Free Markets, Free People

Obama to seek caps on all executive pay

The CEO’s of banks and financial firms that received bailout money may not be the only executives to see their pay regulated:

The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.

The outlines of the plan are expected to be unveiled this week in preparation for President Obama’s first foreign summit meeting in early April.
[...]
The administration has been considering increased oversight of executive pay for some time, but the issue was heightened in recent days as public fury over bonuses spilled into the regulatory effort.

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could go beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on company boards to tie executive compensation more closely to corporate performance and to take other steps to ensure that compensation was aligned with the financial interest of the company.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission.

You are not free to make as much money as you want. You are not free to succeed because government will tax you at the point of a gun to make sure you aren’t making more money than they approve of.

Welcome to Obama’s America.

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43 Responses to Obama to seek caps on all executive pay

  • This is pretty transparent.  Obama tells us that this is the biggest economic crisis since the Depression so don’t ask questions, just do what he says.  Obama, Pelosi and Reid ram through the stimulus.  Obama and his treasury department know about the AIG bonuses when the stimulus is passed.  Keep your powder dry.  Wait until approval rating starts to fall and the stench of stimulus waste starts to filter out into the public domain.  Use bonuses as a distraction and gin up populist outrage against Wall Street.  Take advantage of ginned up outrage to ram through regulation on executive pay economy wide.  Hurricane Obama is just picking up steam.  He hasn’t been stopped a single time.  All the tea parties in the world aren’t going to make a difference until the Democrats are thrown out of power.  The scary thing is that he is still as popular as ever here in Los Angeles.

    •  Keep your powder dry

      Getting to be ever more practical advice for the rest of the nation as well…

  • Given all this, why would a CEO ever move a corporate headquaters to the US, why would he keep one here?

    • Heh.  While Sarbannes-Oxley took a hatchet to NYC as the financial capital of the world, this would be an attempt to finish it off.  Hong Kong, Shanghai, and London are smiling.

      • “Bankers at Deutsche Bank said it could benefit from the proposed legislation by poaching its US rivals’ most talented employees”
        –http://www.ft.com/cms/s/0/4ff2f77e-1584-11de-b9a9-0000779fd2ac.html

  • Wow, now if he can just apply these rules to hollywood execs thenthat would be hilarious.

    However, that would be a war he would never dare start so they are safe.

  • It it unarguable now which way this thing is going. Any questions of Obama being an overt socialist have now been answered in the affirmative.

  • Why am I not the least bit surprised?

  • No surprises here, I mean, how often do you see a President and his Congress foment anger against a particular group of people? I understand there are actually bus tours pointing out the homes of AIG employees. And, how often do you see a President send out his cronies, door to door, to push his agenda? Of course, H.R. 1388 passed this week as well, want some interesting reading?
    Go here:         
     
    http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.+1388:

    • For some reason it’s not picking up the (:) on the above link? You’ll have to enter that to get to the documents.

  • Many people have been talking about “going Galt”.  TAO is picking on people who CAN go Galt: they are wealthy enough that they don’t have to work if they don’t want to.  Now, I will admit that my opinion of the acumen of many corporate execs is pretty low; I suspect that mailroom clerks might have done a better job of running Merrill or AIG, mostly because it probably never would have occured to them to take such risks.  However, do we really want people like Jack Welch and Steve Jobs saying, “F*** it, I quit!” and leaving multi-million dollar companies in the hands of second- or third-stringers?

    I’m also curious to see if these big companies continue to contribute to the democrats (spit) after this.

    Could somebody also explain the effect that this will have on tax revenues?  The richest Americans already pay a huge fraction of revenues derived from income taxes; if they aren’t making as much, won’t those revenues drop very quickly?

    Finally, I’d like for somebody to explain to me how capping the pay of executives helps me one little bit in my personal situation.  Let’s suppose that the president and senior staff at the company where I work got their pay “capped” tomorrow so that they make less money.  How does that help me?  How does it put more money in my pocket?  How will it pay off my underwater mortgage?  How will it help with the fact that I’m on unpaid furlough one week per month because our company is losing business in this bad economy?

    Or am I supposed to be like a liberal (spit), not think objectively, and get my rocks off that “those rich bastards are FINALLY paying their fair share”?

    I’ve often thought that you could line liberals up against a wall and shoot them, and they’d go with a smile on their faces so long as they could look down and see the corpses of “rich people” who went first.

    • “Finally, I’d like for somebody to explain to me how capping the pay of executives helps me one little bit in my personal situation.”

      You say that as if hating the bourgeoisie were not the most important thing in the world!

    • I wouldn’t keep that thumb of yours too heavy on the scale about “bilking the public,” Scott.

      If you only were but a dollar-a-year man, I’d think that a lot of the citizens of Maine would still want even that dollar back if they knew what you were doing to their kids at their state university.

      Even though you’re just a lemonade-stand Ward Churchill, it’s still Maine taxpayers who foot the bill for it.

  • The lie is that executives earn all the money that they bring home, or that it’s their success.

    They have been bilking the public, and that needs to be stopped.  And it will be.  AIG has a very bright spot, it shows just how dishonest, greedy and corrupt the private sector has become, and it has to be brought into line by government — all of it.   The idea that the free market brings just results is a lie, and the public is waking up to that fact.  It’s about time!

    • Scott Erb knows zero about how corporate bonus systems work.  The owners of a business determine the criteria for paying bonuses.  How are executives bilking the public?  If you do not like a company bonus program, don’t buy their stock.  Why should the government tell one citizen what he can pay for labor?

      The government has no right under our constitution to control private businesses operating lawfully.

      • The whole “the shareholders don’t have to buy” is bunk.  This information gets hidden, the insiders make the deals, and of course it’s the entire population that now is suffering.  Nope, Arch, that’s not how it works.  It’s time to hold these guys accountable and get sane regulation in place.  And Congress can regulate business, to assert otherwise is silly.

    • arch – Scott Erb knows zero about how corporate bonus systems work.

      An observation amply born out by these statements:
      ErbThey have been bilking the public…  The idea that the free market brings just results is a lie…

      1.  Corporate officers do not work for “the public” unless they are working under a government contract (such as defense work or highway construction). They work for their stockholders.  To the extent that some corporate officers have “bilked the public”, it is because politicians decided that it was in the vital national interest to fork over unbelievable amounts of cash to bail out those corporations that were mismanaged.

      2.  I am unaware of anybody ever claiming that the free market brings “just” results.  Rather, it is the most efficient way that we know of to deliver the most goods and services.  “Just” implies some standard of “fairness”, which is a subjective measure that can vary greatly from person to person.  Is it “just” that AIG executives made quite a lot of money while they were unwittingly bringing the economy to the brink of collapse?  Is it “just” that democrat trash like Rains and Gorelick made similar, huge sums while mismanging Freddy and Fanny?  Is it “just” that democrat trash like Dodd got a sweetheart mortgage from Countrywide, one of the corporations he was supposed to be overseeing?  Is it “just” that democrat trash like Frank covered for Freddy and Fanny because he BF worked there, helping to stop reorganization and regulation in 2003 when Bush warned that the agencies were out of control?

      Is is “just” that somebody with such a complete misunderstanding of the market system is paid to teach in a university?

      • I’d wager the most Erb knows about corporations he learned from “The Corporation.”  Any takers?

      • 1.   The public was bilked out of its investments and 401 funds by a system of inside trading and secret deals, with the fat cats profiting by feeding themselves.  That’s going to end — the public demands it.
        2.  Markets only bring efficient results with rule of law and good regulations.   If you think otherwise, you need to educate yourself.

        • ErbMarkets only bring efficient results with rule of law and good regulations.

          You’ve used this strawman before, i.e. that a “free” market is a lawless market.  Nobody suggests that the rule of law not apply to the markets.

          Well, except for the morons in Congress and the members of the “public” who are calling for contracts to be arbitrarily modified and for a class of people who have not been convicted – indeed, not even ACCUSED – of commiting a crime to be punished by having their money taken from them.

          You really, really don’t understand the market at all.

          ErbThe public demands it.

          Wow.  You couldn’t even be bothered to cite a poll, which is the usual lefty ploy to “prove” that they are right: “Look!  Look!  X% of the people agree with ME!  See!  That means that I’m right!”

          But before you pat yourself on the back for being part of the mob, consider that, in other times and places, the public has demanded other things that, like stealing bonuses, were not such good ideas.  Examples: slavery, double-dealing / genocide of Indians, Jim Crow, internment of Japanese, etc, etc.  Now, I don’t say that stealing bonus money rises to quite the level of evil as Wounded Knee or Scottsboro, but they are examples of the public being whipped into a frenzy by unscrupulous people and supporting ideas that really aren’t very good in the long run.

          For somebody who is soooooo interested in ensuring that the rule of law applies to the markets, you seem quite eager to destroy the basis of contracts as well as the Constitutional prohibition of bills of attainder.  It would be interesting (horrifying) to know just how far you’d be willing to go in “regulating” the markets and punishing those “fat cats”, especially if you could safely feel yourself part of the mob.

    • How greedy the private sector has become?  You’re a fool Scott.  But thanks for finally showing your true colors.

    • For someone who keeps claiming to be non-statist, you sure like to see the state intruding very heavily into private matters.  You rail against us spending beyond our means, and yet applaud a budget that is so far beyond our means as to make everything else pale by comparison.  And now you applaud the use of government to invalidate what is essentially a series of private contracts.

      You ought to be afraid of government telling every business what is allowable compensation.  But I know you aren’t.
       

    • I wouldn’t keep that thumb of yours too heavy on the scale about “bilking the public,” Scott.
      If you only were but a dollar-a-year man, I’d think that a lot of the citizens of Maine would still want even that dollar back if they knew what you were doing to their kids at their state university.
      Even though you’re just a lemonade-stand Ward Churchill, it’s still Maine taxpayers who foot the bill for it.

    • The lie is that executives earn all the money that they bring home, or that it’s their success.

      Eh. I dount YOU earn you pay 100% of the time either. I know that like to browse this forum during work hours, so I don’t earn all of my money either.  Of course THAT POINT IS IRRELEVANT.  They get their salary because they made that deal with the company. That’s between the exec,  and the company (and sometimes shareholders).  Your perception of “earning” means sh*t here jackass.

      They have been bilking the public, and that needs to be stopped.  And it will be. 

      How does an Exec. getting a high salary “bilk the public”? 

      AIG has a very bright spot, it shows just how dishonest, greedy and corrupt the private sector has become, and it has to be brought into line by government — all of it.   The idea that the free market brings just results is a lie, and the public is waking up to that fact.  It’s about time!

      What a sc*mbag comment.  The free market doesn’t bring results? REALLY?  When you go to your climate controlled home with your stocked fridge, and you post the drivel you do from your PC, using electricity including lights, phones, TVs etc- when you and the missus decide to go to one of your fancy cocktail parties at night, when you can’t even find a parking spot because there’s so many cars, look around and tell me the f**king free market doesn’t get results you worthless piece of trash.  You want to live in a 24-7-365 recession, I can refer you to lots of places on the globe where they don’t bother with free (or even semi-free) markets.  Hey, even the Chi Coms are embracing capitalist principles now, that’s where you take your cue from isn’t it? Or is it Chavez now?

      • I don’t think that Erb would have to go to the Chi Coms or Chavez to get his cues. Those are available from Obama’s permanent campaign, or the Democratic caucus in either house of Congress, or from Erb’s own class notes. Though there is no doubt that an original foreign influence is at work in the mind of Erb, I think one would best look for that somewhere in the direction of the Urals.

      • Learn to read.  The market does not bring JUST results — that is, what the markets brings is often unjust, and hence you need laws, regulation, and some government action.  All Republicans agree with that, 98% of the public does.  So settle down before you yelp “Scumbag!”   Everyone wants a functioning market, no one is saying markets don’t work.  They just don’t themselves provide justice.

    • Here’s how it works for me. I run operational and technology risk management for a global financial corporation (no, we’re not a bank and no, we’re not a bailout welfare recipient). My program looks at our business units, technology platforms, information security programs, etc. and evaluates what kind of risk we’re taking. Risks are optimized to the level of appetite our senior executives feel is appropriate.

      As an officer of the company, my bonus compensation is an important part of my package since I actually make less salary than a school administrator in my kids small district. My base is small, but my bonus is 40% IF I meet my milestones AND the company hits its revenue targets. As a company going through a massive transformation, these targets are not easy. Risk is always changing. Resources are always constrained beyond belief. While Barack throws thousands of more positions for slackers in the government to man the DMV desks and such, we’re cutting more back to optimize and survive Obama’s taxation and economic disarray.

      So when I work 60-70 hour weeks, work on “mandated vacation”, and am accessible 24 hours a day regardless of where I’m vacationing, and pour every bit into my job when I’m there, you’d better believe I deserve a damn bonus when I ACHIEVE results. Naturally, this kind of thinking is foreign to the average Obama supporter since parasites don’t achieve, they consume off of others.

      So Scott, if you’re really serious about your views and not just baiting a response, people like me are equally serious. We’re done with the parasitism. It was bad enough at 30%-40% of our labors. We tolerated it but with great reluctance. Now, we realize we have to cull the parasites as they’ve gotten out of control. Starve the beast. If you’re in that category, be prepared for great misfortune as those of us who produce have risen up to strike.

      • Empty threats — you’ll do what is in your interest.  But we’re talking about obscene compensation packages of top execs whose companies often did not perform well, or had short term profits based on speculation that they no doubt realized could not be sustained.   It’s time to reform the system and reward work and results, not just who can win the inside game.  If you work as hard as you claim, you should embrace that!

    • Thanks Erb, for giving us the opinion of the Communist Party of the USA. Very illuminating.

      I bet that if Obama said that everyone should eat their own feces, you would be up here telling us how nutricious and valuable that would be.

  • Just a thought: 

    What does anyone suppose the reaction would be if a Republican vowed to use the force of government to limit the salaries of television and movie actors?  Under the guise of making it more affordable to go to the movies, because no star would be paid $20 million to make a movie.  And under the guise of lowering the cost of consumer goods, because networks wouldn’t have to charge as much for advertising?

    Do you think anyone would sit still for such a proposal?

    And now the Democrats, having demonized business executives, want to limit the compensation of those they have demonized.  This is really scary stuff.

  • Once you have a Senate majority leader who can stand in the well of the U.S. Senate and declare a war lost and get away with it while our troops are battling ferociously to take back the advantage and win there’s not a lot of downside, yet, to bashing corporate executives.

    But this is the hammer and sickle that are being swung around here, and anyone who mistakes it for anything else will learn, eventually, that they’ll be getting a taste of that not too far down the road themselves. Reid, Pelosi, Schumer, Frank, et al. are vicious, stupid people, and they are so vicious because they are so stupid. They’ll go back and forth in a bidding war with Obama and when it all comes flying apart, you know who they are going to blame, don’t you? The people themselves. And for all the wrong reasons, they’ll be right.

  • Ode to Erb;

    Trollin’  Trollin’  Trollin’
    Til my brain is swollen
    Absurd lies extollin’
    Rawhide
    ……etc. ad nauseam

  • So does this mean NFL drafts will indeed be just that? $40K/year living wage, team-provided jerseys and shoes (a taxed benefit, mind you)? Think about the parity in teams when money is no longer a factor. And with the government owning the franchises and stadiums, we’ll have plenty of organizational capacity to arrange Obama pep rallies during half-time and provide for the use of the stadium during the week for high school Obama Youth events.

    Personally, I’m looking forward to the EEOC engagement in professional athletics. Besides the inclusion of blacks in hockey and whites in basketball (current proposals are to take 50% from each sport and bus them to the other’s arena. Nothing like seeing short goalies do layups and 7′ guys on skates), we’ll truly have Special Olympics in every sport. 85-year-old grandmas will be eligible for inclusion (in Obama’s America, everyone will work as social security will be cancelled when China won’t extend us more credit later this year).

    Now lay off the blogging and get back to digging ditches. Obama’s Watching.

  • The lie is that executives earn all the money that they bring home, or that it’s their success.

    You haven’t the first f*cking clue whether any of these executives deserve what they earn in actual reality. You have a wholly arbitrary, totally contrived thought rattling around in your nut that is based on nothing real, nothing in fact other than an abstraction sprung whole from your own self-importance. Yet as comprehensively phony as your pretense of knowledge is, you would support the state forcing real people to conform to your fantasy at the point of a gun. I’d try to make a determination as to whether your ignorance exceeds your arrogance or vice versa, but frankly I can’t see the end of either.

    Want to know how a nation of Good Germans can go to bed one night and wake up with the blood of millions on their hands? Go to your bathroom, stand in front of the sink and look into the mirror, Erb. THAT’S how. 

    • I’m not the only one decrying obscene executive compensation — the Economist magazine has had that a theme, and no one can justify such massive amounts.  So yes, I do know that they don’t earn it.  And, yes, it’s good that the state will use its power to limit it.  The times are really changing, guys.  Your crude free market ideological mantras just don’t work.  The crisis we are now experiencing have defeated that approach — reality bites.

  • As usual, the left-statists don’t think more than one move ahead.  This move will be met with two responses:  corporations will move significant portions of their operations overseas, and those that stay will reorganize as partnerships, also domiciled overseas.   Final result: lower tax base at every level of governance.

  • I’m looking forward to the day enrollments at the U shrink.  Erb will no doubt cry for more government aid, but the taxpayers will be tapped out…  Look who pays the taxes.  You’re a professor, you can understand elementary statistics.  Those are your cornflakes you are peeing in.

    New York is already waking up to the fact that we have a serious problem.  The financial industry paid a large percentage of the state income tax.  How does putting the screws to those bonuses help?  Not so much.  If they taxed every dime I made, they couldn’t make up the money they lost from Wall Street’s bonuses.   I’m expecting some of that money to come from higher tuition at the SUNY schools.  Which will lead to declining enrollments.  We’ve got 1200 people who won’t be working at Magna, because the plant is closing.  Some of their kids won’t be going to college now.  Since that plant is in my school district, over time we will be making up the property taxes they don’t pay anymore, too. 

    When I retire, or get the axe, I’m gone.  Upstate NY has a lot going for it, but I can’t afford it.  It’s probably worth $500 a month or more in tax savings to leave, and I will.  The kids have left already, because there is no future in these one party, union controlled gulags. 

  • Buy your guns and buy them soon.  Stock up on ammo.  You don’t want to be without when the revolution comes.  These Socialists are just asking for trouble.  And if they aren’t careful they will get it.

  • “The idea that the free market brings just results is a lie, and the public is waking up to that fact.”

    I’m late with this, but for posterity I want to come out of the weeds so this comment is fully challenged. 

    The first part of this statement is true. The idea that the free market brings just results IS a lie. It’s a lie as written. The free market isn’t supposed to bring just results, that isn’t part of its makeup. Here’s another as an absurd example: 

    The idea that the free market brings forth the earth’s sweet, nougat core is a lie.

    As to whether “the public is waking up to that fact”, I can’t be sure. I’m confident most won’t be surprised to learn there is no nougat in the center of the earth. However, it’s possible the public believes that the free market is supposed to bring just results – if university professors these days are teaching that it should. I can say no one I know, college educated or not, believes the free market is supposed to bring just results.

    Also, this isn’t a small lie. It’s a great big one. NO market system brings just results. None. It can’t be done. Systems that appear to come close operate under oligarchies such as socialism, communism, or fascism. However, even these will define “just results” as determined by the morals of the controlling group. Those ruled by the group will not, historically and logically, agree that the results are morally right and fair.

    Just market results, social justice, economic justice – whatever the label, the concept is a logical fallacy. It does help as an aid in debating best civilized positions in the totalitarian vs anarchy spectrum. But as an end goal, it’s like drilling to the earth’s nougat core. We’d all like to achieve it. If it existed.

  • I tell you some people can’t understand the ultimate downfall in our era is greed.  Weather you call it free market….or onie recieving their just due, there is an underlining issue that has brought great Amercia to its knees…Greed.  These coporate execs.  sit up on their thrown and think “hey theres no way I can run this company into the ground, its just to large”.  But when you look back at ENRON, Finanical instiutions, and all the bad decisions made all the way came from GREED.  So do we ignore this fault in our free market system or do we regulator.  My belief is there must be some regulation to prevent peoples 401ks from disappearing overnight by the greedy so called leaders.  

    ALSO – note that all YOU of talk as if these CEOs really work their way to the top of the company and deserve their just rewards.  Last time I remeber this country was ran on the GOOD OLD BOY system where the “C” Student hired the “A” Student.  The only reason the “C” is leading is because who he knows NOT what he knows.  This is exactly why our country is in the shitter.  People talk about these CEOs work hard and deserve just CEOs go to these top schools and never really work one hard day in their life.  But yet there so call vision they are suppose to lead the average american company to greatness.  Hell, no….see what this country lacks are the true company founders (of these big 500) the ones who scratch and crawled their way to the top and had a great vision not only upper society but also the life of the common man.  Now this new generation comes in to run a company but these CEOs have been spoon fed their whole life.    You guys obivously forgot about the GOOD OLD BOY system…and that our country companies are ran by “C” students!