Pay caps

Obama gave a speech back in February wherein he laid out plans to cap the pay and bonuses of executives working for companies who received taxpayer-funded federal bailout money, noting that such executives could still receive compensation (like options) tied to the long-term health of the company.  The move was in response to events like the AIG fiasco that occurred after the first round of Bush bailout money.

This week, the Federal Reserve “pay czar” Kenneth Feinberg – hired to oversee the companies who took the bailout money – issued a set of guidelines (The White House likes the term “formula” and “guidelines” better than “pay cap”) aimed to limit the pay at 7 firms who received the most bailout money.  The White House ordered what’s being described as “drastic” pay cuts for 175 top executives at these companies, which are:  AIG, Citigroup, Bank of America, GM, Chrysler, and the financing departments of the two automakers.  However, it’s worth noting that the guidelines don’t specifically prohibit multi-million dollar paychecks or substantial deferred compensation.

Said Obama in a speech, “I’ve always believed that our system of free enterprise works best when it rewards hard work.  But it does offend our values when executives of big financial firms — firms that are struggling — pay themselves huge bonuses even as they continue to rely on taxpayer assistance to stay afloat.”

The Fed also noted that it would begin reviewing compensation practices at some our largest largest financial firms. In its guidelines the Fed stated, “Banking organizations too often rewarded employees for increasing the firm’s revenue or short-term profit without adequate recognition of the risks the employees’ activities posed to the firm.”

The Fed also noted that the hope is for other banking institutions to adopt the “pay cut model” in an effort to focus on long-term profitability and stability, rather than short-term cash.

And so we award a Fantasy T-Wearer Award today to Kenneth Feinberg, with what we’ll call the People’s Republic Executive Salary Cap, above.

4 Comments
  1. it is scarey to think any government can decide on any PRIVATE CITIZEN’S pay… especially the US. No matter who and no matter how much. It is not my business nor anyone else… especially the government of a free nation.

    Obama’s salary is $500,000 per year, his trip to New york to celebrate a wedding anniversary cost $450,000 (for a 747 and fighter escorts) His and his family’s housing is free, his transportation, his golf trips are free, schooling is free for his kids, his food is free, his vactions are free… all this adds up to compensation more than most executives. What is the difference?

  2. Its about time…I dont have a problem with people working hard and reaping the benifits of that hard work, but to rape a company and reap the big paycheck doesnt quite cut it.

  3. Get a copy of Article 1 Section 8 of the United States Constitution, you can find it online.
    It specifies 21 powers granted to the United States Government. The founders wisely recognized that government, any government, will reserve for itself more and more power ove…r time. To preserve our freedom, the founders limited the federal government to these enumerated powers.

    Please read this document (far less than 1,000 pages) and ask yourself, “where does it grant the government the power to provide healthcare, take over and run private businesses, or set the salaries of anyone?” PLEASE WAKE UP AND SEE THE DIRECTION YOUR ELECTED REPRESENTITIVES ARE HEADED. Your freedom was purchased for a high price, don’t squander it just to be trendy or partisan.

  4. Gee that didn’t take long. The first line of section 8 reads

    The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States;

    Welfare defined as health, happiness, or prosperity; well-being.

    The Gevernment has the right and obligation to protect the general welfare of its citizens. Millions of Americans without healthcare and millions more being fleeced by insurance companies would qualify. Investors losing their life savings while executives give themselves millions in bonuses, even after they were bailed out with our tax money would qualify. To provide guidance and support for businesses which are in danger of going bankrupt and further crippling the economy and leave even more people without jobs would qualify.

    What doesn’t qualify is lying to Congress and to the country to start an illegal war. To imprison innocent people without charging them with any crime or allowing them to defend themselves, even when it is known that they are innocent doesn’t qualify. To illegally monitor and record private phone calls doesn’t qualify. The previous administration spent 8 years shredding the Constitution and you only decide to speak up now?

    I and millions of others saw which direction this country was headed and thank goodness it is over.

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