coming...he’s playing politics to get constituents of Congress on board first.
Bush did the same thing with TARP version 1 but it was left relaxed and somewhat “optional”. So that first 700 billion that came out of our checks might as well have been flushed down the toilet.
“Will this include Boeing/McDonnell Douglas, Lockheed Martin, Northrop Grumman, General Dynamics???.........they pretty much exist hanging off the public teet.”
Those companies do business with us on contract for cash. There’s no purchase of preferred or common stock or purchase of any equity whatsoever.
The Wall Street gangs are actually getting cash for nothing as in TARP 1 but with TARP 2 we will actually have an equity stake in the companies, these aren’t contracts. So long as the taxpayers have a majority equity stake in any entity or draft the conditions of loans as the debtor, we have the right to call the shots.
I too think all of the bailouts are crap. We have such a dynamic capitalist system that when any of these systems go down, 10 more with more competent and able managers will fight to fill the void. Yes, the credit markets would freeze and the sting would be bad for a brief period but I have no doubt that the recovery would be swift and real.
But if we are going to do this bailout, we need to be as draconian as hell with the conditions so as to make the incompetent executives either jump ship or get their act together so they can repay us. They have to know that the gilded age of a 14 trillion dollar monopoly money, shadow banking system with credit default swaps, CDOs, SIVs, MBSs, etc are over.
Government intervention on salaries cannot be a good thing.If these companies think they are better off without the government's meddling, they can continue to run themselves without government money. It seems like I'm the only person here who's actually had to deal with investors so let me explain how this works: the people writing the checks get to attach all the strings they want. They can name executives, put people on your board, set financial metrics... all kinds of stuff.
If you don't like it, you can walk away without their money. Sometimes that's the right thing to do, sometimes it's not. The decision is how much you need the money vs. how much you want to avoid the conditions attached to the money. I don't see why this should be any different just because it's government money.
This year, my company is not giving raises and may also slash our bonus pool (bonuses are a pretty big component of our annual income). We haven't even done anything stupid, it's just that the economy is down and our revenues are down too so money it tight this year. Frankly, we'd all rather take a year without bonuses than lose our jobs. Meanwhile, at companies that have been run so badly that they are completely insolvent, they are handing out billions in bonuses.
Ideally, these guys shouldn't get $1 of government money, they should just go out of business, but the economists with the President's ear are telling him that if that happens, the resulting meltdown will cause much more havoc — i.e. then I would lose my job regardless of how much my company tried to cut back.
Maybe they're right, but whether or not they are, they are going to give money to these ailing financial institution and industrial giants and in that case, I don't want them to just give it out to these failed CEOs. They can get a bonus when their companies are strong enough to run without government help.
I agree....
Since they are getting OUR TAX DOLLARS....the CEOs should be held accountable.
The Business Socialist mentality of letting these guys get overpaid for failure is total nutso. Their overpayment to begin with is one reason why these companies are tanking
Even if they remained in the private sector....executive overcompensation is bad....it means stockholders (who truly own a public company) are getting less of a dividend.
And...never buy the “we need to pay for top talent” argument. There are fewer plum executive positions than the number of talented people able to fill those.
Funny how people go nutso over a welfare queen getting a government check....but give a failed CEO a pass when he/she receives, basicallly, a government check
First, I am against bailouts period but this is s slippery slope we do not want to go down. What we have here is the 2nd stage of the commies in charge nationalizing business. The first stage was the bailout.
Soon they will want to cap the salaries of private company execs because the company is in a particular tax bracket or simply because the government demands it, because, after all, government allows a business to exist as a corporation.
This salary BS is a Red Herring to keep us sheep occupied while they stick it in our a$$e$.
Don't fall for it. The Federal Government IS the problem, not the solution.
1) So they move the corporate headquarters out of the country, costing tax revenue but limiting nothing.
2) The stock holders elect the board, they are responsible for the CEO pay.
How about George Soros? Does he get a cap?
Start with a cap... PRIMER cap.
government also allowed them to merge into megabanks and in some cases, brokered the deal - now we hear ‘too big to fail’
so now saint uncle sam is going to fix it - and want to place strings on that ‘help’ - maybe some strings should be attached and i don't think screwups should be rewarded
but that applies to screwups in banking
and screwups in government
this is what i think happened
the democrats forced bad loans
these loans were twisted, bundled, insured, sold, rebundled, massaged and kissed tenderly by people that were creating new financial instruments that spread the risk
greenspan kept money cheap after 9/11 - which was probably what kept us afloat after that attack
cheap money - plentiful money - easy loans - housing prices inflated way beyond a reasonable value
pop - bubble burst
i know lots of financial nerds have different thoeries but some agree with mine
so my bottom line is that democrats caused this - democrats have escaped blame for this - democrats are spooking us by declaring economic armageddon tomorrow if we don't let them fix it
i also think bush was spooked by the people advising him in his last few months in office
i have little faith in the financial nerds - every statistic that is released is a shock to them - every month - every quarter - even greenspan admitted he had to rely on intuition
i also think we don't have trillion or so to try theories to avoid a recession - all the advocate ‘experts’ say they have no idea if this will work - all the experts that are not advocates say this has not worked in the past and won't work now
i also wonder how long we will be able to sell paper - seems our credit limit should be about exhausted
seems to me that the democrats caused all this - and now want to fix it - they also want to impose rules on that help
i say let it go - if we meltdown now, do be it - because i think delaying the problem is only putting off the day of reckoning
we can dream can't we in thugspeak
/s
Just another reason for more corporations to move overseas.
If they limit pay, how does a company attract competent people to clean up the mess and take it in new directions? New people aren't going to give their work away for pennies on the dollar...
Uh, as long as Republocrats get their bribes, they certainly don’t want any “new direction” or “clean up” of failed companies. That’s the whole pont of bailouts.
Too Much: The Historical Link Between Bailouts and Pay Caps
Regulation
Frustrated by their failure to curb compensation using the tax system, angry lawmakers looked for alternate, if more limited, means. They narrowed their focus to companies seeking federal help, arguing that any company looking for an RFC handout should be required to limit salaries for top executives.
In 1933 Congress demanded that insurance companies borrowing money from the RFC (or selling stock to the agency) be prohibited from paying anyone more than $17,500 annually.
Directive 10-289 ends economic and personal freedom in the United States. The government now controls every aspect of an individual’s economic life; it is a dictatorship. The best minds, can’t tolerate this change and choose to retreat.
Point noted.. It does appear they want to keep the status quo.
“If they limit pay, how does a company attract competent people to clean up the mess and take it in new directions? New people aren’t going to give their work away for pennies on the dollar... “
If you are tens or even hundreds of billions of dollars in the hole, you give up the right to attract top talent with exorbitant salaries. They take the bailout loans with the conditions and do the best with what they get or they file Chapter 7 and liquidate...it’s that simple.
If the top execs making 500k a year turn the company around and regain profitability, they can then (after paying the tax money back) offer incentives as they please based on their good performance. They can’t do this beforehand.
If I am a desperate small business owner with a track record of years of mismanagement and huge losses, no bank in their right mind would just give me a huge loan with zero questions asked. No venture capital firm would dare do that either. They would impose serious restrictions and most certainly would impose salary parameters as protection on their investments. The tax payers should expect the same.
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